tv Nightly Business Report PBS March 5, 2019 5:00pm-5:31pm PST
>> announcer: this is "nightly business report" with bill in the bull's-eye. target silced the doubters, answering questio investors had about the health of the consumer and the strength of thl reindustry. gaining steam. thter a slow stretch, home prices could be o verge of heating up again just in time for the spring selling next big thing. that's what some call the new generation of wireless technology. ft the biggest challenge may be securing itm hackers. tlose stories and more tonight on "nighbusiness report," for tuesday, march 5th. and weo bid you a good evening, everybody, and welcome. now, while investors do continue to watch and wait for developments on t trade, major retailers offered some optimism today for the markets,e and start with target and its strong
results for the critical holidae shopping on. ceo brian cornell said today that sales are clickg both online and in stores. in fact, the big box retailer had one of its best holiday seasons in more than a decade. its results also reduced some of the conrns that investors have had about the state of retail and consumer spenng. target stock rose about 4.5% today. courtney reagan takes a look now at how target is hitting the bull's-eye. >> reporter: two years ago, target told investors it would spend $7 billion, mostly its stores, remodeling hundreds of existi locations and building new smaller fmats at a time when many competitors wer closingores. investors were skeptical, but it workte. target rep a stronger holiday quarter and isca foreing a better profe full year than analysts expected. the retailer saw the strongest comparable fourth quarter sales
in a decade, driven by strong in-store shopper traffic and more than 30% online sales ow grth. >> the investments we made inen fulfil are connecting with the consumer. they're taking advantage of ordering onlineki and p it up in store. they're driving into our parking sts. there arp shoppers taking advantage of same-day delivery. l those elements are coming together. we talked about this a few months ago. our goal is to make target americs easiest place to shop and i think that's starting to happen. >> using stores as fulfillment hubs is getting shoppers online orders faster while lowerin costs. analysts are impress wed what target has doneut some wonder whether the momentum will carry on. >> the question is cannt they ue that into this year where maybe the consumer doesn't see as much benefit from th fiscal stimulus poured in last year. >> reporter: in august, ceo brian cornell said the u.s. consumer was among the strongest he had seen in his career.
while he still thinks consumer is healthy, his assessment isn't as strong a it was. >> consumers are shopping.yo ce still. strong consumer our outlook is that we'll see consistent results across 2019. so certainly we're going to watch it carefully. it's going to e and ow, but right now i think we're seeing a pretty consistent consumer environment. hat certainly showed up in our january results. >> reporter: the retailer hit a bull's-eye for 2018 and investors wait to see if its oan continues t hit the mark. for "nightly business report," i'm courtney reagan in new york city. and now to hl which reported better-than-expected earnings, revenue and tosame sales for that same holiday period. the ceo atriktributes the resul to the investment in its mobile app, brand partnerships and remodeled stores. it expects solid results down the t sent the stock up more than 7% in today's
session. but the rall retail was t not enoug lift the broader market even an secretary of state mike pompeo said he thought washington and beijing were on the cusp of a trade dole. it was a subdued dayn wall street, with the dow closing down 13 points to 28,806, the nasdaq fell 1 and the ss 500 down 3. believe it or not, this week will mark ten years since the start othe bull market. during those dark days a decade ago, no one really knew where the market would findn itself 2019 but here we are. the past ten years could lay the groundwork for the n ten. mike santoli has more. >> as the 10th anniversary of the climact march 2009 market bottom arrives this week, many observers are focusing on all the ways this period since the global financial crisis has been extraordinary. the worst economic shock75 i years felled huge financial institutions and ushered in the most aggressive bank sts ulus
efforter see mo striking is how difficult it's been for stockarket s. investor the s&p 500 sank briefly to on march 6th of 2009 and reached its closing low three days later. it has delered a ten-year annualized game of 10.78%. that almost matches the ten years following the 1987 sto a market cra the generational stock market low set in the summer of 1982. while in general markets don't follow a specific paern, a buyer of stocks at depressed levels after a dramatic collapse tends t enjoy gains substantially better than the 10% historical average. so what does this say about the prospects for the market from here? when 10-year rate of return has reached similar levels in past cycles, the bull mark was pretty far along but still had some life left in it. at the ending of a very strong bu market like the or 1990s, the trailing annual gains have been near 20%.
of course there are no guarantees an nasty market shakeouts are a feature. the 20% drop late last year is strategised by some as an early tremor of a more damaging downturn, for example. and it could be. but over the past decade, the bull has weathered several such tests and hasn't yet failed one for good. for "nightly business report," i'm mike santoli. and ten years after the start of the latest bull run, one hedge fund manager is now forecasting a downturn in interest rates. kyle bass st d today t expects rates to head back to zero next year because ue believes t. and the rest of the world will fall into an n,economic recess forcing the fed then to cut interest rates. so let's turn now to nela richardson to talk about where she sees interest rates heading and the market. she is a s investmentategist at edward jones. good to see you again, welcome back. >> thau. good to be here. >> you do not agree with mr. bass. you do not see a receson
ahead, correct? >> no, we don't see a recession that's imminent. for evidence of that, we look to the labor market, which is strong. we see wages growing. we look to manufacturing and we're seeing an expansion. we look at a healthy consumer, as you preface t with,t is still spending. for these reasons we see that the economy willontinue to grow, albeit at a slower pace than what we enjoyed lastyore. >> but you have to advet, w been ten years without a meaningful pullback in the market. yes, we had some corrections like we had in december, but we are overdue, don't you think, for something more of a pullback of some kind? >> thankfully for some of age is just a number. >> right. >> expansions don't die of old whatly kills an expansion sue. is the federal reserve. the fed has put their knives a aw least for now. they promised to be patient and pause rate kes. so we think that this bull market still has legs. there will be volatility.
we're returning to normal bouts of periodicvolatility, but we think stocks will continue to climb this year. >> tal me about valuations. there are knows that say that stocks are overpriced. mr. bass talked about that todas well. others think they're fairly pride. where do you fall on that ectrum? >> if you look at historical averages, they're right in line with five year and ten-year trends. we think they're appropriately priced. so in this market it's incorporate tor diver be diver an midcap but overall it's about having a diversifiedfo poo talking about the long-term retail investor. >> very quickly, la, a lot of your viewers are interested in investing f income. at this rate where do you go for income? >> well, there's good news on this front. because rates are so low in the u.s. but still high relative to
what we see abroad, we think that tre is real opportunity in short and intermediate bonds. that means that investors can hedge their portlios. they can be active bondholders, add that income without taking that extra risk from long-term bonds and long-term maturity to get the same yield. so that's good news for iome holders. so that's where we see -- that's what we recommend our clients go to short-term bonds, cds and intermediate bonds. >> on that note, nela richardson with edward jones, thank you. >> thank you. meanwhile, interest rates do play a key re in the housing market. today we got a little clearer picture of the winter market and some clues about what may be in store for thepring selling season. diana olick has the story. >> reporter: the 's home builders ended 2018 on a low note. sales of newly built homes inde mber were nearly 2.5% lower annually. total sales for the year were
only very slightly higher than 2017. the supply of new homes for sale also rose to nearly seven months, showing demand has weakened a a builders sitting on more unsold products. they have lowered pces some, but most builders are still focused on the move-up market, not the entry level, where demand is strongest. that they say is because of the high costs for land, labor a materials. buyers at the ending of last year were facing higher mortgage rates and that likely played into the weakness. the average rate on the 30-year fixed has since fallen, which could give builders a boost thi spring. home builder sentiment rose in february on th back of lower rates. but lower rates can be a double-edged sword. they helped fuel a strong run-up in prices in 2017 with some markets overheating. the gains in home prices have been shrinking since last april when rates began to rise. r wies lower again now, we could see home prices gain steam
yet again. home sales are off to a slow start this year, but me supply is coming on the market. unfortunately, the bulk of that supply isn the higher end, meaning wealthier buyers are more likely to get a bargain than those already struggling to afford their first home. for "nightly business report," i'm diana olick in washington. the u.s. budget gap widened in the four months of the fiscal year. the treasury department says the government ran a $310 billion deficit fromghctober thr january. a 77% increase from the same period a year ago. part of the reason is that tax collections fell and federaldi sp increased. now to china where that country's premier today outlined some of hiss co economic goals during than addre to th national peoples congress. eunice yoon has the story for us from beijing. >> reporter: china's premier acknowledged that the trade dispute with the u.s. was one of se challenges for china's
economy andaid this year would be a tough struggle. these are the numbers in china's version of the state of the union address. beijing has set the gdp target lower in a range of 6 to 6.5%. cpi is expected to be manageable at 3%. the economy will create 11 million n jobs, down from the actual figure in 2018 of 13.6 million. the premier said job stability wiic guide p so the deficit-to-gdp ratio was raised to2 spoke.8%. the budget will carve out 2 trillion yuan f bger tax cuts and lower fees. bank spending will be a priority and the government is green al lighting l bonds, 59% more than last year, to fund infrastructure. what was also interesting was what was missing from the report. no mention of the controversial made in china 2025 program has raised suspicions among china's trading partners, including the u.s.
now the report says one of china's top priorities is to promote high-qualityg manufacturnd strengthen technological innovation. so the language may be different but the ambition to become a echnological leader is the same for "nightly business report," i'm eunice yoon in beijing. it is time to take a look at some of today's upgrades and ad down. google's parent alphabet was rated a buy at needham. the analyst cites the value of youtube and the network effect where the addition of a new user addsthalue for users. the price target is $1,350. the stock washa up more 1% to $1,169.19. tesla's price target was lowered to $192 at barclays. the analyst cites rect price cuts and the closing of stores. the rating remains underweight.f the stol 3% to $276.54. still ahead, the next generation of wireless networks promise to be faster and do more, but are th safe from
fda chief scott gotieb is resigning. in a statement released this afternoon, the secretary of health and human services, alex azar says that gottlieb will be ping down next month after nearly two years at that agency. gottlieb is credited with leading the fda's charge against underage vaping and with accelerating some genericrug approvals. chinese hackers targeted niversitieswo dozen in the u.s. and around the globe. accord g to"the wall street journal" it was part of a scheme to steal research about maritimo tegy, something that is used by the military. the majority of universities targeted hav research hubs that
focus on that area. and cyber security experts are gathering at aajor conference in san francisco, and a hot topic this year is how to secure t coming wave of 5g .etwor deidre bosa takes a look at a strategy many will hope will keep the next generation of wireless connectivity safeer >> reporter:trust, always verify. that's the principle behind zerr t, a cyber security model anone of the wbiggest themes at rsa this year. it is the strictest approach to secund assumes every actor is malicious, giving access only on a realtimeas eed basis. >> this idea of zero trust is being abl to create security from your device all the way to t even have to care abot where i goes in between. >> reporter: secsaity experts y it will play a critical role
in the 55g landscape. it will also lead to more security dangers to turn these devices intoweapons. a potential ban on chinese equipment makers like huawei and zte won't alone keep amica's 5g landscape safe. instead they say the zero trust approach should act as an overlay. the stakes are high at rsa this year. not onlyill 5g connect more devices than ever, but our identities, our thumb prints, ices, faces, will be used to keep us secure. biometric screening comes with its own dangers. >> we need to take steps towards ensuring people's security. that means that individuals are going to have to give up some piece of information to make that happen. that could be a biometric, and i think in order to do that, that will make people more secure in the future. >> reporter: according to the security index, americans aren't opposed to facial recognition systems wn it comes to
security in banking, but they're far less willing to allow it for things like sporting events or direct marketing. experts say privacyonrns can be mitigated. >> we need to get biometric screening to get to a place where we are truly passwordlessa password responsible for 70% of phishing >>attacks. eporter: it is expected to cost the world $6 trillion annually by 2021. experts here say that breaches are inevitable and the i.t. world is focused on managing the ri. for "nightly business report,id general electric surprises investors, and not in a good way. that's where we begin tonight's market cus. ge's new ceo, larry culp, said the company's cash flow this year will beti ne, citing its struggling power business as a factor. the power businessill face headwinds for, quote, a couple of years.
ge began aassive turn-around plan last year in which it said it would cut its debt by billion and has been selling assets in order to do soy tohares fell 5% to $9.89, but they are up moreha 40% since hitting a low of $6.66 in ccember. en says gamer interest in electronic arts hit video game apex legends has dropped by half since launching last month. the investment firm notes that osex legends was still the second watched game behind rds rival, fortnite. ea noted yes that apex legends hit 50 million players in less than a month while fortnite took four months to hit 40 million. ea shares were down1.5% to $95.72. new data compiled by jeffries has revealed a steep deceleration in sales at revlon. revlon sales fell 15% in the four weeks ending on february
23rd and they were down 9% th overall i past year. shares of revlon as a result fell 21% today to $20.19. and discount retailer ross stores is doing something that other retailers are not it's actually opening stores right now. the company also reported better-than-expected earnings and revenue and announced a $2.5 billion buyback program but its guidance was not a a strong hoped for and that sent the stock lower in initial tr after-hoing. it did finish the regular session up a fraction. and urban outfitters today toed quarterly earnings expectations helped by double-digit growth in sales dom itsital operations. the ceo called the final quarter of the year afu succe one for all of its brands. the stock was volatile in initialafter-hours trading this evening. it did finish the regular session up a fraction at $30.35. coming up, why european auto executives are all
nissan's former chief has now been granted bail after spending months in a japanese jail. tokyo judge set bail at $9 million and said that carlos ghoan must remain in japan. he's awaitint charges t understated his income, charges he denies. found guilty he could face 15 years in prison. europeanuto executives say the potential for punitive u.s. tariffs on european car imports looms large over the industry. at the geneva auto show the ceo of volkswagen called it a major threat and a big unknown. >> this is a critical situation for us because mostlyprur
ium brands here in germany are depending on the import market of the uted states, so audi, porsche have significant market share there. >> president trump last year threatened to put a 25% tariff on c every import from the european union. those tariffs have so far not been imposed. officials are meeting this week to discuss that issue. and even as the threat of tariffs does cast a shadow over that industry, europe appear autokers are making a big push into electric cars,pi r up their plug-in models, many of which are on display at the geneva motor show this week. >> reporter: they are the models turning heads in geneva. electric cars and suvs of europe's aomakers are preparing to roll out. take bmw, it is vision c ising in 2021 and its ceo says that's just the start. what do we see in the next years? will it tick up definitelily. it's the future drive train for
the future of mobility. >> reporter: last year bmw, like most other edautomakers, tra tesla when it comes to selling evs in the u.s. while tesla is lowering the price o its model 3 down to $35,000, most of its models goes for far more, which i why porsche believes its new ev will attract luxur car buyers. >> we get very goodk feedbow for the tycon at the ending of theear and we have a lot of customer demand today, so we are looking forward to a presenter's car. >> reporter: low prices at the pump mean many are content to buy and drive gas cars. but that could change quickly. >> the world is getting greener and we ha to support that. >> reporter: when will we see most of these electric cars i rollino showrooms? we'll start to see it later this year and gradually it wil pick speed, with a slew of
electric cars and suvs hitting thetoad in the n two to three years. phil lebeau, "nightly business re the most expensive car ever made has beensold. this bugatti fetched nearly $19 million, including taxes. this particur model is the only one that will be made and it was designed to celebrate thh 11 anniversary of the company. the supercar will be delivered the customer by april of 2021. the buyer is not known, but cnbc report that it is a former chairman of volkswagen. > so who else can afford to buy a bugatti? how about the people who made "forbes" annual list of the world's billionaires just out today. amazon's jeff bezos has retainet his top s with a net worth of $131 billion. bill gates is number twro ding out the top three, warren buffett. this year there are more than 2,100 billionaires in a total with a combined net worth of $8.7 trillion. the average net worth was $4
billion. 1450 of the billionaires are self made. 252 are women, incding kylie jenner, who is now the world's youngest self-made billionaire at the tender age of>21. he took the title from mark zuckerberg who became a llionaire when he was 23 years old. and that will dot for "nightly business report" m sue herera. we want to rinding you this is the time of year your public television station thanks you for your support. >> we d thank you for that support. have a great evening. we'll .