tv Nightly Business Report PBS February 8, 2019 5:00pm-5:30pm PST
>> announcer: this is "nightly business report" with sue herria and bill geth. lucky seven. the dow notches seven straight weeks of gains, even with radeering concerns over and growth. hanging in the balance. amazon is set to be reconsidering putting its second headquarters in new york amid a wave of local opposition. price of admission. one university's plan to offer free tuition in exchange for at percenge of your future income. those stories and more tonight on "nightly busifrss report" for ay, febr good evening, everyone, and welcome. stocks got a late-day lift to keep their weekly win streak alivit this came de a rise in investor nervousness and lingering concerns over trade,
global economic growth and a slowdown in corporate earnings.h e fears dominated most of the day's trading and resulted in a mixed fish for stocks. the dow jones industrial average was down 63 points to 25,106. the nasdaq added 9 and the s&p 500 gained 1. all of the major indexes posted small gains for the week. the dow is now up for seven straight. bob pisani reports tonight from >> fears over the s./china trade war fueled a lot of today's declines. first "the wall street journal" reports they don't even have a trade deal drafted yet aheade o march 1st deadline. industrials like boeing, em caterpillar, conductors like nvidia and taiwan semi condtor traded after goldman sachs warned chip makers looked expensive. demand for memory remai very soft and prices continue to decline. around 11:45 a.m. easrn time, eamon javers reported that a
senior white house official told him that the key march 1stli de on trade could very well be moved. that lifted stocks off they' lows but there wasn't a lot of buying volume behind the move. finally another big red flag has been earnings. earnings growth has turned negative for the first quarter. that's the first time we've seen growth estimates dip below zero. it's still positive but even that is trending towards zeroo thanks slower global growth and rising raw material costs. for "nigh t'm bob pisani at th m malee joins us to talk more about the ma he's equity strategist at miller taback. thanks for joining us. >> great to be here, bill. >> when we started this day we ought we were three wee away from the deadline to get a trade agreement with china but now we hear tin deamay move. what does that do to the markets
do you think and their expectations? >> ll, t market did bounce back when that news started to filter.hrough wall street he but the one thing that concerns me is that it's just -- we'vete cr a situation again, i think, where this is the uncertainty ovess this will be with us for quite a while. listening to what the people -- people, real a insiders saying and especially the geopolitical experts who look at whahi has done in the past, they're saying this is going to beso thing, this intellectual property issue is not going to be settled for quite some time, many, many months. even if we get a small deal or kick the can down theoad a little bit with a small deal and push the 25% tariff increase out for several montus, it's -- it's going to be a while before we have any kind of definitive n this.nt so i'm very concerned about it. >> and the one other thing that is very reals economic growth globally is slowing. >>here's no question. i mean one of the things we saw in the second half of last yea is that people were hoping,
geez, europe has really turned down tut maybe worst is behind us and we'll get kind of a trough growth in europe and asia in the fourt quarter. obviously with the estimates coming down just in the last couple of weeks and growth slowing, especially in europe, it looks likeng we're g to be -- that the worst is not behind us. we start to worry about, geez, is the u.s. going to hold everything up or follow the rest of the world down. >> before we let you go, you're starting to scare the kids here. are you worri about our market here in the united states right now as a result of all of this? >> well, you know, i am a little bit, but again i'm more cautious than bearish. i just think after the 16 rally in just five weeks, we need to take a little bit of a breather with the fed on the sidelines but notua addingitative easing, we have to look at the fundamentals. with them looking a little bit weak going forward, we want to avoid chasing the market and look to buy on weakness rather
than strength. >> matt, have a good weekend. >> you too, thankyou. and now to one of the most valuable publicly traded u.s companies, and that is amazon. it is said to be reconsidering its plan ton a second headquarters in new york city. a proposal that was expected to bring 25,000 jobs to the area. as first reported by "the washington post," executives had internal discussions to reassess the situation, whicht has been y local opposition. today new york governor andrew cuomo phed back, saying new york needs amazon and that the incentives offered make sewe. >> you khat the incentive package was? we get $27 billion ine, reve they get $3 billion back. we get 27, they get 3 billion back. i would do that all day long. >> we are joined now by scott hn who as you know has been covering this story for us all
along. scott, it'sreat toee you. one of amazon's main criteria for this new headquarters site was a, quot stable, business friendly environment. miscalculate ny york or did new york maybe misrepre >> well, it's hard to imagine, e, that new york didn't put its best foot forward, maybe put a rosie picture on things, so maybe there's a little bit of that. on the flip sare it's to imagine that amazon, with everything it knows about all of these cities that have bid on this project didn't realizthat is a b diverse city, it's a union town, and that it was going to hitome speed bumps potentially in actually closing the deal and getting this facity in long island city queens. a little bit of both. there's so, no doubt, a fair amount of posturing on both sides. this is bargainig that's playut in public. >> exactly. but assuming they do ending up
going someplace else, you have visited all of the other possible locations amazon was considering. if it's not new york city, who do you think it might end up being? >> well, first of all, l's be clear that amazon is not saying that it is pulling out. >> right. >> b certainly there's talk about maybe entertaining that option. if anybody knows all the fferent options available, it's amazon. remember, there were 238 cities that bid on this project, 20 finalists. sono the company all of that and knows all of the data. at the same time, it doesn't realistically have a w of options because, remember, they couldn'tat ulty decide on one place reportedly because there weren't enough workers, high-tech workers to fill allf the jobs. so they may have to stay in new york. one option for i them to do things kind of the old fashioned way, and that is to pay for it for themselves. don't give up control to new york by taking the subsidies.
this is, after all, about a $180 billio a year company that's haggling over $3 billion in subsidies, so they could do it that way. >> yep, absolutely. scott, thanks so much. stick around, you're doing double duty for us tonight. we'll see you a little later in our pr now to another hot topic, and that would be drug prices.jo son & johnson revealed this week it's going to begin showing the list price of drugs in television commercials starting with its popular blood thinner, xarelto. those will begin airing in late march. but isy transpare like this a good idea or will it just create more confusion about an already confusing issue? joining us tonight, robin ma fe professor at the university of california hastings law. robin, thanks for joinint.us toni >> pleasure to be here. >> this is something the trump administration has proposedul companies s do. johnson & johnson will be the first. what do you think, good idea, bad idea? well, give johnson & johnson a great deal of credit for getting out front.
after the administration proposed itsregulations, the industry had its own list of regulations. johnson & johnson is the first one to put it on the line. >> now, what will this do for the consumer? will it help or hurt the consumer, because you've got to ad all that fine printin, correct? >> the problem will be what's actually in nde ad can anyone read it. i don't know about you but i don't read all the fe print that comes through in those ads. somethinger may learn about the prices that are out there. >> if they're going to list the price, that really means nothing when you con wde the diffs that we pay for drugs, whether the insurance companies are involved, the different pharmacies that are involved, the pharmacy benefit managers. is it going to be a bit misleading to list one price or what you expecte to pay when you go to the pharmacy? >> you're absolutely right. the question ishat numbers go into price?
the list price matters, because many peo do pay that list price. y ey pay it if they have got a plan in which tve to pay up to a certain amount before the plan kicks in. many of us have those. or they pay in co-insurance or other ways. those are bed on the list price. that's not the only price that matters. now, johnson & johnson h said they're also going to list a typical price. what's a typical price? a typical price may be something that you and i never see. >> you know, the p cynicalt of me thinks that the insurance companies will just find a way around this and prices will not benefit the consumer in the long run. what's the likelihoo of that? how are the insurance companies bing to handle the fact that there now will either a list price or typical price that the consumer can see? >> this alone will not briic down. it's a great proposal. consumers should know what's out there. but it's going to take a lot of changes before you and i pay a different amount when we walk
inar the cy. >> we will see. again, the commercials start airing late march.ha we'll see whaens after that. robin feldman, thanks again for joining us tonight. >> thank you for having me. it is time to take a look at some of today's upgrades and downgrades. fiat chrysler was downgraded to equal weight from overweight at barclays. the analyst there calls the automaker's 2020 targetssi aggr. the firm also cited disappointingaf region sales. the stock fell 2% to14.93. kellogg was downgraded to hold. the analyst cites disappointing rnings and weak guidance we told you about yesterday. the price target is $62. the stock fell a fraction to $55.36. archer daniels midland was upgraded to a buy from hold. the analyst says that the market is undervaluing that company's earnings growth potential. the price target is now $52. shares rose a fraction to $41.76 today. grubhub was upgraded to buy
frtral at bank of america merrill lynch. the analyst said the recent investments in marketing should drive that company's growth going forward. price target now $108. shares rose more than 4.5% today to $86.08. still ahead,ve thege college grad has $30,000 of debt, but we'll show you one school that's trying to he time now for our weekly market monitor who likes stocks diat he his are l the digital transformation and names you should own longer term. this is his first time on the program.s joining us michael lippert,
portfo oo managerthe baron opportunity fund. welcome. >> tha >> let's get right to your picks. leading technology companie guide wire software is the first one. whyt? do you like >> they sell software to the property and asualty insurance company, a massive industry. this is still on green screen technology and they're going to shift to modern digital software, interacting with customers in a different way. guidewire is dominant in this space. ey have never lost a customer. very few businesses that can say that. the shift to the cloud for them very, very beneficial. o threeeals will be two times as large as their current deals are today, and the profits will be at least one and a half to two times so the shift to the cloud is very beneficialith them. >> i'm seeing a trend with your three picks. the second is very familiar, he be, but you mentioned cloud. that's where they are now as well. >> yeah. i think this shift as happened all across software. yodon't have to load the
software on your computer, manage it yourself. now your provider like amazon or facebookngs provihe software, services and analytics to you. adobe does the same thing and they're participating in big trends. producing and distributing digital content, marketing and advertising over digital mean they're one of the big players there. you know, what's incredible about adobe a is they're very high-margin business. everyone at home knows they can turn a oost 40 cents each dollar of revenue into cash at the end, at the bottom line. r thatlly impressive. >> and microsoft is your last pick. sure id you weren't quite they were going to be able to transition and kind of turn -- reinvent themselves, but they managed to do it in your assessment? >> yeah, a i think for long time there was debate whether or not they would get out of the windowsnd pc generation to the cloud generation. i thcek the has really done for that the company. you've seen a lot of legacy software businesses, tech businesses nevcr s. microsoft has.
they're now one of the two dominant players in the cloud, along wit amazon's aws and microsoft's azure business i still growing about 75%. and their total cloud business which includes office 365, is growing over 50%, so i think microsoft has a long runway of double-digit growt and also generating great profits and free cash flow. >> we hear from so many mon managers who like companies because of their parti. how much is left in the cloud growth strategy? >> i really i think we'the very, very early innings of that. i think the way we could capture data the way we could deliver software and analytics, we're just starting to move to the cloud. most information technology spending is still done the old way. and i think when you think about the transitions like this or the generations like this, this will honestly lt 20 or 30 years.'r 5 to 10 into it so we have a long ways to go. >> mike, thanks for being with
us night. >> thank you. there's trouble in toyland and that's where we begin t tonight's mar focus. hasbro reported profits that missed wall street's forecaststs and quarterly sales fell by double digits. the ce said hasbro's business was disrupted by the liquidation of toys "r" us but analysts believe this has a promising pipeline of new toys for this year. that seemed to capk'he st decline for a time today. hasbro was down more than 10%, but itis fd the day down about 1% to $89.39. > electronic arts quietly released a rival to the wildlyp r fortnite game this week. ea said today that 10 million people have already played apex legends in the past three days. we should point out it took fortnite two weeks to hit that same mark. electronic arts admitted its surprise to do an unannounced launchutas risky, so far it seems to be paying off. the stock rose 16% to $97.60.
ell goodyear's earnings below expectations and sales were down 5% in the most recent quarter. the company blame currency headwinds and weakness in brazil and china whi offset growth in europe. goodyear fell 9% to $18.69 it touched a 52-week low in the process. the aluminum parts manufacturer arconic said it plans topin off one of its two main businesses and slash its dividend. the move comes after they rejected a $10 billion buyout saying shareholders would benefit more from a re cructuring. thpany also abruptly replaced its ceo. arconic was down 3% to $17.10. sonygs buy back its own stock for the first time ever. a little more than $900 million worth. it is the second major japanese company to unveil a buyback this week. softbank made a similar announcement earlier in the week. sony shares rose just about 3% to $44.29. wells fargo says most of its online and mobile banking
services areack up and running. smoke at one of itsye facilitie erday prevented customers from accessing those services. the bank did say, however, that there are continued problems with direct deposits and se cred card and mortgage balances are still not available. shares were off almost 1% to $47.65. for thousands of high school students and their wait is on.he applications to the colleges of their choice have been submitted, and now fingers are crossed. but most are also scratching their headsbout how to pay the pricef admission. with america'sttudent loan d soaring, some newlternatives are cropping up. scott cohn is back with us now from west lafayette, indiana. >> savnah williams is an education majorn our third year at purdue university. she knew going in the math was not on her side. >> i'm going to be a teacher, and i won't make a whole lot of income in the future. >> how to pay for her education
without droing in debt. purdue offered an alternative. instead of taking out loans, savannah will ery a percentage income for 10 years after she graduates. >> if i would have gone with a traditional loan, i would have had to pay it all off. you know, who knows how long that would have taken. >> it's called an income-sharing agreement, the latest attempt to tackle a's college debt crisis. that crisis is massive. a1.6 trillion dollar drag on the economy, affecting people's ability to buy a home, buy a car, start a family, for years after graduation purdue's president says the program now in its third year shifts the risk away from th student. >> it gives them a certainty and some protection andsafety. they're not going to have that uch mon borrowed piling up, compound interest, whether they're doing well o not. >> if the graduate doesn't erk, shoesn't pay. and if she does really well, her total payments are capped.
2017 graduate charlotte herbert who g job as a technical writer making about $32,000 a year h financed senior year with the program. >> i think it's a goo balance between you have to pay for school and keeping people from decades and decades of unmanageable debt. >> purdue says it's the first four-year college to offer income sharing, but the concept taking off elsewhere in higher education as well. in sanfrancisco, austin allred co-founded the lamb todda schoo which teaches computer coding. free up front in exchange for 17% of your income for two yearm if youe $50,000 a year. >> if your job ats school promising a job, it doesn't make sense that a student pays youbu h of money and it doesn't work out on the other side. schools don't want to do that for obvious reasoos. >> it'soon to tell if it will be the way everyone pays for college in the future. the programs are unregulatednd
still leave graduates with an obligation not that much different from student loans, but this is one way some schools are trying to bending the curve of the price of admission. i'm scott thn in w lafayette, indiana. in an age of high-tech combat, guess what's making a ? >> i'm morgan brennan in lima, ohio, at the joint systems manufacturing center. it is the last remaining tank factory in america, and it's experiencing a renaissance. we're going to beng t tanks coming up on "nightly the fda chief is increasing
the pressure on e-cigarette maker juul and altria. the commissioner is calling on the companies' ceos to explain their strategy and threatened to pull the products if more isn't done, something he has threatened to do >before. o when you think of the modern military, you probably think tting-edge technology. high-tech drones, precision-targeting missiles. but there's an unlikely weapon that's making a comeback. good vyd-fashioned hea armored battle tanks. morgan brennan is in lima, ohio. >> we come uphere, we have additional robotic welding machines up here on the right. >> they come in as rusties, battle worn steel hullsating ck to the '80s and september he sent here for a second life. >> it's about a five-month process by the tim it arrives here and it's delivered to the army. >> new armor, new electronics, new capabilities. the upgraded 70-ton m-182 abrams
tanks are an army comeback story. so five years ago when this facility was down at the lowest production levels, the majorit of that was for military sales. we relied heavipon foreign military sales. that actuallyhi kept facility alive. they did a study and determined we needed to make sure thisli fa was operational to do exactly what we're doing right now with these tanks. so from that study came the funding out of washington. >> this facility, the u.s. army joint systems manufacturing center, is the only remainingnt tank p in america. last year theedal governmental kagovernmen alloca billion for upgraded tanks and this year $2 billion. this was turning out one tank per month as recently as 2016. today six. next year as many as 34 per month. >> since he1980, tank has been
one of our franchise programs. it's a significant piece of our overall production. we have production on the tank, we have proction on strikers and a few other vehicles that we're doing. it's a pretty significant portion of our business. >> enough orders have been guaranteed to take production to 2021, a bigsa rev from five years ago when the army considered idling operations. at changed? the geopolitical threats, and major general cummings, a high-ranking army official involved in the project, said tanks will be crucial to military operatns. >> the abrams tank is still the in platform that we have our formation and our fightsnd continue to have overmatch over those. >> the new demand has been a boon for local jobs. 300 people worked here and today it's doubled. it's expected to reach 1,000 ployees by next year. it's significant for lima,
population 38,000, a manufacturing town that's lost an estimated 8,800 defense industry jobs since the mid-'90s. so this is a military modernization story. it's a manufacturing story,ut b it's also a people stor and i terms of that, the stakes couldn't be any higher. >>ol tell i take this personal, because not only was i a soier, i have sons who are soldiers. you know, luckily they have all come bk from afghanistan and iraq safely. but everybody in this facility and everybody that worked for me understands the end game, and that end game is soldiers will di we make mistakes. >> for "nightly business report," i'm morgan brennan, lima, ohio. >> that is an amazing -- >> it really is. >> -- increase in the number of tanks. just the fact that thd n is there, that they're reverting back to the good old-fashionedr ar tanks, the abrams. but that's an incredible step-up in production. >> itis really
i know morgan will continue to follow that story for us so we'll keep you . post before we go, here's a look at the final numbers on wall street. the dow was dow 63 points, nasdaq added 9, s&p 500 gained 1. for the week all of the major indexes posted some small gains and now the dow is up for seven straight weeks. and that will do it for "nieptly businesst" tonight. i'm sue herera. thanks for joining us. >> i'm bill griffeth. have a great weekend. hope to see you again on monda