tv Nightly Business Report PBS May 24, 2019 5:00pm-5:31pm PDT
♪ >> this is "nightly business report" with sue herera and bill griffith. >> rough week. the dow suffers five straight weeks of lossesin as stors fear the trade war with china will hurt economic growth. long haul, truckers are getting squeezed by tariffs creating a umpy road ahead for that industry what's old is new again. hollywood is betting that the summer sequel will be the secret toff boxe success. those stories and more tonight on "nightly business report" for friday, may 24th. >> good evening, everyone, and welcome. bill is offhis evening. stocks rebounded after yesterday's steep sell-off, but it was not enough to save the ge major ave from weekly declines. this week investors were rattled by escalating trade tensions
between the world's two midwest powerful economi and while some say the damage will be limited, the market seems to be gr more concerned that tariffs could hurt global growth which, i turn, could pinch corporate profits. today thoseer worries put on the backburner. the dow jones industrial average added 25 points, and the nasdaq was up 8 and the nasdaq was up 8 and the s&p 500 rose three. fr the week, all of the major indexesl. the dow now down for five straight weeks along as losing streak since 2011 and oil prices recorded their worst wee of the year, declining about 6%. mike santoli has more on the market's recent decline and what might come next. >> the stock market's maye malaan so far be viewed as a normal pull back after a very ourongmonth rally. a routine reset in an ongoing bull market and the ongoing fragility of the cycle carried
the rif that the downturn might deepen into a more serious correcon. >> the s&p 500 index was down 5% from a record high at its worst this mon and it was coming as the trade frictions grew more intense. it has more and this data weakness is pretty typical. even after this drop the market remains up more than 12% and that's ath mor respectable gain after a 6% decline in 2018 and yet the tariff hikes and disruptions are at a delicate point as the tax cut had a 3% growth rate last year and the european indicators have remained sluggiss and t complicated the consensus projection of a rebound in high single-digit percentage growth in the second half of 2019. the second half of this year begins in just over a mon after all. the treasury bond market reflects this tension and the ten-year yield sinking to an
18-month low this week as slowerrs brace for growth and price in a higher chance that the federal reserve won't be moved to cutra interes s by the end of this year. the fed has so far declined toi cate that this is its intention and many parts have been under pressur and semiconductor, transportation and small c a stocks arell more than 13% below their highs as investors have punishe the companies most reliant on either china trade or abrisk, u.s. economy. does this mean most of the adjustment to the ongoing trade standoff and economic owdown has been made? the answer will determine whether the market is undergoing a benign pullback with the start of something worse. for online business report i'm mike santoli at the nechyork stock ge. >> the ultimate cost of the taff is the big unknown hanging over the tonight steve liesman brings us nw estimates. >> in the wake o tariffs have drangtically chaed their outlook and they have been forecasting a trade deal with china and now they're forecasting a prolonged trade
war. they plugged the new tariffs put in place this week into their estimates and another round they now believe is on the way. as a result, they s higher prices in the u.s. lower growth and reduced en conf. goldman sachs says a new round of tariffs would shave another so if the off growth economy was going to grow 2% it would now grow 2.5%. morgan stanley believes overall prices would be a quarteroint cut higher and it would cost each american household 1. >> the upward effect on inflation would be greater and fast and you have to remember that these tariffs are negative for growth. we expect most of the impact on gdp growth to come from lower business investment and that's as a result of lower ceo confidence. producers may be able to source their goods from outside of ch ka and that wouldp costs down and economists say if it was cheaper elsewhere they'd
already be producing there. even if production relocates to produce tariffs and growth still weaker. for nightly business report, i'm steve liesman. >> we've talked a lot about the impact about the cold economic waar onus sector, but one we haven't touched on yet is the trucng industry which plays a critical role in getting ed import and exported goods where they need to go so we sent frank holland to pennsylvania. >> keep on trucking is a populat saying, bhis year the only thing truckers are saying is that revenuesre declining. >> 2019 has been a challenge. >> mark zimmerman ia third-generation trucker. the portion of his business under contract has remained fairly steady, but the dailyor rates f trucking known as the spot market have seen declines since the tariffs went into effect last year. retailers andtu manufacrs front loaded shipments into the u.s. at the end of 2018 to get ahead of those tariffs now and
their warehouses and stockroomu are and those companies are in the driver's seat. they say i don't have to move it rid now. i'm goingo negotiate a rate that's a little bit lower than what i thought i would pay initially and the trucker then isoksaying, , if i want to move that load i have to be willing to negotiate a come up with a lower rate. >> the shippers having it, it's also dropping to our bottom line where we don't have the ability to increase as our cost increase for 2019. rates for standard trucks had fallen 19% since last april. the refrigerated trucks that carried food nearly 14% and fla bread rates for industrial goods are down about the same amount. >> the impaelt by zimmerman and j.b. hunt and snyder national and swift, all reportee renues this year all while dropg their stock price over the last year.
>> they're also hurting trucking margins when drivers dropped off a trailer like this one and picked up another at the same me and at the same place and it's called a dua trance asisac and it's happening less and less at major peets. >> we've dual transactions fall over the last year anywhere from an 80 or 85% normal to you understand 20% across the board. >> there's hope that a trade al caneverse this trend as an industry seeks new roads to revenues. for "nightly business report" i'm frank holland in aston, pennsylvania. >> believe it or det, the t war with china may be helping homebuyers as well as the nation's big public builders. diana olick explains the ripple effect. >> they had investors rushing into the bond market causing the ten-year treasury yield to drop and mortgage rates took a deep
dive. the average 30 year fixed fell sharply compared to 4.29% at the start of the month, while that may not seem like a lot, today's homebuyers are incredibly rate sensitive because home prices are so high, they're already stretched and that's why stocks at the homebuilders e still tied to rates and in yesterday's the winners. were >> prices were soaring as builders deal with higherns uction costs and the median price of a new home sold in april hit a new record for the month. rates are likely to stay in new low range or even go lower. that could give an unexpected boost to th summer housing market after a pretty mediocre spring. for "nightly business report,"i i'm olick in washington. co durable goods orders fell in april. ing to the commerce department, orders for goods designed to last at least three years fell 2.9% and within the report a closely watched proxy
of business investment cooled off and orders for civilian aircraft dropped sharply, likely reflecting the grounding of boeing 737 max jet. following that durable goods report, j.p. morgan lowered its economic growth forecast for the 1%.ond quarter to just boeing is reportedly facing an seco probe i disclosures about problems with its 737 max jet. acg to bloomberg, the regulator wants to know whether the company was, quot adequately forthcoming to shareholders about issues with its tubled fleet and late today "the wall street journal" reports that the max's return has been delayed by the faa's re-evaluation of safety procedures ofld 737 models. boeing says the safety of the models is no in question. despite those reports the stock rose more th1% in today's trading session. united airlines is teing its cancellations of boeing 737 max flights through early
august. the carrier said that would i result 40 or 45 daily canceled flights. southwest and american have already suspended those flights into august. it is time to take a look at some of today's upgrades and downgrades. dow was upgraded to neutral from underweight at j. morgan. the analyst cites conservativem ess and unresolved trade issues between the u.s. and china. the stock closed just above that level at $49.20. blooming brands was upgraded to buy from neutral at guggenheim securities. the companies in the beginning stages of a turnaround. the price target is $25. the shares rose a fraction to $18.37. constellation brands was downgraded to equal weightrom overweight at morgan stanley. the analyst cites the potential slowdown i demandor beer this summer as well as the stock's valuation. therice target is $220, the shares fell 3.5% to $198.68.
still ahead, tech stocks have been caught up in the trade war, but that's not stopping our market monitor from finding some buys in th♪ sector. ♪ ♪ >> one story caught our attention, it ds wherith the unintended consequences of the tax law and ylan mui has it. >> and it's lf in this one. that was our last company.
>> it's been four years since t daniel lieutenant, he suffered a massive heart attack while deployed on the the mediterranean sea leaving her to raise her three young sons on her own. >> i saw her get taller and you realize at right? they lived comfortably in the northern virginia suburbs and they don't have a big financial buffer so wade was shocked when she filed taxes this year and got hit with a bill from uncle sam. >> if i can haveba my h back i would totally have them back the night before, but i feel upset because our husbands have given so much and this is how we're being >> it's an unintended consequence of the new federal tax law and it'sgo devastating star families like wade's. when a member of the m dies while deployed their spouses receive special benefits
and often a portionthe payment is transferred to their children and that money has typically been taxed at the lowest rate and generally 12% to 15% a now many families are finding that has tripled for 27% and for wade, it's a difference worth hundreds of dollars. >> wade is pleading with washington to fix this problem. this bipartisan legislationth i house and the senate to restore the old tax rates on benefits paid to children, and both sides of the aisle say ced e families have sacri enough. >> we are here all prepared to honor these men and women coming monday for memorial day, but we need to let our actions here in congress speak louder than our words. >> the congress left f their memorial day recess without reaching a resolution. >> i don't think that that's how he thought he was going to leave us. i don't thk that he thought we
were going to be taken care of and i don't think it's fai that we should have to take another financial hit and another burden. after dealing with all of the things we have to deal with which is our grief or chilen's grief, and the financial burdens that come with all ofhat. all they can do is hope and wait. for "nightly business report" i'm ylan mui in washington. >> across the atlantic, british prime minister theresa may has resigned. this decision comes after six months of failed attempts to a deal with parliament which would ensure a smooth exit from the european union. >> i negotiated the terms of our exit and a new relationship with our closest neighbors that protects jobs, our security and our union. i have done everything i can to convince them to back that deal. sadly, i have not been able to do so. i tried three times. i believe it was right to
persevere even when the success seemed high. britain is scheduled to leave the eut e end of october. the so-called brexit is being cited as the potential nosk to the e. foot locker is losing its firm footing. the athletic footwear and apparel retailer missedma ess due to increased pressure as companies like nike or selling products directly to customers and bypassing retailers all together andan th co trimmed its full-year profit guidance and foot locker plummeted 16% to 44.40. it postedec better-than-ed results in a rise in same-store sales and the company raised its guidance for next year and nnounced a new independent chairman the retailer's shares jumpe more than 27% to 23.96. third point has reportedly bought a ske in health insurer
santeen and wants it to consider selling itself with the $15 billion merger with well care. s rlier this month it reported another pair of hedge funds were considering a challenge to thatr mer believing centene could do better when it was sold. it is the largest provider of medicare health plans and shares were higher today long-awaited $5 billion settlement between faceok and federal regulators over privacy issues is reportedly now beingd yed due to a partisan split at the federal trade commission. the wall street journal says the gop chairman of the ftc is struggling to win support from at least one of the two democrats on the panel who are concerned the settlement won't be tough enough. facebook shares were up a fraction today to 181.06. >> and the fda approved the world' most expenve drug, noef artis' new gene therapy will cost $1 million and used as
a one-time treatmentor genetic mortality. it is working closely with insuatres to c five-year agreements based on the success of the treatment. novartis rose more than 3% to 87.52. time now for our weekly market monitor who likes tech stocks and he recommends being selective in the sector. u joininis steve dudash president of i.t. weight management. nice to have you here. w tech has been extremely volatile as work through all of these trade headlines. so you did give us threeicks that you think may be able to weather that storm a little bit others.han amazon is your first pick and there are a lot of bullish calls on the street about amazon, but tell me why you like it. >> listen, our economy right now is in a very, very good place. the only thing holding it t bac threat of this trade war and this trade war is just show. this is that t
this is theatrics and two sides acting strong and trying to negotiate what they can and? is normal and earlier in the segmenow talking about the markets have pulled back 10% and that's where we're at right now and we're looking a defensive technology companies and that means companies that have lots of cash and lots of earnings and frankly something me and you will use more and more of no matter what's going on. you can make the argument that if the economy pulls back it helps a company like amazon and frankly, the barer to entry to get into their business is so massively high that if the market pulls back and the economy pulls back, it will squash anyon else who gets in there and therefore make the market tighter for that type of company. >> next on the list is vmware. >> again, this is a defensive term i'm thinking about for people's portfolios. we're talking about a company that takes data and crams it down a puts it in smaller spaces and more economical to
transfer. if things g tighter and if the trade war goes on for longer, companies will need to make more profitable ways of holding data. me and you use data more than four years ago and twicemu as , if not more than that. companies like this will be profitable now and they are profitable now and in the future, as the economy keeps growing as we use the technology and you're only going to see more in these type of firms a google's parental fabbet is on the list. there are some regulatory concerns that have been weighing on the stock a little bit and why do youike alphabet. those regulatory concerns any the market pulling back is why the market right now is a b w and thle segment is a buy right now in the sense that google will be used in the future and if this economy pulls back we ll not use google and if the unemployment goes up a couple of points we're not g ung
google less and you're right, there are regulatory things both hereernd as that will never go away when you'realking about , you will always have that aspect and you're buying it at a cheap price rig now. that's what we're talking about with any of these opportunities and people are afraid of things that they shouldn't afraid of right now and therefore makes things more valuable for us. steve, thank you very much. steve dudash with iht wealth management. >> coming up, where's the ?be >> i'm jane wells in los angeles. are you going to a friend's hous b for abecue this memorial day weekend? be careful,hey may sneak some fake meat on to the grill. can you tell which one? the potential for the alternative meat market and the obstacles.
>> one quarter oforking americans have no retearment savings. many households still struggle to cover their day to day, pences despite a strong job market. nonetheless, three out of four say they're living comfortably. memorial day weekend marks the unofficial start to summer and with that comes trips to the vie theater and lots of barbecues. so we end our program tonight with stories on both. jane wells is up first with a look at what's cooking on america's grills. >> is it real? no. perhs it's appropriate that here in the capital of fake, la laland,on b meat is leading the fake meat charge. >> how do you do that? >> t company had the best performing ipo in years. meat altertives arehowing up
n more fast food chains and grocery store, but beyond meat is spending so much on improving the product and scaling, it's not clear when it will be profitable. >> our current householdar ess is 2%. we've got a lot of custome to talk to. >> would you ever try the meat substitutes? >> no.ve tried it. >> never have, but i'd like to tray one some time. >> even so, as the summer grilling season starts, demand for meat alternatives is heating up and they've warned of potential shortages and beyond meat went through their own ven brownccups and said he's not going to let that happen again and they're availabl to have capacity and the stock and ingredients suspect enough to go twice the levels that they expect. >> this is fake meat. asis is real. fake meat often h a few morees calohan real meat and higher sodium and it has zero cholesterol a lower fat.
the real difference right now is the price. cost at leaoducts 50% more than real meat. it's a matter of building up the supply chain and convince farmers to cut out t middle man, the cow. >> to set the goal within the company to o at least category with one product to price animal protein in a significant way. l> alternative meat can take up 10% of the globaeat counter and be worth $140 billion, but the industry has its work cut ou wof it. >>ld you ever have a fake meatr? burge >> no, ma'am. >> why not? >> the real thing is the real thing. >> though it's getting harder to tell what's real and wet's not. >> j wells, los angeles. >> now to the summer box office which will bring a new twist on old franchises. julia boorstin has more. >> what's old isga new for
the movie business this summer. studios and theaters are hoping familiar brands will draw a broad audience and turnaround the box office. north american ticket sales are down 10% so far this year. the fact that marvel avengers dgame broke so many records mean people are more likely to return to theaters. >> is all about momentum in the summer and certainly endgame set up the summer movie season to be really strong because you have so many people seeing that movie being inspired to see other movies by virtue of in-theater marketing and trailers for the upcoming slate of. >> aladdin is a key example of a big trend. studios counting on tried and true brands to draw families. perhaps the most highly anticipated examples disney' lion king remake. >> no, no, i've got it. the pixar's toy story and universal's secret life of pets 2 is using a similar peplaybook. are high that the likes of
the lion king plus big action films will draw moviegoers and one reason why theater chain stocks are up thi year even though box office receipts are dwn. anotherraw this summer, big action movies are back such as universal's fast andio fus spin-off hobbs and shaw, and the fast and furious films tha have grossed $5 billion worldwide. ready for more marvel. spider-man farg from home and disney will release x-men's "dark phoenix." >> there is no superhero burnout. it seems sawaudiences can't get enough and spider-man far from ome is a beneficiary of the good will and surrounding endgame like every marvel movie and endgame sets up spider-man far from home perfectly to be of the biggest movies of the summer.
despite the yea to date declines at this point of the o boffice and with so many of the big brands roaring back the annual box office could end upsetting a new record, for nightly business report i'm julia boorss.n in los ange >> before we go, the dow added 95 points and theas nasdaq up 8 and the s&p 500 rose three and for the week all of the major indexes were lower and that is "nightly business report" for tonight. i'm sue herera. thanks for joining us. have a great weekend and we'll see you monday for a special edition of "nbr." ♪ ♪