tv Nightly Business Report PBS March 20, 2019 5:00pm-5:31pm PDT
>> announcer: this is "nightly buness report" steady as she goes. the fed signals it may not make any moves on interest rates this year, cutting its forecast from two hikes to non aitrust fine. the european union goes after google. just the latest regulator turn up the heat on big tech. is this the price they pay for success? done deal. disney ctsses i $71 billion purchase of fox and noe hard work begins. those stories tonight on "nightly business report" fo m and we do bid you a good evening, everybody, and welcome. it was decision day for the federal reserve with a twist.
as expected, the central bank kept its benchmark interest rate ecchanged. what was not ed was a strong signal then that there will be no rate increases this year and maybe only one next year. investorsreathed a sigh of relief immediately after that announcement was made. the dow recovered from a 200-point decline but word from president trump tha. tariffs against china may remain in a place frolonged period took a toll. by the end of the day the dow closed at 24,745. steve liman has more on the fed's decision from washingto for the federal reserve in a series of major annouements ter its march meeting kept interest rates on hold, do downgraded i economic outlook. the members had previously
forecast two hikes this year. they're gone now. they s decided top reducing its bancesheet. for a central bank that moves policy slly, it was a rapid about-face for a forecast oh strong grond a rate hike as recently as december. despite the changes, chairman jerome powell maintained a positive outlook. >> the da are not currently sending a signal that we need to move in one direction or another. participants usually see a growth of 2%, unemployment belo, hey see inflation remaining close to target and they see growth, as i said, around 2%. so that's a positive outlook, it's a favorableoutlook. >> still the fed downgraded from 2.2% to t2.1%s year and powell highlighted risks to the economy from global developments. >> you see slowing global . grow there's no resolution of brexit, there's no resolution really of the trade talks. these are ongoing risks.
we're also carefully monitoring what's happening with u.s. growth. we called that out in our statement, that the litedata that we have do show a slowdown. on the other hand, as i w mentione see the underlying economic fundamentals for growth this year astill very positive. >> finally, powell noted that downward pressure on inflation is a p majorssure on the fed and central banks around the world but no hint from powell about what the next move is up or down. he gave the car impression today he doesn't know either. for "nightly business report," washington.iesman in let's turn now to art hogan for more analysis on the fed, e economy and themarket. he is chief market strategist at national secu. welcome back, art. >> hey, sue, thanks for having me. >> you say this is a bold move. i guess the question isop in yo ion was it the right move? >> well, it's hard to say. you know, it's the three things i think about here, i really feel like jay powell didn't need to actually remove both of the dots for
2019. plen more meetings in front of him that he could have done that so that's where it reallyets bold. that's where it exceeded expectations. this fed made a pivot fro being auto pilot hawkish in december to patient in january and now they're even more patient. what does this tell us? it tells us the fed is at neutral, literally at neutral and the next move could be a hike or a cut in interest rates. my guess is the next move is a hike. t andnk that probably comes in the first part oft 2020. but riw the fed has reinforced the fact that they're really patient and that's probably a tailwind for the market. he>> so what doestock market do with that? clearly for wall street, no more hikes at least for the foreseeable future is a good thing, but they alsodowngrade the forecast on the economy. that's not such a good thing. so where doehe stock market go, do you think? >> i think you really would rather have the fed tightening rather than cutting their rates.
we know the first quarter is likely going to be slower than the first quarter of last year. we hope the second quarter picks up in activity. we don't know that yet. i think what jay powell was speaking to is the global economy has slowed down and we have no resolution on brexit and the u.s./china trade war. i think if any of those things turn positive. for example, if we get a u.s./china trade deal, i think the economy picks up in the s d second and third quarter of this year. the fed may have to hike again, it m happen thisyear, but it's not in the cards. >> as you look at the market as a longer term investor, how do you handicap this given the headli risk that you just outlined? >> we need a trade behind us tk the can earn $170 for the s&p 500 this year. that's what o base assumption is. if we don't do that and escalate i think this market is pricey. our base case is we'll get a trade deal done. unfortunately we're going through that back and process which seems like it's the end of the process, not the
beginning. getting ainrade deal b us, we think this market can move higher than we are right now, we just need to get in the rear-view mirror. >> all right, art, thank you. art hogan with national securities. european union officials say they are willing to grant a short delay for britain's exit from the bloc but it comes with ions. they want parliament to approve the withdrawal plan that has already been rejected that increases uncertainty just days before the uk isul sch to leave the eu on march 29th. the european union has ordered google to pay $1.7 billion for agentitrust violations. they sd google abu its position in the online advertising market. >> if you have aravel website or a news website and you want to sell the advertising spaceth next t search that you can do on your site, you need a broker. d google is one of the absolute biggest brokers in this
market,nd they misused their dominant position to make sure that nos riv were able to compete in this markeor advertising on new sites, on travel sites. >> in response, google's parent, alphabet, says today it has already made changes to its products and that it plans to make additional updates as well. the tech giant and othe ind under pressure here in the u.s. so what does that mean for the tech industry? ian sharer joinss now to talk about that. ian, welcome. it seems tt europe is taking the lead on all the talk of tech andn on big possible breakup of big tech. what do you think will play out on this country's soil? >> you know, it's going to be really interesting. i think tre's going to be an ongoing conversation on capitol hill where they try to understand the basics of how technology works.
th've learned they have a lot of education to gough. i think at some point there's going to be a test, whether it's an attpt to see what a breakup of google or facebook could look like and to see what happens to the rest of ech industry. but there's going to be a lot of especially from the tech industry, who says, look, we're getting all of this pressure andere don't d it. >> here it has happened again. it's happened in the past. technology companies or compies on the cutting edge of some type of innovation getay ou ahead of regulators and lawmakers. it happened with at&t, it happened withmicrosoft, and now it's happening with a lot of these faang stocks. what's your expectation not just for what the regulators and lawmakers are going to do, but how the companies w >> well, they need to get in front of this as much as they can. there's a lotf things that have been put out there. i think senator warren has caused af lot conversation that probably would not have happened otherwise or taken a
little longer bo -- by calling >> are this regulations that wouldom give them space between the regulators and lawmakers so they tone down the rhetoric? >> they could answer a lot of these concerns the things that right now these companies are getting a lot ofss pe from all sorts of places. and they're kind of responding to some of it, but the larger problems still remain. we're still not convinc that the election interference that happened in 2016 won't repeat. we're still not convinced that these companies are not acting monopolistically and's still ongoing concerns they are not protecting our data correctly. if they can't answer those types of questions, they're going to have a bad dayet s point. >> very quick lly in the 3 seconds we have left, if it came os perhaps a breakup, wouldn't thatr more innovation?
we have seen that in the pt as well. >> that's definitely an argument and i think that's where you're starting to see people like ard but warren push t that's not a guarantee. if we just break them up for the sake of breaking them reup, w causing trouble in the economy. we're not actually being thoughtful. th's what's important, we need to be thoughtful if we're ever going to go down tha path. >> all right, ian, thanks so much. >> my pleasure. so with all the talk about regulations and laws to rein in some of these tech giants, is wall street's so-called faang era coming to an end? if so, where does nearship come from? mike santoli is staying le at the new york stock exc n that. you don't buy the notion that the faang era is comingo a close? >> well, i do, bill, think it's a lile premature to say it's coming to a close. what we have seen is a little fracturing of ang. if you look at facebook, to a lesser degree google's parent alphabet, those stocks underperformed for a lot of last
year. facebook h has its valuation punished to some degree because of all these concerns. at the sone time, am netflix, these companies that are not really using your private data in a way to sell to advertisers but selling ayo service thaare purchasing and you wish to, they have performed better. so there's definitely been rethin exactly how durable some of these business models are. >> so if indeed we do see action against some of these companies or regulations, where do you see new leadership kind of emerging? >> you know, sue, it's very difficult to conceive of new leadership that is exactly asnt domis these companies, because i do think there's an argument to be made that these sinesses are in some sense, they tend toward natural monopolies. they have these network effects that gives them power. i think they would probably, if they did get broken up or recede in the market's favor, probably health care is the place to look. whether it's medical technology services, you'v already seen it grow to a larger
portion of the market value of the s0, so perhaps that is the way to go. we've gone long stretches of time in the market without a single dominant cohort of companies that was really driving returns. >> but going back to the faangs for a momt here, you have to admit if there are to be regulations or some kind of a law, even ifhere's a breakup, that is going to put a crimp on their profitability g forward, isn't it? >> i would completely agree with that. not onl overt regulations or breakups or lawsuits, but also just the chiing effect i has on these companies' ambitions down the road. every one of these technology companies probably figures it has to maneuver for its next act, whether it's self-driving cars or other services. are they going to be permitted to make additional auisitions the way facebook has done so well over the years or expand into those other areas aggressively. i think those tngs veryong term should be on investors'
radars. >> mike santoli at the new york stock exchange, thanks, michael. it is time to take a look at some of today's upgrades and downgrades. fedex was downgraded to neutral from overweight at jpmorgan. the firm cites rising labor costs andotential pressure on operating margins. was the price target is $202. the stock fell about 3.5% to sony was downgraded to hold from buy at jeffries. the analyst cites concerns about a peak in game profits. sony'sinability t exit the smartphone business. the price target is 50.70. the stock foal $43.28. dollar tree was upgraded. the analyst cites a recent meeting with management which increased his cfidence in the company's plan.
the price target is $117. the stock rose a fraction. this shrine of hope has been built tside this now closed gm plant that has president trump tweeting. i'mrank holland, i'll have local reaction to those tweets and the closure coming up there are reports tonight that the fbi has now joined tal crimnvestigation into the certification procesof the bo 737 max. as first reported by "the seattle times," the fbi's seattle field office is now part of this investigation because of itsxilose pty to boeing's 737 manufacturing plant inon
re the investigation is being overseen by the justice departme and carried out by the transportation department's inspector general. lis latest report sent boeing stock initialer in after-hours trading tonight. oil prices settledt a four-month high after hitting $60 for the time since november. government data showed a sharp decline in oil and refined fuel inventories. that sent the price of domestic crude highert though settled just below that >$60 level. optimism among the nation's ceos is cooling off. according to the latest survey, chief exe atives concerned about global economic growth. ceos now see the economies growing at 2.5% this year and's lightly down from the earlier estimate. the disney and fox merger is officially complete, and it could mark the beginning of a new eraor hollywood. but integrati t thewo companies could prove challenging. julia boorstin explains.
>> reporter: disney has officially acquired fox's entertainment diassets, inclu its movie and tv studits with i avatar and x-menra fhises along with national geographic and fx and an aitional 30% stake in hulu. these assets building disney into ah behemoth wre content to stream direct to nsumerso better complete with digital giants like >> for everything to go seamless and everyone to be a winner, that's probably a little unrealistic. netflixve the years did spend, spend, spend. >> tiiger w in a note to employees today, i wish i could tell you the hardest part is behind us. that closi the deal was the finish line rather than just the next milestone. what lies ahead is the challenging work. it isn't just about integrating the two companies but the
launching of the direct-to-consumer streaming plus.e, disney it's expected to include new, riginal exclusive content plus disney's library. they will unveil the details of the new service which will feature star wars and national ographic at a preview day next month. it remains to be seen is gen z and millenials actually want to download somethi calledisney plus. does that remind them d of thei childhood so they like the idea of something more edgy, which is definitely what netflix provides. >> as disney doubled down on on-demand content the remainder of fox is focused onive news and sports. looking to benefit from the political news cycle inharp contrast to have disney's more timeless content. for "nightly business report," i'min julia boor the fda approves the first postpartum depression drug. that's where we begin tonighs mark focus.
sage therapeutics is me company the the inable drug that treats this condition. it will only be available through a restricted program because there arebo concerns risks, including excessive sedation or sudden loss of consciousness. two clinical studies showed improved symptomsnd at theg of the first infusion. the ceo says that is key. >> when you think about what we potentially are offering, rapid reonse, one-time therapy, getting women back home, we don't hear any resistance to that. in fact there's a lot of enthusiasm. in order for these women not to suffer in silence but to get better. >> wall street h has been anticipati this. the stock has been up 60% so far this year, but it ended the day down more than 2.5% to $152.46. general mills increased prices, a it paid off. the packaged food maker today reported higr margins, better-than-expected earnings and it is forecasting improved profits for this fiscal the company was also helped by
lower costs. shares rose about 2% today to $48.29. nexstar will sell 19 tv stations for more than a billion dollars to tanga and scripps. nexstar is in talks t sell two more stations in indianapolis. all three stocks fell. nexstar was off a fraction tanga and scripps was down close to 3% each. ford plans to n build a factory in michigan for autonomous vehicles. the new facilit e isected to open in the necessary two years. it's part of the automaker's plan to focus on se e-driving anctric cars. the stock fell 2% to $8.51. president trump traveled to ohio today just days after pressuring general motors to reopen a plant in that state. the automaker's factory closed earlier this month and the town of lordstown is feeling the impact. here'srank.
>> reporter: outside of this now closed factory where general motors made the chevy cruze, a shrine of hope left by some of the thousands of workers who made their living here. >> you just don't replacehese jobs. >> reporter: ryan mccabe, a husband and father of six w id off from the lordstown, la ohio, after 19 years. >> your family has worked at general motors, youras family retired from general motors, and you're the last one there. then all of a sudden it's all gone. >> rorter: gm closing this factory as it focuses more on trucks and suv sales of the cruze sedan falling by almost half over the past five years. mccabe took these pictures of thele last oning the assembly line. now he and thousands of other or jobs are searching at other gm factories. >> when general motors a mary barra tells us there's all these opportunities for us to transfer, it comes aoss aso cold and calculated because i know they have kids, i know they have families.
how would they react in the same situation as us?te >> rep lordstown is under reallocation and could reopen after september when gm and the unioer contract negotiations. but president trump, who visited ohio today, wantsnswers w. tweeting over the weekend, i want jobs to stay in the us want lordstown and one of the sst economies in our history opened ord to a company who will open it up fast. >> i'mlad he is supporting us and wants to help us. i just wishld he w come here and kind of see firsthand, random of just making tweets about it. >> reporter: the reaction from others in town is mixed, especially after a 2017 sech ere the president told local workers manufacturing jobs would be coming back. >> i think it's a little too late. i think he should have been on the bandwagonhen they first -- when they cut the other shifts and whe they announced that they were going to cut this shift. >> i feel like it's company's fault, not the
president's fault. >> reporter: the closure of this plant is expted to have a $3 billion negative impact on this region this year. at the sane time,acturing jobs here in ohio have grown more than 2.5% since january of 2017. still, the fate of this factory and mccabe remai unclear. >> we don't know if this is a temporary layoff or permanent layo. the whole unallocated status just kind of makes -- it makes it hard to gauge what to do, especially for people with families. >> reporter: for "nightly lasiness report," frank h in lordstown, ohio. coming up, companies arehe looking for next big thing in gaming. but are consumers willin? there was a legal setback
for german life sciences giant baer last night. a secondas jury ruled that its roundup weed killer caused a man's cancer.r baid acquire monsanto which makes roundup for $63on bil last year. we told you yesterday about google's big push into the growing video game market. today other companies showed off their new innovative devices that they hope will be the next big thing in josh lipton is in san franci >> if you move your body around -- >> reporter: some fans don'tan just wt to play video games, they want to feel like they're inside the game itself. that's the appeal of virtual reality or vr. a totallysi ive 360-degree experience. today here at the game developers conferenc in san francisco, one of the biggest players, facebook-owned oculus,
introduced the oculus rift s. >> it feature a much higher resolution display, which obviously makes the whole image a lot clearer and more immersive and features our touch controllers, which give you a natural sense of real hand presence, being abl to reach out and interact with the virtual wod around you. not just the big companies, startup magically sells mixed reality goggles where the digital content is integrated into the real exworl. fople, when i put on the goggs, i suddenly appeared like an old man to my fellow gamer, as we ran around the room and took shots at each other. for all the hype, this remains a relatively small market for now. analysts say only 6% of u.s gamers own a virtual reality or augmented realityheadset. in part they say that's because there still i't enough compelling content right now to motivate a lot of gamers to go
t and buy this hardware. and that's partly because othe rising popularity of games that are free to play, like fortnite, made byc epi games. it boasts more than 200 million registered players, raking in almost $2.5 billion last year. electronic artsal released r game apexen legds in early ry februa. 50 million playersigned up for first me in the titles month. analysts are watching electronic arts closely. if ape legends is a success, then other publishers, such as activision may follow suit and enthusiasticallyha embrace same free to play battle royale style. for "nightly business repor" i'm jos lipton at san francisco. finally tonight, it's time mer march madness. according to thecan gaming association, nearly 50 million americans are going to wager at coll $8.5 billion on the
college basketball tournament. this is first march madness, by the way, since the supreme court ovturned that ruling that effectively outlawed sports betting in almost every ate. here's a look at the final numbers on wall street. the dow fell 141 points, nasdaq rose 5, s&p 500 down 8. that will do it for "nightly business report" tonight. i'm sue herera. thanks for joining us. >> i'm bill griffeth. have a great evening. we'le