tv Nightly Business Report PBS March 19, 2019 5:00pm-5:31pm PDT
>> announcer:s thi is "nightly business report" with sue herera and bill griffeth. not so speedy delivery. fedex cuts its pfull-yearfit forecast for the second time this year, and it is blaming a worldwide economic slowdown playing to win, geeoogl making a big push into the video game industry and it coulde change the g as we know it. > denimdebut. why the company that invented blue jeans is getng ready to return to wall street. those stories and more tonight on "nightly business report" for tuesday, march 19th. ood evening, everyone, and welcome. bill is off this evening. we begin witpa a c that has become synonymous with the global economy, fedex. e company, which ships more packages when activity is orrong, rd quarterly
results below wall street estimates. and the fure doesn't look much better, fedex lowered its full-year outlook for profit again citing a slowdown in globaltr e. they earned$3.03 a share. that sent the sto lower in initial after-hours trading. kate rogers has more on fedex's results. >> the big thing to focus on are, continued impacts of global slowdown on the company's business, the cfo sd in a tiatement slowing international macroeconomic cons and weaker global trade growth trends continue as seen in our year-over-year declines in fedex revenue. they low its guidance for the itfull-year w a weaker q4 range than anticipated, due to concerns over global trade growth. this comes afterg lower guidance last quarter, citing eaker international business, particularly ineurope. for "nightly business report,"
i'm kate rogers. so let's turn now to donald brotton for more on fedex's results and what those numbers may be telling us about the heth of the econom nice to have you here, don, elcome. >> nice to behere, thank you. >> all right. what do you make of these results? obviously the street thinks that it does not portend anything on the very good side for the global economy, but what about you? you say you're generally speaking an optimist. >> well, i really am. and this is the company that's going to deliver cee-comm in the coming years and decades. but the bottom line reis, the just following through on what they told us 90 days ago, which is if you look at air freight numbers, volumes in europe, you can blame it onbrexit, you can blame it on whatever, but the rates of volum c theretinue to decline. but more concerning is that since that last release 90 days ago, in the interim not only did
they get proved right about europe, buthe rates have declined in air freight volumes in asia have really stumbled and fallen. >> those two issues you bring up, asia, the u.s./china trade war and brexit, both of those remain largely unresoweed. may be getting a little bit of progress on trade. so that does not really portend a brightuture for fedex, does it, if it still has those two clouds hanging over it? >>well, it doesn't portend a bright future in the sho term. that's granted. but i would tell you the air freight numbers tell you i quite frankly china needs to do a trade deal more desperately than we do, which raises my confidence that oneill actually get done. and eventually one will and then the dominant player in that market, fedex, will be the biggest beneficiary. brexit willventually get settled and if it does,
hopefully we'll get relief and improvement in volumes there and again fedex will be a beneficiary. >> what do you do with the stock in the time tha we have left? >> we continue to be a luong-tem bull about the company and its prospects and as a rets stocks. if you look at how well they are managing their operations, their technology, they move things more efficiently and make more money on every package than they ever have. but they can't control the macro aneconomy. they control brexit and they can't control trump and the trade tar tfs andde war. >> indeed. don, thank you very much, as always. >> my pleasure. on wall street the dow snapped its four-day w after a report that chinese officials are pushing back on u.s. trade demands. as a result, stocks ended mixed. the dow fell 26 points to 25,887. the nasdaq rose 9, but the s&p 500 fell ever so slightly. bob pisani has more.
the markets whipsawed on a couple of conflicting headlines about u.s./china trade talks. the dow jones industrial average snapped a four-day win streak. stocks rallied early ahead of tomorrow's federal reserve meeting per the usual pattern. the fed iedelf has conduct studies on what is called the fed drip. it's the tendency for stocks to hours igher in the 24 preceding a fed announcement. the fed has found this phen benon puzzling it does exist. but the s&p 500 passed below the day's prior low late in the day and we saw heavy selling prsure pick up and the rally fizzled out by the close. stocks have held up very well recently. crude oil prices are hovering near four-month highs and there's definitely hopes for a deal. we're getting very close to the fina stages of negotiations. recent headlines suggest the u.s. and china are inery tense negotiations. china wants assurances that the tariffs will be eli part of the deal and that's certainly a sticking point.
u.s. treasurely secretary steve mnuchin still scheduled to go to beijing. china's vice premier is slated to travel to washington the following week, so negotiations are really intense right now. for "nightly business report," i'm a bob pisanithe new york stock exchange. there are new developments tonight relatedbo to ng. the department of transportation hassked its inspector general to audit the faa's certification of the boeing 737 max following two fatal crashes involving the aircraftin october. boeing says it will fully cooperate with the audit. separately, there are reports that former delta executive, steve dixon, will be nominated by the white hou to head the faa. as bob just me federal reserve policy makers began their two-day meeting today. the central bank is widely expected to hold interest rates steady when they announce their decision tomorrow. ahead of that decision, steve liesman surveyed marketwatchers to get a sense of where they see the market and the economy headin >> as fed officials huddle to
set interest rates at their march meeting, aew survey shows wall street preparing for slower u.s. growth this year and some thinking theig fed even cut rates down the road. the cnbc fed survey for march sees growth slowing to 2.3% from 3.1%n2018. bumping down again in 2020 to 2%. it includes economists, strategists and fund managers and point to slower global growth and trade tensions as thd g threats to the u.s. expansion. the two could shave more than half a point togethe off o growth this year. >> if the global economy is still in difficult shape, i don't think the econo is going to snap back that much. i think the economy is in a little bit more trouble. >> on the other side are those in the survey who are more optimistic because they think the tax cuts this year could continue toeler additional growth. >> it'c to ev that all of the beneficial tax s cuts on ient took place in a six-month period. these are multi-year projects and take a long time to be
planne executed, delivered, and then incorporated into business >> bringing down growth forecasts, respondents also brought dn their tlook for rate hikes from the fed. at the height of the bull market respondents thought t fed would hike rates as many as three or four times in 2019. that's been pared back where barely a one-quarter point hike is barely expected. next year most are betting on a single hike, but 35% think the fed could even cut intert rates. so the fed is seen as on hold for now but investorsre on the lookout for whether more than ust patience is needed for the central bank. for "nightly business report," i'm steve liesman. the news tonight takes us to thmidwest, which has seen devastating and historic flooding. most of nebraska is under a state of emergency. according to some early estimates, nebraska's agricultural sector could face nearly a billion dollars in damage and loss. agriculture accounts for 20% of that state's economicti ty. livestock accounts for nearly
60% of nebraska's agricultu revenue. and some say flooding could planting rmers from txt year's feed crops. it ise to take a look at some of today's upgrades and downgrades domino's pizza was upgraded to overweight from neutral at jpmorgan. the analyst sites the potential fo double-digit sales growth. the stock was up more than 2% to $248.76. union pacific wasdowngraded to hold from buy at luke capital markets. the analyst cites the problems posed by the flood in nebraska. e price target is $182. the stock fell more than 3% to $160.75. noble energy was upgraded to buy from neutral. the analyst cites the comphy's free c flow. the price target is $29. the stock was up a fraction to $24. coming up, big tech is making a big push into video. we'll explain.
the top antitrust democrat is calling for the ftc to investigate facebook. f the house judiciary committee's antitrust subcommittee wants to know whether the sial media company's conduct violated antitrust law. a in "new york times" op-ed the congressman encouraged the tft e a tougher stance against the country's largest tech companies. he cited the cambridge analytica scandal and facebook's handling of user data among other issues. well, there is big money to e made in the video gam industry, and google wants a piece of it.e th tech company made its inteion known at the annual game developers conference in san francisco, which is where we
find josh . >> to build a game platform for everyone. >> google's ceo took the stage today at the game developers conference in san francisco, where he announced his company's big push into the $135 billion video game market. it's called stadia, a new game serve for devic running google's chrome browser. and google hopes it will up-endiup-end the traditional video game market. it means fans will soon be able to streamx, comp high-level games over the internet right to their phones, tablets and televisions. no need for pcs or expensive game consoles. google executives say stadia is a game-changer. n >> as we said our presentation, we want games to be available for everyone. without the barriers or the limitations of the hardware that
they may have in their homes, we'll take care of the hindware our data center. all you need is a laptop or a pc or a tv to stream to, so you don't have to have that expensive custom hardware to get the best possible game experiences. over me, we think that that will dramatically increase the game audience for everyone. >> google isn't saying exactly launch, only wil that it's at some point this year. the company isn't yet detailing the busthess model . will it be a subscription? or will google take a portion of all proceeds spent on stadia. there's plenty of competition whenom it to video gaming. microsoft is eteloring this nology and so is amazon. analysts say one question is whether the big game developers now buy into this vision and partner with google. that could mean giving s upe of their game's proceeds. is that worth it to potentially reach tha more gamers around the world.
for "nightly business report," i'm josh a media milestone has been reached. for the first timeor households subscribe to a digital streaming service than to traditional pay television. according to a new survey deloite services 69% subscribe. 80% subscribe to internet video only netflix says it has no plans to make its shows and movies available on apple's upcoming video offering. ceo reed hastings says he wants customers to watch netflix' content on its service. joining us now brett sappington. nice to have you here. welcome. >> glad to be here, sue. >> ts is suc a fascinating space to me and it's one where ew entrance to it all the time. you say there will be a number of winners in the space but y single out netflix.
why? >> netflix is the leader.ey e the dominant leader by a significant margin. over half of u.s. households have a netflix subscription right now, and that's significantly more than anyone else. the next closest is amazon. >> what about apple' entry into it. do they have an uphill battle to height?th 're very, very innovative company certainly and they want in on this space. netflix doesn't want to do business with them in this particular niche at this whpoin. does apple have to do? >> well, i thi anyone entering the online video space right now for subscription services, everyone has kind ofup an ll battle to try and rival hulu, amazon a netflix. but there's no company perhaps han 's out there other maybe facebook or others that has a betteruc path toss than apple. apple has iphones, they have itunes, they have smart watches. there's a number of ways to both
get services to consumers and to omote their service. >> what about content, does it come down to who can create the most original content, or ds it come down to who can aggregate the content from other players or maybe both? >> it realloes come down to content. you don't subscribe to a service unless you interested in watching what it has. for apple to be successful, it needs to have good distribution and it needs to have a unique reason for consumers to pick them either over other services or in addition to the otherha services they pay for. >> what does netflix have to do to maintain its dominantthreat? as we mentioned, apple is a very innovative company. aot of companies that are in this space,heir bread and is innovation, so what does netflix have to do to stay in its lead position? >> they nuve to con to produce good content. and they have proven very adept
atoing that. in fact what we've seen from netflix is ar num -- a significant moerg portio their library has gone from movies and television shows to original content and original programming. they're winning awards. they're gaining subscribers both here and internationally. so they just need to keep up that momentum. it's going to be difficult, paicularly with a number of known brands entering the market. >> on that note, brett, thanks much. brett sappington witar pk associates. well, the other shoe drops at dsw, and that's where we begin tonight's market cus. the shoe retailer reported a surprise quarterly loss. analysts had been expecting a profit. the company cited hire overall expenses and an irease in inventories. dsw's ceo also announced a rebranding effort that includes a name change to designer tobrands. the fell nearly 13% to t $22.09. s a different story for michael's.
the arts and craftsai rr reported better-than-expected quarterly earnings that helped offs guidance below consensus. the company plans to open 24 more stores during the new fiscal year. the stock wasp more than 8% to $12.79. goodyear tire plans to cut 1,100 jobs in germany. the company says the decision i part of its plan to modernize manufacturing facilities. the move follows ford's announcement just a few days ago that it plans to cut about 5,000 jobs in germany. the stock closed up a fraction to $17.92. weak sales data i sapping the energy out of the shares of monsterbeverage. a wall street analyst citing nielsen data said s es were down more than 3% in the week that ended march 9th. rival energy drink maker bang saw sales rise that same week. the stock fell more than 4% to $57.92. levi strauss is credited with creating the first pair of blue jeans. the company is one of themi
nt forces in the industry, and investors will soon be able to buy shares of the denim pioneer. courtney reagan has more on the company's upcoming ipo. >> investors can invest in more than just 501s. they are the top seller of jeans in the world and its wall street debut comes along the industry.in competition is stiff from the likes of wrangler and old navy. rival wrangler parent company, vf rporation, is spinning off its jeans wear business into a new public company. and gap enninc. is spinff old na i own publicly traded entity. this comes at a time when jean sales areorast to improve globally, though at a slower rate over the past f de years. one challenges is athleisure. >> it is a concern for the category broadly speaking.
however, with that said, i think levi's in many ways defines the category. >> as consumers buy more stretchy, casual clothing, companies including nike, adidas, lulu lemon, under armour gain share in th u.s. gap, j. crew, bananali rep lose apparel share. ret npd sees the trend turning, forecasting women looking to s place yoga pants with je this year. >> dim is one of those categors tha will cycle in and out of popularity. in recent times it's been experienng an upswing. >> that's good news for levi's women's business which is less than o30% sales but growing. it's also good for the competition. american eagle global brand president chad kessler say his brand is number one for women i the u.s.and, quote, growing rapidly. he expects significant growth to nd tinue in both men's women's jeans this year. so why go public now?
levi strauss says the offering will give it more financial options, but experts point to another t motivation f dual-share class ipo that gives dthecendants of the founders family 10 class b votes to every 1in vote of the class a stors, or nearly 81% of the voting power. investors hope that history of profitability and sales can continue for years to come. for "nightly business report," reaganrtney coming up, is the item listed on that e-commerce sit re or fake? with the u.s. and china in the middle of a trade war, it might be harder >>peloton was hit with a $150
million larouit. a of music publishers allege that the maker of video streaming exercise bikes used more than 1,000 songs from well-known artists without si perm. the publishers say peloton failed to license songs from the comp and that resulted in a loss of income. peloto says it is evaluating that complaint. as the u.s. and china continue their trade war and it heatup, in fact, chinese nationals may have found a surprising way around the tariff, increasing the number of counterfeit goods according to the fbi. china is behind an ever-increasing number of fake products and is now targeting american trademark recds in a quest to gain access to e-commerce sites and american consumers. andrea day has the story. >> reporter: this is the federal inspection station at jfkt, airpor massive warehouse where almost every package coming into the united states through new york city must pass through.
>> we're talking about, you know, anywhererom 800,000 to a miion pieces ofail a day. >> reporter: that's b2lion worth of legitimate trade in just this past fiscal year. frank russo is the jfk port f direct u.s. customs. the mission keep the real goods flowing and stop imposters in their tracks, a challenge like neve >> we've seen a big spike certainly of just volume. >> reporter: from guns, jewelry andits. just in the last 72 hours, all of these products came in here. >> absolutely. >> reporter: so what's behind these doors? room.s is our most secure >> reporter: the room load wi potentially kourngt fit a drug more. >> everything from pharmaceuticals, tramadol, oxy codeine, ecstacy, to counterfeit ney and counterfeit i.d.s. >> reporter: fueling the spike, e-commerce and smaller packages headed straight for the consumer. >> an incredible uptick in
e-commerce. >> reporter: and some of these new super fakes, he says, are so impossible to st kpo ll the difference. >> was this on its way to a consumer? >> probably. somebody ordedt online. >> fake or real? >> fake. >> where are we seeing most of these coming from? >> certainly china. one part of the world where we're seeing an ever-increasing number of counterfeit goods. >> reporter: we wanted to finding out what's behind this virtual epidemic of fakes coming in from china and howan so are winding up on e-commerce sites for sale. >> it's driving up cost o for clients. >> reporter: diane specializes in trademark law. she says imposters are trying to hijack her clients' luxury brands by duping the u.s. patent and trademark office or uspto so they can register as the brand on sites likeamazon. >> they file a document with the trademark office that says ourm il address has changed. then they go over to the amazon brand registry and say we are
the owner of this mark and they give their e-mail. amazon looks at the uspto records and confirms the e-mail. at that point amazon gives them access to all of theirtools, as the rightful brand owner. with access to those tools, they can take down and they can ensure that their own counterfeit product is sold on oamazon. >>ou're saying it could be as easy as just changing an e-mail to start this process? >> i'm saying it is as easy as changing an e-mail. >> reporter: amazon tells us in part, wov r suspected counterfeit items as we become aware of them. amazon's proactive technologies and services for protecting brands, incding brand registry, are increasingly effective. as a result, bad actors are attempting to find new ways to abuse our protecti w. we areking closely with the brands, the uspto and others to continue to strengthen our protections. >> it's unbelievable h easy it
has become. >> reporter: when an e-mail address is changed, the trademark office sends out an alert to the old address to confirm, but they can easily be missed or even ignored by a brand. >> for my clients e,alon i received about 12 or 15 of these e-mail alerts. >> every day i come in and i nd a newproduct, a new product category that counterfeiters are producing and faking. >> reporter: steven shapiro is he unit chief for the fbi's intellectual property rights unit. >> they'll communicate with the patent andicrademark o as if they're the actual brand holders in an attempt to change the contact ioinformat >> reporter: and as trade wars intensify, he says criminals are looking to e-commerce and sellingny way they can. >> there are some that feel as tariffs increase and other policy issues come along, that counterfeit is seen as an alternative route towards making additional profits. it's very difficult to monitor
every single seller operating on these platforms because they are massive and do have millions of transactions a day. >> the uspto tells us it takes the issue offraudulent, unauthorized and improper submissions very seriously and is wor nng right to identify those filings and stop them from being processed or causing any harm. i'm andrea day fortl "ni business report." and that is "nightly business report" for tonight. i'm sue herera, thanks for joining us. we'l