tv Nightly Business Report PBS March 22, 2019 5:00pm-5:31pm PDT
>> announc: this is "nightly business report" with bill griffeth and shue stocks slide. concerns mount that the global economy is slowing, and the major indexes have one of their worst days of the year. spring has sprung in housing. sales o register o their largest monthly gains ever, and there's one thing that's driving demand. digital divide. retailers in some cities want to ban cash. lawmakers say it's still king. those stories and more tonight on "nightly business report" for friday, march 22nd. and we do bid you good evening, everybody, and welcome. wall street connected some economic dots today, and the result was an ugly t endthe week. stocks fell hard because of weak data both here and abroad with
one report suggesting that recession.y be in and for the first time in years, the three-month t-bill is now yielding more than the 10-year note. that is the definition of an inverted yield curve which sometimes foreshadows a recession. he close, the dow industrial average was down by 460 points, closed at 25,502. the nasdaq was down 196. the s&p fell b 54. for the week, all of them were down a f ction atleast. bob pisani starts us off tonight from. >> what happened to our rally? yesterday at the high point thej s&p 500 wast about 2% away from its record buhigh. global growth fears have swooped right back in. remember the bold narrative, the feral reserve and the central backs.round the world, they the tariffs are going to go away. the chinese willtimulate their way out of the slowdown. and the europeans, well, the data is not going to get any
worse. here's what's going on. we do have a much more patient fed and central banks around the fed but that's not priced the president has made it clear, though, maybe immediate reduction in riffs, that's a problem. overnight we got difficulties monica lewins dismal manufactur. here in the u.s. we're continuing to see our own bond yields move to the downside. most big questions in the s&p 0 get 40% of their revenues from businesses overseas and that's why thislobal growth equation is such a big deal. so this weak global economic narrative stays with us.hi ats level it means stocks are veryco pricey. uple that with lower interest rates. that's taking a toll on the banks. they're all down 9% or 10%. meanwhile we've seen a number of these defensive interest rate sensitive sectors hit new highs. so real estate investment trust, historic high today. utilities, historic high today.
they tend to do well when rates are low. defensive names like verizon, pepsi,coke, they were doing well today. but the more volatile names, particularly tech names, so amd or micron, netflix, nvidia, they're on the downside. so the bull narrative is running up against economic reality. for "nightly business report," i'm bob pisani a stock exchange. so if the global economy is slowing and interest rates are on hold,bl you're pro on the hunt for field. looking for the best places that will give you a little bit of income. dave joins us, managin director of etf.com and is here with some ideas. good to see you, dave, welcome. >> thanks for having me. >> you say the way investors sh think about this is yield risk. so we divided your different picks into low risk to high ssk. so let'srt with the first one, which would be low risk. that's the vanguard s&p 500, voo. why do you like that t >>nk a lot of people look
to traditional distdend-paying ks as a safe haven when you've got a low interest rate environment like this. thes s&p 500 pout a 2% dividend right now. for every $1,000 you invest, you're getting $20 back in dividend. that's been a consistent rate of return for many investors. it's a good thing to thinken abt ou're looking at low interest rates, particularly in the long bond. >> in our moderate risk category you've got the super dividend u.s. etf div. you're going to get a better yield but pay for it as well, right? >> yeah. so where something like voo, that s&p fund might charge four basis points or 0.4% a year, dis in the 48% basis range, about half a percent a year. you' also getting a much more risky portfolio. it's holding small cap stks, midcap stocks and only holding 40 or 50 stocks at a time. so it's a more concentrated portfolio. but what you get is a yield of about 7%.
that's a huge uptick from the regular owned s&p 500. and i m you want to e aggressive and can sleep at night, you picked for the higher risksishares mortgage real estate rem. that includes like limited partnerships, malls, things like >> yeah. so real estate has always been a place people go to get consistentincome. it's a time-honored tradition. you'll get yields of close to 10% there. again, you're investing in a very narrow corr of the market. similarly partnerships which ow natus pipelines, they yield about 10% too. again, you're taking much more risk and you'll be paying more p that half acent range for fees. >> what's the yield on that, very quick? >> right about 10%. >> there you go. dave, thanks so much. late today an item in the etws that wall st will be watching very carefully, justice department special counsel robert mueller closed his russia
investigation into possiblece interfern the 2016 election and related matters. the report is now with attorney general william barr, who according to dow jones said that he may send congress a summary those findings by this weekend. the white house says the presidt has not been briefed on the document. the investigation took two it resulted in felony charges against 34 people, including six whoerved on mr. trump's campaign. to the economy n and the housing market. sales of existing homes recorded one of their largest monthly gains ever in feuary. diana olick explains what was behind that jump ander wheth it can continue. s>> reporter: home buyer came back in force in february, responding to a sharp drop in mortganterest rates. sales of existing homes jumped nearly 12% compared with january, but we're still about 2% lower annually. >> as the mortgage rate beg to drop, there was evidently a strong pent-up demand. people wanted t take a
second-chance opportunity. there are also morechoices, more inventory choices, prices moderating. still good economi fundamentals of job creation. >> reporter: the average rate on the 30-year fixed started last year pretty low, boosting sales. as that rate rose, sales weakened. by november when it went over 5%,al collapsed. then rates began falling again and buyers reacted. the supply ofomes for sale has also been rising for several months, although builders are still not putting up enough int entry-leve homes. then there are overheated home ices, still up over 3% in february but gains have been shrinking and sellers arewl s coming down to earth as their homes sit on the market longer. the question now is can this higherac sales hold on. >> it is sustainable providedom the price growth moderates, and that is dependent upon increased supply so builders need to get active in buildingd moderately pri
homes because there is a sufficient demand for moderately priced homes. >> reporter: ifupply does not increase, home prices could start heating up again. even today'sag lower mor rates would not be enough to counter those gains. for "nightly business report," i'm diana olick in washington. the u.s. posted its biggest monthly budget deficit on record last month. federal spending for things like agriculture and traportation programs increased. the budget gap widened to $234 billion in february pushing the deficit f first five months of the government's fiscal year up almost 40% from a year ago. one day after the treasury department imposed new sanctions on north korea, president trump reversed them. the white hou s pressretary said today the decision -- explained the decision by saying the president likes chairman kim jong-un and does not think the sanctions are necessary. yesterday treasury targeted two chinese shipping companies accused of helpi pyongyang
evade existing economic sanctions. this latest policy directive comes about one month after the second summit between the united states and north korea. taxpayers may be getting some rethef. treasury department today said that it would waive some penalties for those who did not have enough taxes withheld from their paychecks last year. t will apply to those who paid at least80% of their liability during the year. as we reported, many were surprised by their tax bills because they failed to adjusat ithholding amount. and president trump said today that he plans to nominate economist steven moore to fill one of the two o vacancithe federal reserve's board. moore is currently a visiting fellow at the heritage foundation. he also served as an economic advisor to mr. trump during the 2016 presicantial aign. he is a defender of tax cuts and has been crical of policy moves made by fed chair jerome powell, just as he president has. time to take a look at some
of today's upgrades and downgrades. best buy was upgraded to outperform from perform. the an roois cites improved sales and earnings power. despite the heupgrade, stock fell a fraction to $70.11. chipotle was upgraded to neutral from underperform at webb bush securities. the anast cites channel checks hat suggest a more than 6% increase insame-store sales in the first quarter. the price target is $640 which is below today's closing price of $671.46. lululemon was downgraded to neutral from outperform also at webb bush securities. the analy cited a tougher economic environment for retail and the potential for lower margining as a result. price target now $155. that stock fell more than 3.5% today to $143.21. and biogen was downgraded by a numr of firmstoday, n cluding morgan stanley, which lowered its ratinge stoc to underweight from overweight.
the analyst cited the failure of the two alzheimer's drug trials that we told you about yeceerday. the p target now $210. that stock fell more than today to $216.71. still ahead, gm's new road map. >> gm is boosting production in north america, adding 700 new jobs. i'm phil lebeau in 'lmichigan. have the numbers and why gm is building more in the u.s. that story coming up on "n pinterest has filed to go public. the company releasedts ipo prospectus which shows it generated $750 million in
revenue, losing about $63 million. it h roughly 265 million monthly active users and it plans to trade on the new york stock exchange under the ticker syol pins. indonesia's national airline says it wants to cancel ide for boeing 737 max jet. it had ordered 49 planes, of which just one had been delivered. the total order was wortheay $5 billion. the airline says that it's difficult to cancel agreements once they have been signed, but that it will continue to talk with boeing. general motors is planning to hire hundreds of workers and expand production. thisfter the automaker idled plants in the u.s. and became a target of president trump for doing so. phil lebeau reports tonight from lake orion, michigan. >> reporter: our chairman and ceo, mary barra. gm's ceo calls it a major investment,is and it .
gm will spending $1.8 billion, hire 700 worrs and build a new electric car here in the u.s. >> it's going to come out in a year or two. we haven't released a specific date yet. there will be a lot more to follow on e specifics of the product. today we're really focused on the workforce. >> reporter: unfortunately for barra, to focus on gm's decision to end production at its planned in lordstown, ohio.ma while , but not all of those workers have transferred to jobs at other gm facilities, the lordstown plant remains idled, d that's what bothers the president. recently tweeting just spoke to mary barra, ceo of general motors, about the lordstown, ohio, plant. am not happy that it is closed when everything else in our country is boomin i asked her to sell it or do something quickly. she blamed the uaw union. i don't care, i just wantifst w open. >> you're all focused on that relationship. he has an agenda, it's about job
creation. i very much wanting the company to con to grow, continue to invest in the united states. we are committed. >> reporter: ultimately gm wants more efficient plants, something it struggled to do compared to ford and fiat chrysler. that means gm having fewer plants, being mor productive but more profitable. for gm workers at the lake orion plant, today's news is welcome. >> that's exciting. we had some doom and gloom there for a while, didn't know what was happening with our plant. >> i think it's a blessing. i thank god that we have it. it's been looking pretty gloome for utomotive companies, so we need this big time. >> reporter: with the uaw hintract expiring fall, gm's decision to end production in lordstown ohio and other points in the u.s isikely to be a point of contention in those negotiations. that's separate from any tweets gme president may send out pushing to reopen plants. phil lebeau, "ghtly business report," michigan. tiffany's ceo says the
future looks bratht. where we begin tonight's market focus. the luxury jeweler expects growth to resume in the second half of this year helped by a rebound i its e-commerce business. that forecast helped offset slightly disappointing quarterla s. the company also stuck to its 2019 revenue and profit targets. stocks were up 3% at the close. they had been down about 5.5% at one time but finished the day at 103.21. >> elsewhere sporting goods retailer hibbitt spos issue an upbeat outlook. same-store sales were also better than the company cited its e-commerce strategy and plans to close about 95 brick-and-mortar stores. the stock soared by 20% today to $21.70. nokia warns of possible su compliance . the network equipment maker revealed it is investigating transactions at teal lucent. investigators have been made
aware and it's conducting an internal investigation. the shares fell 6% to $5.88. former basketball star shaquille o'neal is joining papa john's board of directors. o'neal is also its brand ambassador and an investor in nine of its restaurants in atlanta. >> it was a great opportunito we want create a culture there now where people are loved, welcome and accepted. we don't wanto have any problems. listen, pizza is fun. everyone knows shaquille o'ne an know that i'm in a fun business. ant to get this thing back on track. >> the appointment comes as the pizza chain attempts to fix its image after its founder reported used a racial slur on a media training call last year. we stock price up 6% to $49.80. this weke's m monitor likes stocks that he says will benefit from a slowing economy. now, last time he was with us was a year ago in april of 2018. at that time he liked amazon, whic is up 22% since then.
he liked key corp which is down 24% and microsoft which is up 25% since then. john trainer is back with us, chief investment officer with peoples united advisers. john, good to see you again, en we >> good to see you, thank you. >> and you still like microsoft. how does that benefit from a slowing economy? >> well, you know, we had what i believe to be a good appreciationor where t economy was last year. we nev bought into the permanent 4%, 3% growth. we thought we'd b slowing. oo we erred on the side of owning companies like microsoft that can really take control of their earnings. they don't need a strong economy grow. that's the bias we had last year and we're actually very with that bias in portfolios right now. earning good companies that are growg their earnings because of good, core, organic growth. >> your second pick is johnson & johnson. it is a strong growth stock you say but doesnecessarily need a strong economy to continue to succeed because there are peoe
talking about our economy slowing. >> exactly. and i was very pleased to see, even though johnson & johnson was down today, it was down fractionally and act held up fairly well. one of the things you want to thisfor in a market lik are what are the stocks that really are not going down. that tends to give you a sense of where things are going. we think investors will really appreciate that good, strong johnson and johnson cash flow and we rewarded owning that stock going forward. >> finally, home depot, clearly they have done wells the housing market continues to bump along here. is this necessarily a bet on a better housing market? >> well, it's a bet on the fact that wet didn't think inter rates were going to go through the roof. so you saw rates come down today. that should be good for mortgage rates. home depot, you saw theho good ing numbers today. home depot is a beneficiary of new housing starts, but also individuals that are staying in theie and the home repair. so we see them at the crossroads
of two very good trends that we see going forward for a while. >> we will see what happens. john, again, thanks for joining us. john trainer with peoples united advisers. when ceo dan shulman smun off paypal from ebay four yrs ago, he made diversity, inclusion a priority. but as julia boorstin re his hr team couldn't tell him if they w fe payingrly across gender and race. >> i said rate away to that, that'slo ridi. we should know right away if we're paying equally or not. i wanted an outside study to go and look at this. we want to address this gap, if there is one, immediately. >> reporter: that first year the company found and fixed a $3 million pay gap. since then paypal h reviewed s 20,000 employees' pay and performance three times a year, with audits by two outside compants. here's how works. hr sets a pay range for each job category and location, looking
at demand forerin skills as well as experience. then managers evaluate p employeeformance across 12 categories, including collaboration nd and whether they have hit specific targets. >> i am being as fai as possible and as equitable as possible by using this very objective framework. >> reporter: but bias still creeps in, so hr works with consultants to compare pay across the whole company to make sure there's no gender or racial discrimination. >> so we don't leave it to chance and we don't leave it to individual managers to pick their favite people. >> reporter: three years after fixing that original $3 million pay gap, the company found and fixed a pay gap just a tenth that size, roughly $300,000. fixing the pay gap was a first . step now comes the harder part of closing the gender gap in p-paid management and engineering roles. equal pay seemed like the easiest thing to address right
away. you look at what percent of women were in leadership roles or active minorities were in leadership roles, that takes longer to address. >> reporter: now the company is focused on hiring and promoting more women and minorities into thosejobs. >> we've spent all this time hiring people. ife you don't h processes and thoughts about how welcome somebody feels when toy come a company, they churn out. >> reporter: paypal trains employees to be aware of unconscious bias. for positions at the director level and above, last year the company introduced a policy to interview a least one diverse candidate. shulman says these aren't just better for employees, they're also better for shareholders. >> companies that are more diverse perform better. i thought if we were going to be succesul and build a great enduring company, we had to have diversity. >> reporter: shulman says the advantages of this focus on diversity are not just bringing in a range of perspectives, but also thety to attract top
talent. for "nightly business report," i'mia jboorstin. and coming up, why cold, hard cash may never go out of style, even in our digital here's what we're watching for next week. this is highly anticipated on monday. apple eected to unveil that new streaming video service and a paid subscription news service. then on wednesday, as senate panel holds a hearing on airline safety following the deadly 737 hes of those two boeing max air crafts. on thursday, the final read on economic growth for the fourth charter is due, and that's what we're wg for next week.
and ahead of that applemo ay announcement, "the wall street journal" has reportedly agreed to join ple's new paid subscription news service. but other publishers have opted out joining, including "the new york times" and "the washington s"st." "the new york ticeo told reuters last night that relying on third-party distrbeution can dangerous for publishers who risk losing control of their own product. retailers are also goi digital with some merchants preferring to accept mobile payments ly, nocash. but lawmakers s areaying not so fast. frank holland is in philadelphia tonight with a look the >> reporter: philadelphia, the birth place of the american revolution, appears to be starting a new revolution against a cashless economy. >> there's a certain group ofop just, for example, in philadelphia that when these few businesses had gone cashless, they couldn't go in ththere. 're just -- that's not
correct. >> reporter: councilman bill greenly pushed for the laws to force most stores toontinue taking cash. businesses that have gone cashless say it speeds up transaions and makes bookkeeping more efficient. but greenley says it discriminates against consume who don't have checking or savings accounts. about 6% of the households in the u.s. are unbanked according to the fdic philadelphia is not alone. new jersey passed a cashless ban this week and new york city and washington, d.c., are considering similar laws. even in the heart ofilon valley, san francisco lawmakers are proposing an even stricter cashless ban thatnc wouldde amazon go stores. merchantsumers and have strong feelings about this new law. >> i feel like the cashless stores are exclusionary, and philadelphia has aretty high
poverty rate. so i think it's good for philadelphia in particular so that everybody has an option to shop where they hawant. >>s a business decision. as more an more regulations are put on th small business owner, it's harder and harder to operate in the city. >> they don't like runni a business in philadelphia, move somewhere else. >> councilman greenley says he doesn't believe this law will hurt existing businesses or discourage new companies from cophng to ly. >> i really don't want to make it sound like it's an anti-business thin i don't think it is. i think it's just a pro person, pro consumer. >> reportef all with cash.s in the u.s. are 27 with debit cards and 21% with credit cards. while ait d future may be inevitable, cash is still king. for "nightly business report," . and before we go, here's ana look at the numbers from wall street on this friday. it was a negative day. the dow dropp 460 points. the nasdaq was down 196.