tv Nightly Business Report PBS February 4, 2019 5:00pm-5:30pm PST
. >> announcer: this is "nightly business report" with sue herera and bill griffith. >> knowour abcs. google's parent, alphabet, reports strong revenuerowth t costs rise, and that's raising some questions. beyond stocks, not cvinced at the market's bounce will hold? maybe it's time to consider alternative investments. cashing out. a new start-up will buy your home so you can rent.t back and a growing number of peop are doing it. rose stories and more tonight .n "nightly busineort" for erood evening, ne, and welcome. alphabet is a silicon valley heavy weightnd tonight, it reported better than expected earnings. at first glance, the results are somewhat of a relief, given the decline in the stock price late last year. sales rose despite mounting
public pressure over issues like privacy and the company auorized andditional $12.5 billion in share buybacks. but costs rose ast well and t is not sitting well with investors. here are the numbers. alphabetard $12.70 a share, easily topping .expectatio revenue was up more than 20% from a year ago to $39 billion. but those cost concerns sent the stock lower in initial afterhours trading. josh lipton h more. >> reporter: $27 billion, that was a big number in alphabet's latest earnings report. first aglevenue from g properties, the core properties that this company owns and operates likeearch a youtube, erin kessler of raymond james says that beat his estimate growing at 21.5%. on the otherhand, though, kessler did note some disappointing metrics too. gross margins lower than expected and all of the expense were up $800 million, higher
than wha more "nightly business report," i'm josh lipton, san francisco. danl joins us now to talk about these numbers and his take on the stock. he is senior research analyst at newbergeberman. >> great to see you both. >> any red flags for you, t expenses or anything else? >> bill, i think overall, the business appears to be healthye ore search business was onut target, e is seeing strong growth. the google cloud business appears to be doingery wel what people are a little bit disappointed by ofisourse, the margins and obviously the level of expenditure in some of the other bets but i think if we step back and think about what's going on withco this any, this is really a longer term focused company that is putting mey into newer areas like waymo, for example, with autonomous driving so overall, we think it was a solid report. we understand the -- some of t concerns but i think the business remains on track. >> you like the stock for the next one towo years. do you have a specific price target on the stock? >> we can't speak to specific
price targets but what i would say is i think if you look at some of t key secular trends around the cloud and mobile and digital and thisy rea speaks to the transformation of indust bes andinesses well beyond technology and google is really sitting in the middle or at theenter of a lot of those trends and empowering others, d that is what ultimately we think drives the attractive top line growth story and what we think can create additional shareholder value over the next couple of years. >> you know, i think about the -- there's been so much skepticism about google over the years going back to its days of the ipo, people thought it was too expensive but you made an interesting point in your most recent research report that we are still making a transformation to aigal age and they're part of that transition, right? >> i think that's right, bill. and when we speak to customers, when we speak to people in industry, all of them are reall trying to transition their own businesses towards an age where they hav to intera with their customers, their partners,
everybody in a very dferent way, and they need a company like google, like alphabet, to help them do that. and the key for alphabet is to continue to tinnovate, invest, not everything they do is going to work and it's not always going to work in theli ti that wall street would like, but the feedback and really the takeaways from our research suggest that the longer term initiatives under way at the company are really in line with what cus are looking to do, and that we think is ultimately criticalo creating shareholder value. >> daniel flags with newberger berman, thank you for joining us tonight. onec wall street, stocks help lead the market higher as additional profit reports trickled in to start thek. w the dow jones industrial average was 175 points to 25,239. the nasdaqdded 83 and the s&p 500 was up 18. >> well, wall street will be watching president trump's state of the union address very carefully tomorrow. fi's expected to discuss trade priorities and spelly the need to pass his new nafta. now called the
u.s.-mexico-canada trade agreement. kayl kay kay kayla is in washingn for us tonight. >> reporter: the u.s mexico canada trade agreement was signed in november but it's staring down a month-long debate on capitol hill wherepu icans have bristled at its wage requirements and democrats feel it doesn't goar enough to protect manufacturing jobs. the agreement that was supposed to have something for everyone has ended up alienating both sides. laurie walli is director of public citizens global trade grou, a liberal >> they didn't quite finish the job on the environment and labor standards and unless those get strengthened, jobs will continue to be farmed out to mexico to chase $1. a hour wages. >> reporter: gabriela is with theeritage group. >> labor provisions and environmental regulations, it's not their place to be in a trade agreement. it's supposed to be about trade. >> reporter: and then there's the steel t and aluminuiffs that the u.s. still charges its north american neighbors.
prominent republicans have said they won't vote on it until those are gone.ld auto tariffs complicate the situation. that was delayed because of the government shutdown and could be pushed back until april, making the path forward cloudy. for "nightly business report," i'm kayla tausche in washington. the u.s. is also trying to settle a trade war with and now that country is celebrating the lunarew year of an impact the tariffs are h hang on its economy. eunice is in beijing. >> reporter: it isn't clear just how much work is going to get done on trade this week the chinese government is officially closed for the lunar new yeaoliday and the timing isn't particularly convenient, given president trump's march 1st deadline, only a few weeks ay. though some officials tell me they are working at least part of the time. a tremendous amount of work still needs to be done. trade representative bob
lighthizer a steven mnuchin are expected to come t a beijin fother round of talks. they may have to work out the logistics of another trump-xi summit andhey have to handle many contentious issues like forced technology transfers. the leadership here will be able to get another read on the economy, the lunar new year is istmas equivalent to c or thanksgiving. people go home for big family events and buy a lot of gifts. 400 million people are traveling this year. heonomists use the sales period to gauge chinese consumer. ur, this holiday, economists are looking at l goods, duty free items, casinos, jewelly, as as alcohol. over the weekend, president xi gave his lunar new year speech, hailing the economy's, quote, steady progressnd the hlunar new year sales will give an idea of the progress. meanerile, the gent played catch-up today, releasing a group ofno ec reports that
had been delayed by the partial government shutdown and for the most part, they pointed to a slowing economy. toward the end of year. in one of those reports, factory orders i sharply than expected. that was in november. in another report, a key measure business investment also fell but there was a bright spot, a separate report showe that erders for durable goods rose slightly in noverom the prior month. oil prices today touched a 2019uligh, but then theyd back a bit. prices rose initially on opec led supply cuts and u.s. sanctions against venezuela's petroleum industry bt orders r betold you about sparked concerns about a possible slowdown in economic demand and that sent domestic crude lower to about $54 a barrel. the shifting prices in the oil market and the sharp bounceback in u.s. equities have probably left you a bit weary and wondering what is next for the market and ifhere areny alternative investment options you should be considering. john is the founder of the
family office and he joins us now to discuss. perfect timing. >> welcome aboard. >> thank you, bill. thank you, sue. >> one of the things you're s looking ate gold market but a specific play in gold. >> yeah, specifically gold coins. why not own it dirtly if you want an alternative to the stock market and this is an alternative, bill, that has returned over thet p 15 years about 315%su v58% for the stock market. so, you could pretty much s five times what the stock market returned. >> but you'reng talold coins here. >> yes. >> and how much should you pay thr those gold coins? >> that is one o keys. you want to find a dealer who will sell you as close to -- withs small a premium as possible. most of them that i looked at that had good business ratings were between% to 4%, certainly under ou% is what you expect to pay so with gold at roughly $313 an ounce, a one ounce coin shouldn't cost youha
more about $1,360. >> when we ask you for alternative investments you caught us off guard with the next one here. the lending club. >> yeah. >> peer to peer loans that you can -- you put money into this fund and then they loan it on your behalf. >> exactly and you get to pick the people or the businesses that you're lending to. so that's one of the thingsd i libout it. number two, you get diversification. you're not saying i'm putting all of thisn on j nigerion. you could say i'm, putting $ that's their minimum, $25. i could put $50 or $500 but you're being the ban you're warren buffett here, lending the money out and getting the interest rate. theec borrowers comese they're getting a lower rate becausey'd pay the bank the bank might pay them 18%. may be you're getting 11% or 12% and you're spreading that risk around with a bunch of businesses or individuals, and the retus have been prett darn good, especially since they
track all of this for you, bill. >> the third one i was curious about. pay off your bills, that seems like a no brainer, right, or borrow from yourself. >> yep. >> yorrow fromr 401(k) or your ira. sharon openerson is having at pt ri now. >> she's spinning right now. >> the reason you borrow from yourself is the irs sets a minimum tt you must pay yourself back. the interest rate that you charge yourself. if you don't pay it back, of course, you could have penalties as well as the interestcharges, but assuming that you're a consumer that's going to be paying youelf back and paying yourself instead of the bank, i think makes so much sense cause let's s you're paying off a loan at 8% or 10%, instead, you could be here, paying yourself 6% or whatever the irs s says minimum that you can charge and it makes all the sense in the world. you're borrowing from yollself. >> we' get you together with sharon for lunch some time. >> okay. >> you can talk about that. >> tannk you. >> i to be a fly on the wall. john, thank you very much.
we all do. time to taket some of today's ades and downgrades. we begin witgrup conoco phillip which was upgraded to buy. e analyst says the company's long-term growth opportunities including alaska, australia, and qatar are underappreciated right now and the price trararget rig now, $82 the stock rose to goldman-sachs rates match group a sell. k's analyst says the st valuation is high. price target now is $45 and shares fell a fraction to $54.43. meanwhile, inuit was upgraded to equal weight from underweight and morgan stanley will exceed conservative revenue expectations. pri price target, $225 and shares rose 3% today. still ahead, the big wrig
indicator. >> big rigs like these are often seen as an economic indicator xp but industryts say the latest numbers may be misleading. i'm frank holland in toledo, ohio. ll have that story comin every night, we bring you a lot of facts andecigures on the omy, but sometimes all you have to do is look at the number of trucks on the road because demand for big rigs can be an indicator of economic strength. frank holland is in toledo, ohio.
>> reporter: orders of new big rigs like these are often s an as rolling economic indicator. >> historically, class 8 truck orders are a bellwether of economy. >> reporter: tractors, these trucks pull trailers worth of good all around theuntry, delivering what we buy to thee stores that buy them from. steve basset, ahe truck does recall in toledo, ohio, say bite the o to a good start. >> we areeeing strong demand. i took down a very significant order just three days ago. >> reporter: something peculiar is happening. a recent report shows a declinek in new t orders, something you would not expect given the demand. historically, it's data that could drive upnd concerns economic slowdown is just down the road. >> it's hard to add water t full glass. >> reporter: but kenny of atcre arch says new truck orders are down shifting, primarily
theire they reached record 490,000 last year and there is sll a 300,000 order backlog now. >> that unbuilt level of backloo is twice what the average backlog to build ratio is. >> reporter: that means a least anine-month wait for new trucks. he says there may be a lot of demand but little incentive for manufacturers to increase capacity. >>tr the ind is, you know, reasonably at capacity right n in a two ship set-up. you know, if you push to three d shifts, y't get that many more trucks. >> i think there's a great demand for tractors. >> reporter: monica, the owner of first exprs, a transportation business, says at least right now she's focusing on another challenge. >> s we are busy, and we do need the trucks. the biggest challenge is the > reporter: a shortage of 60,000 truck drivers is forecasted for 2019. >> very cool. you could get used to it. >> reporter: uncertainty about getting real drivers behind the
wheel, an uphill climb for an industry facing record demand. for "nightly business reporan" frank ho conflictingeports on an and a major stor drug maker and that's where we begin tonight's market focus. oomberg news reported that starboard value had taken a stake in bristol meyers squib. that sent the stoc report from a thatoard has not yet contacted bristol's management and that sent the stock in the other direction but it still heclosed h by nearly 2% today by $50.85. they did strike deal with papa john's. they will reportedly invest $200 million which will reduce john schnatter's stake in the compan shares to the company rose almost 9% today to $41.97. and spotify is reportedly in
lks to buy podcasting company gimlet media for about$2 million. that move would diversify spotify beyond music streaming and mark the first time it has purchased a content company. shares of spotify rose 1%oday to $138.60. tesla is acquiring battery technology company maxwell technologiestlor a l more than $200 million. maxwell makes devices that store and rapidly deliver surges of energy. tesla ceo elon muskai is to be a fan of the technology's potential for speeding up electric car charging. tesla rose a fraction to $312.89. maxwell tech, which is a small cap stock, soared 49% to $4.59 newspaper giant ganet has rejected a haktilever bid from digital media. the board of directors questioned the oposal's credibility and said the offer undervalues the company. digital first media, a hedge fund backed company officially known as mng enterprises offered
to buy it for $12 a share in cash. the stock fell. s cisco reported better than expected earnings. the food service distributor plans t lay off 10% of its workforce, and automate some jobs in an effort to bring down expenses. the company's quarterly revenue came in slightly below estimates. but shares rose >>4.5%. goldman-sachs may claw back executive pay over the malaysian corruption scandal. the bank's board has approved a provision that could see former ceo lloyd and other senior executives lose out on mlions dollars in compensation depending on the outcome of the investigation. last year, the justice department launched a probe into the malaysian fund whereon $4.5 bil was allegedly diverted to the personal accounts of various govnment officials. that investigation is still ongoing and goldman-sachs arranged and underwrote bonds
for that fund a the malaysian government has accused goldman of enriching itself at the ngpense of the malaysian public. the ban industry is watching what's happening in washington, especially with the new make-upth o powerful house financial services committee. the panel is led byma congress maxine waters who is known for her fiery rhetoric towards wallt street. in a recent interview with john harwood, she took on a more moderate tone. >> reporter: at one point during the campaign, you said about bankers -- >> what i'm going to do to you is fair. i'm going to do to you what you >> reporter: so, you recently met with jamie dimon o jpmorgan, david solomon of goldman-sachs, what did you do to them? >> ll, first of all, let me just say this. when you areak sg and you are among friends and you are with an orghaizationyou have great relationships with, you take the opportunity to have perhaps fun, to
describe to them in ways maybe you wouldn't describe to other people how are you going to do things and youet them, basically, involved aun rstanding what you care about and what you have learned from your time in office, and you make these kind of quips. >> so people shouldn't tak literally. >> not literally, yes. absolutely. i have an open door. i welcome everybody from bankers toactivists, nonprofits, from veterans, you know, people involved in the health industry, ev if you know you disagree with the particular industry, youet them in and you let them talk to you. >> are there particula iues where you think there's a very good chance that you'll be able to work with those finan institutions? >> well, i think the work that i have done already as ranki member of the financial services committeeemonstrates that i'm a strong legislator and i know how to work with the opposite
side of theisle. i know when to work with the opposite side of the aisle. >> reporter: what role, in your philosophy, does redistribution of income take? >> i'm not defined in that way that i believe in redistribution. because that implies that you want to take somerom the rich and give to the poor. i'm defined about fairness. i'm defined about, you know, in a way that would create equalrt opity. >> congresswoman waters said her goal with wall street executives is persuasion, not legislation. coming up, revolutionizing real estate onean start-upts to buy your home so you can rent it back.
the one-time bond king is retiring. bill gross has announced te's planni accept aside after more than four decades in the world of gross cofounded pinco back in 1971, was named the fixed income nager of theecade by morning star. when he left in 2014, the firm was the world's lgest bond firm with nearly $2 trillion in assets, but his departure from pmco was there were personality and culture clashes with management. l he went to janus henderson funds and now he'ving to focus on his charitable he retailer, charlotte russe, has filed forankruptcy. the women's apparel company plans to close about 94ng store.
duourt proceedings, it will continue to operate its website and keep open some stores. it had 400 stores across the u.s. sharar tte russe is privately held. today's homeowners are sittin on a record amount of equity but a lot of them cannot access it. sometimes because they don't have hight enough cre scores to qualify for a refinancing. but now a new company i a offeriay for them to tap that equity without moving a muhle. dina explains. >> reporter: chris driscoll need cash to invest in his real estate business and while he had plenty of equity in his gainesville, georgia, home, he couldn't access fit. >> my credit score was a few more points, or you know, i made the banker happy that day, o whatever, i could have probably done it for a little lessha mon. buts not how the world works. >> reporter: enter easy knock, a barely two-year-old company that will buy your home from you but
let you stay on as a renter. at any time during thase, you can buy your home back. >> it's a company that's allowing people to access equity in their home that have been shut out b the traditional lending market. >> reporter: easynock makes money through rent and fees. at the end of the lease, which can be up to five years, the tenant has the right to choose between buying the home back or selling it to easy knock does not want to keep it. >> we are not in the business of continuing to own homes. >> reporter: so far, the company has bought about00 homes in 5 southern states but with a recent infusion of $100 million from investors, kessler said he expectso expand to 36 states and 2,000 homes this year alone. for chris driscoll, the financial process was pretty easy, but he admits tre is an emotional downside, especiall if he's unable to buy it back at the end of his lease. buit there are ben as a renter too, like not payxeg property homeowners
insurance or any of the maintenance on the home. for now, easy knock is contracted out its rental managementbusiness,ut as it expands, expect to bring that in-house as well. for "nightly business report," i'm diana olick in washington. >> to read more about this new away i to tap io your home equity, you can head to our website at nbr.com. finally tonight, one ofet wl st favorite and least scientific traditions, the super bowl indicator. it says the market will rise during the year after a team from the o wginal nfls the big game and it will fall when a team fro athe oldrican football league wins. that means with the patriovi' ory last night, stocks should fall this year but as you know,hi the philade eagles, an original nfl team, won super bowl lii last year and stroocks year before that, when the patriotwon, stocks soared so maybe the super bowl indicator isn't so super anymore. we'll see. >> if it ever was. before we go, a look at the
final day on wall street the day after the patriots win and the stocks went up 175 poi so, we're at 25,239. the nasdaq added 83 points today and the s&p was u 18. we were at the highs of the session. and more earnings are still to week.this >> that's right. it's going to be a busy week. so thank you for joining us. i'm sue herera, thanks for joining. >> i'm bill griffith, have a great evening. we'll see you