tv Nightly Business Report PBS January 8, 2019 5:00pm-5:31pm PST
>> announcer:s is "nightly business report" with bill griffeth and sue herera. win streak. stocks notch their longest string of gains since november, as investors start to brushff bad news. lifeline. sears isn't dead yet. the judge gives the company's largest shareholder one more chance to save t storied retailer. skyrocketing costs. it's nog secret that d prices are on the rise. but why is it so hard to lower them? those stories and more tonight on "nightly business report" fo, tuesanuary 8. od> and we do bid you a good evening, ever and welcome. three straight days of gains. stock market the has been behaving lately, that's saying something. tradesi sve industrial stocks helped lift the broader market today on word that u.s.
and chinese negotiators seem to be making some progress. tech shares were also higher. by the ose, the industrial average rose by 256 points to 23,787. the nasdaq was up 73 and the s&p added 24. but the rise in the market isn't necessarily because o good news. i mean, yes, there was some and it helped. but there were also negative headlines out today. the interesting thing is, that the market isn responding to the bad stuff like it did just a few wks ago. b pisani starts us off tonight. >> so far the action this week is telling us ln awful of bad news has already been priced into the market. it just keeps costng. ks were up in europe and the u.s. despite news that was not or great. the big is earnings. samsung said fourth quarter operating profit would drop 29%. that's wor than analysts expected. they cited mounting uncertainty and lackluster demand in theme
ry business. yikes. maybe apple's announcement cutting first quarter guidance wasn't a one-off. samsung is a global oucompany. a third of its revenue comes from the u.s. and latin america, 13% from korea, 15 from china. samsung stocks down 10% since november and more than 25% since may. but take anoer example. there's more signs of weakness in europe with german industrial production numbe coming in in a weaker print. look how the markets are faring. from december 3rd to the bottom on december 24th, the dow jones industrial average dropped 4,000 points. 4,000. it's now recovered roughly half of that decline. bond yields are on the rise. t yields on 2-year and 10-year treasury notes are slightly gher and volatility has been steadily falling. a widely watched gauge of fear, the vix, plunged 50e in n days. those are big moves. for "nightly business report," i'm bob pisani at the new york stock exchange.
there are reports tonight that the u.s. and chinese negotiators have narrowed their differences on trade. according to "the wall street journal" progress is being made on issues that includehe purchases of u.s. goods and services. though the two sides are still far from a deal,healks will continue into tomorrow. they will reportedly address how china will carry out the pledges it has made. and fromo tradee fed now. the minutes of the central bank's last meeti will be released tomorrow. investors as always will be looking for clarity about t future path of rate increases. but will they get it? after all, the market's response to clarifying comments from fed chairman powell last week seemed to orsow m confusion than anything else. steve liesman has more for us tonight. >> fed chairman jerome powell ii effort to nudge stock marks back on track looks to have nearly lost control of the train. powell last week tried to m convinkets that the fed is aware of the weakness in the economy and sensitive to the
downturn in stocks and not hellbent on raising interest rates. >> we're listening carefully to that. we're listening sensitively to the message that markets are sending, and we're going to be taking those downside risks into account as w make policy going forward. >> the result, markets may have gone too far the other eyway. now expect the fed's next move will be to cut intert rates. futures market pricing no action thisear and in 2020d pri in a rate cut. it's the opposite direction for a fed that is still forecasting rate hikes next year. >> i think people have gone too far in thinking that the fed will stay put and then cut rates. let me explain why.fi t, it's hard to find any systemic weakness in the u.s. economy. yes, the may be small pockets, but overall the economy is doing ll. you saw this on the employment report. >> the question now, will the fed change to reflect the market or the market change to reflect the infed? 2016 the federal reserve
forecast four rate hikes but delivered only one. to this change from hik cuts would be a far more dramatabout-face for the fed. powell's most likely course,thet economic data lead the way. t it's strong, the market could be convinct rate hikes are warranted. if it's weak, he'll have work to do to get the train back on the track. the fed is likely a lot further away from cutting rates than the markets seem to beli e. for"nightly business report," i'm steve heesman. umber of job openings fell in november, but even with that drop, there are sll about 800,000 more openings than workers. according to the labor department, the total number stood just shy of 6.9 the survey is closely watched by the federal reserve for an indication of tightness in the labor market. he partial government shutdown has now become the second longest in history and still little progress is being made in negotiations between the president and congressional democrats. in fact tonight the president delivers his firstme pme
address from the oval office focusing on the key sticking point, the border wall. ylan mui reports fromwa ington. >> reporter: president trump will deliver his speech tonight from the oval office, drawing on the presidency o as he makes his case for a border wall directly to the amblican pu. in a statement, trump called the border a, quote, open wound, and outlined the administration's request, including $5 billion for a steel barrier stretching for 234 miles, $211 million to hire more border patrolagents, $571 million for more immigration enforcement officers, and $800 million for detention facilities and atransport. lot of this will strike the public as brand new information. ahead of ing to get his speech. i've seen drafts of it and this is up to him. it will be in his voice and his orwords. >> rr: democrats say not so fast. they're trying to drum up public support for endg the shutdown by highlighting tsa workers who
are on the job b not getti paid. >> they're federal workers who do so much for this natio in so many places, who believe in this country, who are hurting right now. >> reporter: they're talking about the impact to food stamps, farmers. the fha isn't processing loans or mortgage approvals right now. on capitol hill lawmakers from both parties huddled this afternoon to discuss where to go next. talks between the white house and democratsd.ave stal in the senate, a faction of moderate republicans are calling for anend to shutdown even if there's no wall. and in the house, there will b ditional votes to reopen the government this week as federal workers fac their first missed paycheck on friday. but right now, the ball is in the president's court. i'm ylan mui in washington. leading the dow higher today was boeing. the stock was up mor than3.5% despite reporting slightly fewer deliveries than expected i 2018. boeing also said that the backlog of orders has actually
grown. as phil lebeau reports, that's welcome news for shareholders. >> reporter: for all the concerns on wall street that airplanecommercial business may be flying into a rough patch, 2018 orders and deliveries paint a different picture. while boeing fell justf short its guidance for deliveries last year, the compa still s a record, turning over 806 planes customers. the increase due in large part to the company's most popular model, t 737. last year boeing raised production of that plane to 52 a month, and it's scheduled to hit 57 a month this year. even more important for investors, boeing'soo order grew by almost 900 planes year. despite concerns the president's trade war with china could hurt business, boeintill sees strong demand from chinese that's important, because one out of every four planes in boeing's order bk is scheduled to go to a chinese airline.
if those orders drop, so could shares of boeing. phil lebeau, "nightly business report," ticago. ime to of today's upgrades and downgrades. we begin with shares of jpmorgan which was downgraded from hold to buy at jeffries with the analyst citing the possibi fty that t is finished hiking rates. that in turn could hurt the bank's profitability. the price targe now $110 and the stock fell a fraction today to $100.57. mastercard was downgraded to neutral fm buyt bank of america at merrill lynch. the analyst says rsenue estimaor the year are just too high. price target, $207 at stock rose along with the broader market today to $192.28. also with bank of america merrill lynch proctor & gamble was added to its u.s. 1 list which is a roundup of best investment ideas. the analyst cites organic sales growth and improving market share. the price target is $108.
the shares rose a fraction to or$92.46. trom was upgraded to equal weight from underweight at morgan stanley. the analysthere says the stock price could rise if the retailer's strategic initiatives succeed. the price target is $50. the stock gained more than 1.5% to $49.02. many thought that today would be the end of the road for sears, but after a very dramatic day in court, it turned out that's not t case. at least not sears board has agreed to consider a revooised bid during bankruptcy auction to be conducted next monday. that is as long as a $120 million deposit is placed by tomorrow afternoon. courtney reagan sorts it outor us tonight >> reporter: it's beyond the 11thhour, but sears gets one more chance at survival. a judge is giving sears chairman and larst shareholder, eddie
lampert, and his hedge fund, esl, another chance to keep the retailer alive, less than three months after it declared many doubt it will ultimately be enough. sears and lampert hav a long, complicated history. he was ceo until the bankruptcy filing in ndoctober, a he and his hedge fund spent years and likely billions of dollars on a number of complex financial engineering maneuvers to keep the company running. and while sears has been operating, business hasn't been good. debt has piled up. sears and k-mart stores deteriorated over time and weren't remodeled or refreshed. empty shelves weren't uncommon perhaps what's most ironic is sears history as a catalog retailer gave it the infrastructure and the expertise to successfully operate in e-commerce, but p it wasn't to good use. >> massive transformation on the back of the catalog, on the back of the internet to turn this into a f company of thure instead of a company of the past. >> reporter: sears holdings
hasn't mad money in more than seven years. in 2011 sears holdings had more than 4,000 stores. around 700hen it filed for bankruptcy. lampert's bid aims to keep5 stores open. in its last full-year report, annual sales werend $17 billion, a far cry from its sales peakf $53 billion. sears stock hit a high of $144 per share in april, 2007. when it gotelisted in october, shares were just 37 cents. for retailers in malls, the are positives that could come from a sears total liquidation. retailers like home depot and we's have been picking up market share tha formerly went to sears. mape otors say when new tenants move int a former sears store, the rents paid are from four to nine times higher. for those with fond memories of sears and kart and f its 50,000 employees, there's still a little bit of hope for "nightly business report,"
i'm courtney reagan in hackensack, new >jersey. lso late today, j.c. penney gave an update on how it did holidays.e the retailer said that same-store sales dropped by 3.5% but it still expects to end the fiscal year with liquidity of more tn $2billion. it also announced plans to reduce inventory and close some stores. still ahead, trade war? what trade war. why chinese buyers may be extending their reach into the u.s.ar apple's ceo today addressed around tive sentiment his company saying innovation at the company is strong. his comments to cnbc's jim cramer came almost a week after apple lowered its first quarter
revenue forecast, citing a weakening economy in china. >> in terms of the naysayer, i've heard this over and over again,jim. i've heard it in 2001. i've heard it in 2005 and skr a7 '08 and '10 and '12 and '13. you can possibly find the same quotes from the same people over and over again. i'm not defenhive on it, is america and you can say what you want. but my honest opinion is that there is are culf innovation in apple. that culture of innation combined with the incredible loyal customers, happy customers, this ecosystem, this virtuous ecosystem is probably something that is ra unreciated. >> that helped lift the stock, which closed about 2% higher. iphone sales may be slumping in china, but chinese consumers do not appear to be souring on another u.s. product. that would be real estate.
diana olick explains. >> reporter: at an international real estate show, chinese buyers weren't talking politics, just properties. >> the chinese are basically politically agnostic. what i t mean byt is even though there's a great tension between u.s. government and chinese, the chinese citizen seems to be able to separate thi pol turmoil with the sound real estate vestments. >> and what did you think of the buyers that came to talk to tey. >> rep olson, who sells real estate in the san francisco bay area, attended the show and said not only are chinese buyers active in u.s. housing, the pool is expanding to the middle class mortgage dependent chinese buyer. in the past it was mostly wealthyrsash the median price of a home sold to a chinese buyer dropped last year from just under $530,000 to $439,000. the chinese are also expanding their sites from california to
lower priced markets in texas, georgia and florida. >> the chinese people still see the united stat a a safe harbor where they can take their assetsnd park their money. not only for their money, but also for the future of their children. >> reporter: olson has several chinese clients whose children e already worki at u.s. tech companies. >> we will get a referral saying the mother is flying out next week. their son or daughter is working at google or facebook or linkedin, and they now have enough money d for an payment, so they're ready to purchase a condo for them. >> reporter: chinese buyers flocked to this open house in long island city, new rk, just a week after amazon announced it would open a neweadquarters there. several mortgage companies, especially in california, are now catering specifically to chinese burs. the only problem is there aren't a lot of low-priced homes available for sale, so as chinese buyers enter this space,
they may have to worry less about trade wars and more about bidding wars. i'm diana olick in washington. union pacific has a new hire, and thas wheree begin tonight's market focus. the railroad picked a turn-around expert to be its chief operatingr. offi jim venna is expected to oversee the implementation of a system that will make the company more efficient and profitable. that prompte number of analysts' upgrades and sent the stock up 8. to 150.75. verizon added more subscribtes than exp in the fourth quarter, including more than 1 million post paid phone customers. the largest wireless carrierdi said the cons came in a highly competitive wireless market. shares rose 3% to 58.38. the ceo of alumina issued a weak revenue forecast at theh jpmorgan heaare conference in san francisco. the gene test maker nowts exp sales of 3.8 billion and the
problem is the comny has no big product surprises. that sent the stock down about 4.5% to 293.75. meanwhile, helen of troy trimmed its y fullr sales outlook. the consumer products maker thab ownds like braun and vicks cited chinese economy a foreign exchange headwinds. $115.92. ll 13% to the cost of prescription drugs has long been a hot button issue. today "the wall strebl journal" he an article on how a biotech company is considering tackling high-cost treatment. joing us is the managing director at capital street. nice to have you here, welcome back. >> thank you. >> let's start with "the wall street journal" article on
basically blue bird bio, which isutting forward thedea of expensive treatments being paid for on an installment plan and so kind of an outcome-based pricing. is that practic in an era where it's been so hard to get drug prices lower? >> drug prices are a very hard nut to i think that what the blue bird ceo is outlining is certainly very ineresting. roblem with a five-year payment plan, as i see it, is thathe insurance underwriting cycle is one year. so what if a individual takes that $2.1 million gene therapy and then in one years gone, is now under a blue cross plan or different insurance plan. how exactly then are the costsr uped? i like that they're thinking outside of the box. let's do an annuity type model. but i thinkbl that pro more work and more creative ideas need to come to the ay >> what about the second part of that that sue mentioned. essentiall they're saying if
the drug doesn't work, we don't get paid. what do you think of that and do you think other drug makers are likely to try and adopt that? >> absolutely. so the latter part of it is a value-base type arrangement where exactly what you said, if it doesn't work, you don't pay. e medicare program is trying to do tomt withof the therapies, and i think that's absolutely a step in the right rection. i will also mention that the trade groups, pharma and bio, they r ally favor value-based payment system. so i thenk for products that are coming down the pike with seven figures, something is loing to have to be done. otherwise it w bankrupt our system. >> now, this type of idea probably would not apply to more maintenance-type medicines because the insurance companies seem to be willing to pay for those. indeed with generics, he prices come down. is that the way you read it as well? >> absolutely. p think the other thing to k
in mind, do you remember a few years ago there was an $86,000 hepatitis c drug. this was a product that eventually w cut by 40%. so that list price of $86,000 was the number that you saw in the press that was on the front page of all the newspapers. real eat pbms, which are the pharmacy benefit managers, they cut deals with af couplee companies to bring the prices down. t is a situation where there was competition. here with these new gene therapies, there aren't necessarily competitors and they're a one shot or one infusion type but i would agree with the premise of your statement. >> very quickly, i want to frsue a little more that. is that why it's so hard to bring drug prices down, because of a lack of competition in the traditional sense? >> i mean, look, i just came from the jpmorgan conference and there is really exciting innovation out there. but youeay need competition to bring prices down. so for new, brand new therapies, yes, there's going to be a
period of time where the market is going to have to reset, potentially pay those high prices c untilpetitors come to the market. the fda commissioner, scott gottlieb, actuay spoke at th conference through a webcast because of the government shutdown, but he said, are approving things as fast as we can because at the fda, their man datnd is safe effective. they don't have any power over price, but they know tha competition will eventually bring down oprices. >> that note, thank you so much. bill comingup, the tech trends that could change our daily coming up, we'll tell you about the rise of self-driving vehicles at ces. we are driving down the las vegas strip and there's no one at the wheel. that's after the bre.
south korea's lg issued a stark profit warning. the electronics company said earn fgs likelyell 80% in the fourth quarter. lg did not disclose further details of fourth quarter operations. analysts say results were way down by ar-ending bonuses and marketing expenses for new rt smartphones. they will report full reports at the end of january. ces, the consumer ectronics show is the largest technology show in the recalled would. the annual gathering has long been a stage for innovation and doeak-through technologies, providing a ww into the future and a pee at those gadgets that could change oury daillives. julia boorstin is there in las vega >> reporter: 180,000 people are expected to attding the annual consumer electronics show. this year the giant screens are higher resolutn ever. 8k and some are even foldable.
but the technology that's really in the spotlight is 5g. the next generation connectivity that's as much as ten times faster than brdband. >> i see a huge quantum leap going from4k to 5g. we'll see so much more innovation new innovation coming from different industries, even for consumers of course. so yes, i assume we'll see much more new innovation when the new technologies are coming out. >> 5gapility willpower super fast video streaming without any buffering, which is what oaudi s showcasinghere. offering video entertainment and virtual reality from disney to back seat passengers in audi cars. this year autonomous vehicles have a ever.er presence than this is a self-driving vehicle from mercedes-benz. it can carry upo 12 people. these kind of cars are designed to leverage artificial
inteigence as well as the potential for the coming rollout of 5g. and it's not jus autonomous cars. check out bmw's riderlessn motorcycle o display. the bike isn't desned to go on public roads, but rather to gather data on how to make motorcycles safer. and this year the smaller screens of smart home devices, all voice controlled of course, are an increasingly important battleground as google and amazon ramp up their offeerngs. >> whet's your alexa home device or your facebook portal or your google home or whatever' ap ultimate entry into the game is, i think as you look at that from as perspective, from a marketer's perspective, if you start the purchaseycle with alexa or google home, you get that oduct, you get that toothpaste or that soap. it makes i into your medicine cabinet or refrigerator. >> reporter: we're hearing about all the places ads could sw up, even in your uber app. uber has a futuristic flying
car. this says it will come to markee in tmid-2020s. with ces, the place to get a window into the future. i'm julia boorsn in las vegas. here's a look at the final numbers on wall street today.th dow jones industrial average rose 256 points. the nasdaq was up 73. s&p 500 added 23. that is "nightly business rert" for tonigh i'm sue herera, thanks for joining us. bvel griffeth. great evening. see you to