tv Nightly Business Report PBS May 29, 2019 5:00pm-5:31pm PDT
♪ this is "nightly business report" with suea herer and bill griffith. >> portfolio protection. volatility is back. o stocks selff as investors grow conceed about the economy, so how can you keep your investments safe? >> farm belt flooded. delayed plantings are pushing up cices and now some wonder if food inflatild be just around the corner. >> 529 days, the myths and realities of saving for college which can be especially difficult in this type of market. those m stories andh more tonight on "nightly business report" for wednesday, may9th. >>nd good evening everyone welcome. the market was rocked again and one.eason is a familiar investors are growing concerned that a drawn-out trade war
between the u.s. a china will hurt a global economy that's already slowing and stocks lower around the world as money moves out of riskier assets and into safer ones. the benchmark yield on the ten-year treasury hit a 20-month lownd stocks fell though they finished off their lows of the sessio and the dow jones industrial session fell 321 points, but it had been down more than 400 points and the nasdaq dpped 60 and the s&p 500 was down 19. seema modi has more on today'si sellg from the new york stock exchange. stocks tumbling on an economic slowdown and the dow,p 0 and nasdaq all on pace to post their first monthly losses of the year. trade, key concern here on wall street. it appears as if the deal between the u.s. and china i nowhere close to being reached. the worry is that growth will slow worldwe, that the investors looking for safety in treasurys and as bond yields
fall, so did banking stocks. concerns also pushing retails lo r, and the broad energy health care and consumer discretionary stocks getting and the small cap russell 2000 index and the dow transport index pushing further into correction territory meaning they a10% or more below their most recent highs. traders also watched the s&p 500 break below a key technic level and with the economy front and center, tomorrow's revised first quarter gdp report and china's manufacturing data on friday will be closely watched by wall street. for nightly business report, i'm seema modi. >> so you have these concerns about the economy because of trade tensions and theve issues created wild days on wall street this month. is there a way to protect your portfolio from all of the volatility? joining us tonight is jimmy lee, ceo of the wealth consulting group. good to e you again. >> clearly, owning treasury bonds would have been a good
hedge over this month. as stocks went down, they've been going up pushing rates down and is it too late to protect your portfolio in that way, do you think? >> i don't think it'r a good idea for the average investor. that's never really worked. i think what's most important is to be calm and not panic and actually for long-term investors it is probably a great buying opportunity because as you said most of the concerns about the trade issue and yes, it is causing some other economic tential data that looks like the economy might be slowing and when the trade deal is i done think if the stock market could set new highs. >> you made the mmint, that you can harness this volatility if you do what's called dollar cost averaging. you're actually having the volatility of this market work with you if you're consistent. there are two separate investors. if you're in accumulation mode in saving for your retirement thenegular, systematic investing that we call dollar
costol averaging,ility is your best friend. think about it as a discount or sell on this you want to buy on lower prices. dollar cost averaging worksal well, but if you're a retiree, make sure you have one to two yea of your living expenses in cash that do not go down in markets like this so you don't have to worry about selling your stocks at a discount to make your living >> this has been a defensive market though, lately that traditionally do well when the rates go down and utilities, health care, you know, areas likesu that, cr staples and they've been doing well, lately. do you like those groups? >> our firm has been takin our profit from the growth sector even though we're overweight tech andou look at your portfolio and times like today it's important to have a globally portfolio, and it's a great time to make sure that you're evenly balanced and look at value stocks.
they might hold up better in a correction if you're worried about that, as well. >> what aboutog techn >> do you feel that we're nearer to a bottom in technology? some of those stocks have really been hit quite hard. would you step in at this point? >> think with the w namesld be wary of the high multiple still, too. i think h technolog more room to run and even iwe go further decline in 10% or more, we've been there before and you remember investors, if you started the year on january 1st we're still allowed double p digits and mosple would be happy if their portfolios are up over 10% in stocksnd the fir five months and let's take everything into perspective. technology ioo still a sector to have. >> jimmy l w with thlth consulting group. thanks for joining us tonight. >> thank you. >> some strategists look at the bond market and look at potential signs that a recession is on the horizon, buten r economic reports have not been that bad.
what exactly is the data saying? steve liesman takes a look. >> the bond market acting as if certain a sharp weaking of the economy is on the way and ths stock market is acting the bond market is right. in one corner an inverted seld curve r where they yielded more than longer ones, the opposite of wt it should be and a sign that bond investors believe the economy will weaken and the fed will have to cut rates and stimulate themo economy. of the time when the yield is notverts a recession far off. that's not uncommon from looking at the current ecomic data or economic forecasts. unemployment is running 3.6% and 169,000 which comes withtrong consumer confidence and inflation is running over the fed's 2% target and at one point, 6% and first quarter gdp was 3.2% well above trend and the estimates from the cnbc wrap it updata for 1.6% growthcon the
se quarter and that willme reverse but not all of the trade-distorted strength of the quarter andertainly not a recession. a weakening in growth was expected this year and the question now is whether the escalating trade war between the u.s. and china makes it worse and the fed has to cut rates in response. that's what the bond market is banking on and it's pricing in an li85% proba of a rate cut by year end. where is the fed? they see trades a risk, but have announced they'll wait and see for the effects on the real economy before they act. for "nightly business report "qwest, i'm steve liesman. >> as we've b reporting, the tech sector finds itself in the middle of the escalating tensions between washington and beijing and now it appears that china is considering limiting exports of materials that are critical to the production of things like iphones and electric vehicles. eunice yun has more for usei tonight fromng.
>> the chinese media turned explicit about being's threat to use rare earth as a countermeasure today. the authoritative dale columnist posted a column saying don't say we didn't warn you. it set beijing's initial threat via national tv and after president xi jinping visited a facility last week, from the consumer electronics to the equipment, and analystaays ch covered it in the name of national security. seeing the daily warning at serious because the last two times the paper made similar remarks the company went to war to india and eunice yun. trade temperatures ar targeting prices and the slow grow being grow the demand a it was also
affected by refinery shutdowns, because of bad weather with the midwest from the supply have been cushing oklahoma could restart tomorrow. >> most floods in the west are hurting the u.s. farm belt. thextsive rains have kept farmers out of their fields so plantings are being dayed. in fact, this is turning out to be the slowest corn planting season on record and that, in turn, is lifting the price of variousgricultural xh commodities. corn futures are up 15% and wheat is up about 14% and soybean futures have gained and there's less concern about that crop becau it can be planted later. oi scott nations us now to talk more about the impact of those midwest floods on crop pric and what potentially it means to you and he's president and chief investment officer at nations shares. od to see you, scott. welcome back.
>> thanks, sue >> farmers have been on a wild ride just in the past few months. in may, we saw soybean prices hit a 42-year low on the trade worries and now a bill just mentioned we see a 21% increase. where dthese prices go from here? >> sue, given the fact that th department of agriculture has told us that only about 58% of corn acreage is planted and this time oyear we would expect 90% and you would have to expand lon ation and not only does the corn acreage number means that less corn will be planted and the yields from the achers that do get planted will be bizd. appoin it's off its recent low and we have to expect additional price increases and also floods will have a perverse impact on i sh. so much corn is shaped via the mississippi river and the floods
will mean there's less capacity for that so it will hurt farmers on a couple of different levels. >> on soybeans we were talking about --e've already had an oversupply of sorts because china has not been buying as much soybeans because of the trade concerns a the tariffs. so are we expecting that much planting to occur anyway? >> a lot of farmers have scaled back their plans for planting soybean, but to your n point, soybices are 20% from their highs largely because of the news. and they can plant one or the ect somed you would e price increases from corn to bleed over into what we see in the soybean market. >> how much of this down to the consumer? >> everybody wonders about thatl unfortun for them and fortunately for us to a certain
degree, the food inflation will probably be muted because the price of the actual commodity makes up a relatively small portiot of the price t you pay at the supermarket. in addition, energy is a very big por on of theinput cost crude oilseen both and gasoline prices improve and we've seen crude oil prices dp about 7% and gasoline not quite as much. lower energy inputs are going to keep a rein on some of the food inflation you see otherwise. always a pleasure to see it, scott nation with nation shares. >> time to take a look at some of today's upgrades and downgrades. we begin with shares of allstate. they were upgraded to buy from neutral at goldman sachs and they were cited for improving margins in the auto insurance businesses. the price targe$110, and
96.23. general mills was downgraded to sell from neutral. the analyst t expects the company's fundamentals to weaken next year and theel priceto $48.25. costco was downgraded to hold from accumulated and gordon h s haskett and the price i$255 and shares fell 2% to 48.69. >> planes are packed and the airports are crowded so why are flyers so happy? ♪ ♪
the airline industry's main trade group said today that the boeing 737 max jet is not expected to return to the skies for at least another two months but the international air ia transport asson has no control over that timeline and the decision is in the hands of regulators. >> the ceo of boeing today said he is working to regain the public's trust. speaking at conference in new york dennis said the company is looking closely at its production plant. >> once we get the airplane back up and flying, we get the grounded fleet back up and customers and then we will in a very disciplined way get back to our rate increas plan. i'm not going to put a specific wee line on that because want to very much focus on safety it back up to first, but we do, for the long
term standpoint still expect it to ramp back up it a 57 a month rate and our long-term demand profile still says tt rates above 57 a month could make sense. >> shares of boeing fell in trading today. they are down about 17% since the mar 10th crash that triggered the worldwide grounding. a new survey shows airline sasfaction has soared to a record and that may be a little surprising given that the record number of people flying means more crowded planehan airports. phil lebeau explains whync convenie is making travelers happier. >> there are more flight,ore travelers and more congestion than ever before when it comes to taking a flight. there's also more satisfaction wi the experience. fact, when j.d. power asked almost 6,000 travellers to rate airline svice they gave t industry a score of 773 on a 1,000-point scale, the highest
score ever. travelers say new technology used by airlines like apps to check in for a flight make flying easier and more enjoyable. by comparison, services offered like wi-fi and entertainment systems are falling short of expectations and unlike the samn survey previous years, the biggest improvement andti sation is with legacy, full-service airlines, toppinge list? american airlines. overall they're happier with low-cost carriers. they say southwest and jblue do the best job. all of this comes as the number of people flying continues to climb hitting almost a billion travelers this year and many deciding to become a trip because airfares remn relatively low. >> the average domestic round-trip ticket is under $240. according to the airfare website hopper and it's n eected to
go much higher. a huge factor in many travelers saying they areer haphan ever to take a flight. phil iglebeau,ly business report, chicago. >> start-ups are using artificialntelligence to see if that technology can improve baggage screening at airports catching the attention of the innovation task force at san jose international airport. >> a bag is flagged by airport security machines for containing a threat. it turns out to be a knife, but this isn't just aegular bag and this isn't an airport. the space is a lab and the bag and knife is a dozen of props and a venture capital-backed company sponsored by i pop. the company has produced software by incorporating artificial intelligence or a.i. in the scanners. >> the beautiful thing about
artificial intelligence is it's modeled after the human brain. >> cinnamon says an extra nachine outfitted to catch threats has advantage over human operators. >> the difference is the al ga rithm, they don't get tired. they don't fatue and they don't have biasses and they continue to learn time and time again. >> cinnamon and its co-fouer and i looked at the scan to see if i. ♪issed anything suspicious. i did. >> is that there? >> and time andime again. >> that looks like it's a component of the laptopel i >> i was wrong. >> there was a knife. >> oh, i missed that. e >>ry time the machines caught the threat. >> cinnamon believes that the couple of's w machinesn used in conjunction with human ceoperators are t as accurate as traditional tsa x-ray machines and he adds they're better at detecting bullets
accurately and they are often overlooked by scanners. since last fall the tsa has been usin technology in a demonstration at silicon valley san jose international airport as part ofts innovation task force. >> we like bringing these other partners into this equation because they have solutions that maybe we hadn't thought of that we can test and we can bring those into a live environment. synapse is working with two arports in japan eyeing other venues whichse x-ray scanners from stadiums to schools. we see our system at the both where you can automate the deteshgsz of firearms and whether they can actually operate it and run it. ask her whether the the technology perform it is higher-levelor tasks nightly business report, i'm aditi roy,
san jose, california. >> abercrombie & fitch is closing more stores and that's where we begin tonight's market focus with thepparel retailer lanning to shut three of its largest i stores andtead open smaller format looks. the company also reported weaker than expected same-store sales and it issoft guidance and shares plunged more than 26% to $18.39. capri, that company formerly known as michael korsbe reporte er than expected earnings and revenue and the retailer did trim its full-year sales forecasts thanks to costs linked to its $2 billion acquisition of versace. 35.06.ck fell 10% to canada goose that got plucked as the apparel company missed revenue expect acts and it exslower sales growth in the coming years and canada goose has been shifting its strategy in sales and it has sold its products through
wholesalers and it' opening its own shops and today's news was not will received and it fell 30% to 33.89. dick's sporting goods stored surpastreet expectations and beat revenue forecasts, as well. the company saw an incre their online sales and plans to invest in its digital platform for customers and it also raised its full-year outlook that the stock got caugh up on the bad news from other retailers to nish the dayown at 23.67. cypress semiconductor i reportedly considering a potential fail. the chipmaker received takeover interest and is working with advisers. no financial decision could be made and it could jump 12.23. after the bell, pvh corp reported expectations and falling short of ref newest mats. they saw them miss their sales
targets and the stock initially dropped in after-hours trading and he closed the regular session down 6%. getting the most out of your529 college savings plan especially as the market crumbles. ♪ ♪ here's what we're watching for tomorrow and facebook includes proposals to rein in kr's mark zuckerberg's power pending home sales f month of april and we'll give investors thepringousing season and uber scheduled to
report its first quarterly results as a publicly traded company and that's coming upmo ow, thursday. >> lower mortgage rates are not necearily enticing homebuyers. according to the mortgage banker association, total mortgage application volume is more than 2%nd applications have fallen for three straight weeks and the average fix side now 4.3%. >> here it is, may9th. 5/29, a day that has come to be devoted to understanding and encouraging savings for college using those 529 plans and today vermont said it's making one step further, it's giving every baby born today the 529 account and the ideal time to start ving is within birth and age five. saving for college is a struggle for many ask nd it could be intimidating we asked sharon epperson to join
us once again tonight. good to see you, sharon? good to be here. > how are parents doing in handling the 529 and how well do they understand them? >> on this special 529, few people even know what a 529 plan is. fact, edward jones did a study and said seven out of ten americans couldot correctly find it as an ecation savings and they're not doing anything to pay c for theirlege education and they're saving $5,000 yr or less. >> how about some benefits and drawbacks for those 529s? >> the benefits are that you put that money in and it grows tax-free. you ar putting in after-tax money and it grows tax-free. you take it out you don't pay taxes on it as long as it's for the qualified expenses and also many of unds that are in the29 funds will get more conservative as you get closer
to them coing tolege. in a volatile market like this, if youd is about to go to college in an age-based plan, you shouldn't have to worry as much. >> one of the issues that so many of these plants are different depending on which state you design to invest in and you don't have to invest in omur own state. are theren misconceptions about 529s? >> i think that's confusion. that's one of them. a lot of people includinghe drawbacks and people are concerned about the fees with these plans and not sure of the right thing to do. you can just only yusz it for right of a school education that many 529 plans offer andecou have to with the state and if what if my child doesn't go to college or gets a full
scholarship which we all dream for. you can change it to another friend, family membe or yourself. you want to go to graduate school? use a 529 plan. >> that is why we have you here. >> sharon epperson. >> before we go, one final look at the day on wall street. yes, it was another of those days. the d b hn down more than 400. the nasdaq was down 60. the s&p was down 19. >> and that is "nightly business report" forht t i'm sue herera. thanks for joining us. >> i'm bill griffeth. have a good evening. see you tomorrow. ♪ ♪