tv Nightly Business Report PBS May 9, 2019 5:00pm-5:31pm PDT
. this is "nightly business report" with sue herera and bill griffith. >> land of confusion.tr presidenp said the deal with china is possible, but so are new tariffs and that resulted in a volatile ssion for stocks. >> geo political rumblings fro iran, venezuela to north korea. the number of hot spots on wall street's radar is growing. taking off. if you plan on flying somewhere this summer, get ready to open your wallet even wider. ose stories and more tonight on "nightly business report" for is thursday, may the 9th. good evening, everyone, and welcome. investors spent the dayrying figure out whether there will be a trade deal with china.go ations between the two countries are at a critical juncture withew tariffs on
chinese goods said to go into effect at immiate ght. president trump earlier today indicated that maybe there won't be a deal a stocks fell sharply and then there were signals that something might whppen and stocks pared their losses. all was said and done the dow jones industrial average fell 138 points to 25,828, but it had been down more than 400 o ts. the nasdaq slid 32 and the s&p 500 was down eight. bob pisani explains why the market was moving on every trade headline. >> stocks went on anotheroller coaster ride. today with the dow tumbling 450 points at sessi b lowsore rebounding well off the lows. >> the clock's ticking on a ea trade as the 11th hour approaches and the markets tanked onears that trade rhetoric was ramping up on both hides after president donald trump said broke the trade deal they had inlace at a rally last night, but the s&p rebounded quickly when he had received a bttutiful leer, those are his words from chinese president xi jinping and semis i
andndustrials which initially mbled on trade fears all bounced back on those comments and the semis were weighed down and carpillar's found w fairly modest at best. here's the bottom line, street is having a tough time with the outcome of the trade talks and if there is no tra deal, at least tariffs will not increase whileegotiationsontinue. we've been saying all week that a complete breakdown in trade lks with new tariffs in place for months would cause major problems for the markets and thatould easily drop the s&p into the $2600 range.rn out, ubs agrees with that and the report out yesterday ubs had a complete breakdown in trade talks could result in u.s. stocks dropping 12% to 15% and a that'sly the 2600 area with china stocks dropping even more dow 15% to 20%. for the most, the market is acting like the mostiky outcome might not be an all-out trade warnd it's the middle ground and no trade deal and no increase in tariffs if
negotiations continue and we'll see if that's the outcome. for "nightly business report," i'm bob pisani at the new york stock exchange. >> the chinese delegation is in washington for thept resn of those negotiations. the early word out of beijing is that they plan to play hard ball and president trump wasn't tipping his hand on the u.s.te st. kayla tausche reports. >> talks with china re-opened tonight after the dispute that the language had become public and vitriolic. president trum l isving his options open, praising chinese leadership, but scolding them for backing off their commitments. >> i have no idea what's going to happen. i did get last nighty a v beautiful letter from president xi, let's work together. let's see if we can get something done and they re-negotiated the deal. >> hiking tariffs on $200 billion in chinese goods from 10% to 25% effective at 12:01 a.m. and threatening the rest of china's imports, too.
>> it will be $325 billion at 25% and we're starting thatpa rwork today. >> trade isn't the only area the trump administration is rssping up pree, it denied china mobile license to do business in the u.s. and is a lookingt revoking licenses granted to chinese-owned carriers. the security of our next generation networks cannot be an afterthought. it has to be a top-level priority now. >> tensions simmer, this could be areakthrough or a breakup of the world's two biggest economic powers battling over trade. for "nightly business report," i'm kayla tausche in washington. >> so what happens to the markets iwe do g a trade deal with china and what happens if we don't? joining us to discuss this is art hogan, chief market strategist with national .ecurities. welcome back, a good to see you. >> thank you. good to see you. >> what are your expectations and what do you think the market reaction will be if, indeed, you are correct? >> i think the three scenarios,
e is the worst-case scenario is if we get nothing done and walk, aw and they escalate to the max on all $563illion, 25% and they retaliate with whatever they can throw atit, and i think the market really suvers in that case and the best case scenario is we have a beautiful deal. i think somewhere in the middle where we say conversations are continuing to be constructive and we'll wait twoeeks before we increase tariffs and hopefully tre are bumpsn the road this week and that's our best case and we hope that happens and any one of those three things can happen. >> you know, art, most of the viewers of thisre program long term investors. how should they view what's going on right now? t >> ink they should look at their plans and say i've got a good plan.n pla this is probably exactly what i should be doing, sticking to my plan. now, there is a case where you say this kind of volatility makes me nervous that keeps me up at night and i should stick
to the plan and 60% and stick to your plan and don't let news like this or any of the other things that become that sor of disaster of the week alter you from your long-term plan. >> if indd, they a uncomfortable with their exposure to equities, where would they recommend they reallocate? >> i think the most defensive thing right now in my mind is raising some cash, havi a higher allocation of cash. i only say that, sue, because i think a of the defensive areas that we run to like utilities and staples and things like that type companies are expensive and they're not throwing off very high yields andsa would rather you know, okay, i will spend until the end of this year with the 10% cash a that's as defensive as anything right now. >> we may be getting ahead ofnd ourselves let's make sure ce tariffs do go into place not only for thenese imports and china retaliates with some o their own. that's inflationary. how does the fed respond to that, do you think? t >>t's the wrong kind of
inflation and no economic benefit for those prices going up and those are fixed prices and not driven by supply and demand and the fed will have to take a step back and s how do we react with this and sometimes that leads to higher inpu cost and a lot of times what happens is it drags downmi eco activity. in both situations the fed's in a pickle becausey t like to stimulate economic activity and they might start staring down the barrel of hire than expected inflation and it gives people in the wrong kind of inflation. >> sure is. >> art, thank you very much. art hogan with nationalti secu. >> now we've been talking a lot this week about the various seors that could be adversely affected about the rise in tariffs and here is an unexpected industry feeling the heat. bicycle makers. elan mui is in south carolina for us tonight. >> rough 1,000 bikes a day roll off the assembly lines here as bicycle corporation of america.
workers spray the aluminum frames with special powdery paint, lace up spokes with the rubber wheels and attach theda pels and handle bars and all of these pieces, most of them come from china. >> from everything from the handle bars. >> the pedals and basically 100% of the components are all from china. >> these parts got hit with a 10% tariff when president trump and china started last year. on friday that could go up to 25%. arnold campbeller, ceo of kent international, said a direct blow to his bottom line. >> we've had no choice, but to pass these costs on to our customers and then the customers had to pass it on to consumers. >> we've gotbo lot of s here. >> yeah. we have a surus of inventory. >> the factory has beenil stockping parts in case the tariffs go up. they've cost the company $16
billion and that translates to money out of your wallet. a bike that used to sell for $150 at wmart now goes on $170. >> we're an american company. we don't know how it would be perceived that china is paying for this. we're paying for it. the factory has also hit the brakes on plans to expand. campbeller wants the white house to know that's at least 70 new jobs heren south carolina that will simply vanish. >> we believe in american production. we believe in the american worker. we believe in thetechnology, but please be patient. st the threats and please work and negotiateh wina. >> at this factory, american jobs are riding on a deal. for "nightly business report," im i'm elan mui, south carolina >> the conce is that an all-out trade war could dent global demand for oil. today domestic crudeov settled
$61 a barrel. >> now the global markets have undetandably beenocusing on these u.s.-china trade talks lately, but there arether geo-political hot spots that could have a big financial impact as well and we're talking about issues like north korea, iran, venezuela. joinin us right nowo talk tinosthat, chris con stan is with riverfront of investment. >> mike pompeo was talking about iran and the threats that have been coming out o that country are you as concerned about the potential hot spots or are we talking about saber rattling right now? >> well, look, from a humatarian perspective, obviously places like iran and venezuela, these are tremendously terrible humanitarian crises, however, from the global marketpe pective and from the perspective of all of us trying to figure out what's going to happen to stock markets after the future, the way these countries matter is through the mechanism and the price of oil,
and tor issue these countries is that or any opec country, actually, is that opec's ability to drive pricing and drive supply and demand has diminished in recent oears becaus western technology gains so i view places like venezuela and iran as being increasingly irrelevant to stock markets and th stock markets nd to look through these types of geopolitical affairs except in the near-term impact on a valuation multiplt >> w about north korea? news that it has fired short-range missiles and this evening say that they inteco to inue to do that? certainly, china wld have a reaction to that and the u.s. has already made some statements on it. does that threaten to derail these talks, the trade talks at this point or no? >> that's a really interesting question. i believe that neither n china the u.s. want any more amplexity in these talks than
whateady exists and the advent of north korea acting up again, ihink is an unwanted complexity for both sides and i think if y a take step back, this is very much in keeping with north korean behavior. y we haven't had a missile launch in 500 days and this is straight out of the north korean playbook and to me it looks like north korean saber rattling and they're probably a little b upset that the talks a few months back didn't yield any results and the u.s. administration walked ay and this is i think them saying, hey, remember us? we're still out there, but i'd ke to think that the u.s. and china are focused on the trade deal right now because i thi that's of utmost importance to both country's economies. >> and we will see what happens tonight and over the weekend. chris constantinos, thanks for joining us tonight. >> my pleasure. >> some new reports tonight on the u.s.ta economy. we with inflation which the fed has been focused on, of course. producer prices rose modestly in
april u .2 which was in line with expectations. inflation pressures at the factory level appear to be picking up. a separate report on the job market shows the number of americanss fing for unemployment benefits fell 2,000, a sign that the labor market remains robust. >> time to take a look atome of today's upgrades and downgrades. we begin with downt compo intel and it was cut from market perform to outperform atbemo capital markets and the analyst cited competition for amd which has been gaining market share lately. the pri target on intel now $50. that stock fell 5% to $46.62. ralph lauren was upgraded to outperform from sector performance capital and the analyst cited the prospects for gross margin enimprov and the price target $145. that stock rose 1% to $125.68. >> and also at rbc capital, shares of american eagle were downgraded to sector perform
from outperform. the analyst said growth itspects for its aries brand fell to 22.45. bie & fitch fell to neutral from web bush and the analyst cites concerns that promotions may be increasing and the miprice target fell, to 28.. still ahead, uber is expected to start trading at the new york stock exchange. tonight we look at hef losses and how it burns through ♪ ♪ ♪ ♪
♪ >> facebook'sco-founder is calling for a breakup of the company. in aew york op ed piece, christh hughes sai mark zucker beg has unchecked power and influence far beythd anyone in private sector or in government. i wrote that it was time for regulators to ste and today connecticut senator richard blumenthal said he agrees. >> i thi that facebook needs to be broken up. the acquisitions of instagram and whatsapp need to be unwound and there needs to be department of justice scrutiny about appropriate anti-trust remediest and remember, being big is not illegal. it's the misuse of that bigness.
>> zuckerberg today rejecte calls for breakup and according to the company, he' with government leaders in week. by the way, chris hughes has not worked fce ok in more than a decade, he liquidated his holdings andll that stock fraction in today's session. >> bloomberg is at their 45 a share. that is at the lower end of its toorget ran and shares are about to begin traded on the new york stock exchange tomorrow. c one of the bcerns for investors is trying to figure out when uber will turn a, profut for now we know how uber loses money and a lot of it. deirdre bosa explains. >> uber is a classic, two-sided marketplace and it connects drivers to riders through its app and for each ride a portion goes to the driver and the rest goes to uber and since its inception, uber's costs have far outweighed the revenue it brings in. there's taxes and payment fees and insurance, driver and rider
incentives and other operating costs. in 2018, uber actually lost $1.8 billion and the two years prior, it burned through nearly $5 billion. uber is also pouring money into expansion across the globe though it sold its rush a china st asia and businesses to cut costs in regions where they faced intense, local competition and it's investing in e bikes and scooters self-driving cars and even flying taxis. uber wants a piece of every passenger and public transportation globall and what calls a $5.7 trillion market opigrtunity. for ly business report" i'm deirdre bosa. >> kate spade gives tapestry investors a much-needed shot in ghe arm and that's where we begin tos market focus and tapestry did beat wall street estimatess sold more coach and kate spade handbag. the handbag and accessories
maker had a $1 billion buyback after concerns after a weak holiday holiday quarter and shares we up 9% to$33.36. chevron is walking away from its bid to buy anadarko leaving occidental petroleum as the winning bidder. chevron willol nowct a $1 billion break-up fee and increase its buyback program by 25% to $5 billion. chevron shares rose about3% today to 121.19 while both occidental and anadarko stocks were down. >> norwegianruise line said today that strong, global demand and record booking helped that company post better-than-expected results and norwegian raised its quarterly and full-yearuidance and the stock was up a fraction to eu.59. >>g, dr pepper reported better than expected eennings and r came in just short of estimates. the beverage maker didffrem its full-ier target.
today the stock was down 3% t 2828. the maker of celestial seasonings tea and chips reported a quarterly loss that was narrower than wall street was expecting. e company is selling its poultry business as it focuses on its cor profitable brand and the second unit salehis week for hain.22 2. stamps.com slashed its full-year earnings and revenue forecast and sees furthereclines in 2020 and 2021. the reason. uncertain contract cnges that its partners have with its u.s. postal service. last quter, stamps.com said it's ending its partnership with se postal service. today theck lost half of its value closing a$36.90. after the bell, wynn resorts be analystarnings expectations and missed the revenue target. the casino company lost its
macao operatis. it finished the regular session up a fraction to363. now to the nation's opioid drug epidemic. r a newort today offered some hope in the fight to curb abuse. meg terrell has more. >> the numbers on the opioidid ic are staggering. almost 400,000 people died in the united states from the e drug.e of new data today from house researcher icubia showed progress in one area. the volume of prescribed opioid painkillers declined by a record 17% to the equivalent of about 34 pills per american adult. the data showed opioid prescriptions peaked in 2011 at about 72 pills for adults. the decline s largely driven by fewer high-dose prescriptions which are associated with a greater risk with overdose. >> there is a much greater level of awareness of some of the risks of prescribing opioids and restrictions put in place across
the board to try to reduce particularly these of the high dose prescription. >> the study shows an uptick in assisted treatment for opioid addiction, something researche say is key for making a dent in the epidemic and progress is uneven across states. >> we found that certainly in the new england statesry there' igh use of medication-assisted therapies and mai and vermont, in particular are really using those medication-assisted therapies. >> as the epidemic has evolved e and more hen driveren by the use of illicit drugs like fentanyl. curbing opioids is still an important step. >> if you look at the rates of new addiction. historically, the people who became newly a diblthed became addicted through medical prescribing. new and more of the new addiction are people whose first exposure will be an illicit drug and the naturs of the cri is evolving. >> while it is encouraging,
researchers say it's important to view it in context of the ongoing epidemic. >> we are better than a few he years ago and is still a long way to go and we've had much higher use than in other countries and we still have very high overdose rates. so these -- we shouldn't take these as everything youaid. maybe the worst years of the epidemic are over. >> the health secretary put it differently, it is f from the epidemic, but at the end of the beginning. i'm meg terrell. >> coming up, are pounning a summer getaway? well, it may cost ♪ ♪
>> here's some unwelcome news just as millions of america start planning their summinger vacations. for the first timeat since last year domestic airfares in the u.s. are going up. phil lebea takes look at how much more you'll have to pay to fly this summer. >> if you're book a tripsn the u.s. summer, get ready to pay more. airlines have raised fares $5 each way on most flights in the u.s. the first industry-wide fare hike of the year. >> we'veeen prices increasing since april, and we expect them to connue increasing until about d-ne, end of june and then they'll slowly fall back down until the early fall. >> with the typical domestic round-trip ticket goingt for j under $230, the average airfare today is still far lower than a few years ago, partially because ultra low-cost l airlinese spirit have added more routes and flights. so traditional airlines have
responded by offering mor low-priced, bake economy fares. and overall, they indus has steadily added more flights, and that is hding down fares. the big question is what impact, if any, will be felt by american, united and southwest parking more than 70 boeing 737 maxng airplanes for them to adjust their schedules. >> so what we're seeing them do is shift capacity to their highest demand routes and cut back or cancele routes in short term that are lower demand. >> which means airfare on high demand routes like l.a. to new york may not gop much, but on a route like pittsburgh to l.a., ights may be trimmed because there's not as much demand, so fares there could go up. >> overall, airfares remain relatively low, but passengers are finding they're paying mor for certain parts of their trip like checking bags. in the last year many airlines
have raised the cost of checkin a bag from $25 to $30. philly lebeau, "nig business report," chicago. >> and finally tonight, we all make stakes. some are just more public than others. that's what happened in australia where the country'sl bank put into rculation 46 million new $50 notes. one catch, the word responsibility was misspellede thimes on each note. needless to say, it sparkedome reaction down under. >> it's a huge mistake, and i mean ane absol huge mistake. it's not rare because they've minted them all with thesetaick s. >> you can say it's irresponsibility. >> i think it's sad that peopll can't spe properly anymore. don'hey have anyone checking it. >> it's still worth $50. that's all thathe matters. >> reserve bank of australia says thee spelling will corrected at the next print run later this year. >> it could be a collector's item. >> it could be a
before we go, here's a look at the final numbers from street. the dow fell 138 points. it had been down more than the nasdaq slid 32 and the s&p 500 was down eight. >> and that is "nightly business report" for tonight. i'm sueth herera. ks for joining us. >> remember, there's no a in have a great evening. see you tomorrow. ♪ ♪