tv Nightly Business Report PBS May 30, 2019 5:00pm-5:31pm PDT
those concerns while still there took a backseat today at least during the trading session. ainsresult was very modest for the major averages, the dow industrials rose just 43 points for 25,169. the nasdaq was up 20, the s&p added five. now while these gains were small, some investors are wondering if they are poised to turn into bigger ones? mike santoli starts us off tonight. >> after a messy may market pullback a more th 5% investors are now watching for signs of relief in the form of a bounce and the beleaguered stock index. the makings of such a bounce are starting to appear along the technical sment and seasonal front. the market has begun flashing signals that it is quote, oversold which simply means the indexes of individual stocks have fallen far bow their recent trend and appears ed somewhat streto the down side. though not the severe extremes of december when the s&p 500
sank 20% over three months the currentng rea are in the range of where balances have tended to occur. the treasury bonds have been crucial toit es as well, but the latest rushed lower to a yield of a 20-month low beneathi 2.3%ng fears about a global growth and innation outlook. that's theas enthu for stocks in the same way that stocks have appeared oversold. treasurys are looking overboug suggesting any backup in yield would offer some relief to equities. surveys of both individual and professional oinvestors ahow increasing pessimism, another ingredient for the reflex bounce in those indexes. on t seasonal side, stocks have a very strong four-month gain to start tnd yearhe s&p 500 peaking on april 30th an in such years, may has been weak as this one has and in the five years when the s&p gained 8% in april and pulled back in may as we have this year, june was up seven of those times and the average return of a month was less than 2%.
none of this suggests the headwinds that halted the rally a month ago are about to calm down, china,lobal growth appears fragile and the forecast continueto slip for the coming quarters. the market simply ignored many similar indicaidrs that are t today of a coming bounce. and they kept falling into a crescendo on christmas eve. still the rhythms of the market have a short-term relief in the formf a bounce. whether that leads to a full recovery or just a tempora reprieve. for "nightly business report" i'm mike olsa >> corporations bought a record $1 trillion of their ownst shar ear and buybacks have been a driver of the bull market for the decade with stocks and buybacks trending higher and a new report from net davisre arch says buybacks have been slowing down. in fact, some companies have en selling their shares. so what does that mean for the broader market? joining us tonig is aaron
marshal mfrl manager of the dges funds. nice to have you here, welcome. >> nice to be here. >> you hav a few reasons why you think this is going on, but uncertainty is one of the main reasons. what type of uncertainty >> i think as companies become more certain about the economy and interest rates, what's going on wh global trade, they're more likely to take their cash flow and use to pay down debt or stockpile it because theyt don't know we certainty of that cash flow is going to look like in the when they're more certain they're more likely to return it to shareholders in the form of dividends or buybackr programs o re-invest in the business. he as we showed, there's been a correlation for last decade of the buybacks increasing and the market going up at the same time. if this slowdown continues of buyback, what do you think happens to the stockarket? >> well, t i thinkt buybacks have really provided an
incremental buying of stock w aa tin there are fewer and fewer fundamental value investors out there because more and more money is going into passive etfs. so in the event that they slow wn it would be a negative. however, i think what we've seen in the last couple of months has been a slowdown, butbe i wouldn oo worried about it unless it really continues for an extended period of time. i think last year buybacks were up about 50%. >> right. >> from the previous year. it's probably not going to increase 50% thisiary, but we could buyack as much as we did in 2018 and it's still relativen earlye year. >> on that note. eric marshall with the hodges funds, thanks so much. >> thank you. >> turns out the enomy grew slightly more than expected to start the year. sscording to the commerce department gomestic product which is the broadest measure of economic activity that rose by 3.1% in the first
quarter alleviating some concerns of a potential recession, but theic fed's chair said that if the growth outlook weakens, the central bank would consider an interest rate cut. richard clarita added tt the onomy is in a good place and that the level of interest rates is appropriate. >> most economists agree that a prolonged trade war between the u.s. and cs na risk to economic growth, but today president trump said china wants to make a deal. >> the tearives are having a devastating effect on china. people are fleeing the country with their companies. these companies are leaving for vietnam, other parts of asia ane they even coming to the united states because then there are no tariffs. i think we're doing very wel with china. we'll see what happens. >> those comments follow reports that h china halted purchases of american soybeans. eaier this year the agricultural secretary saidin pledged to buy an
additional 10 million tons of the crop. a new front has openedad in the war, rare earth minerals. china has now threatened to restrict them which could haveb implications for corporate america and for our nationalse rity. so what are these minerals and why are they so >> rare earth minerals power most electronic devices. they're used in smartphone, computer, flat screen tvs, eve urbrid cars, but they're also important to national defense. they're in military kiequipment satellite, jet engines and sonar systems. despite the name, rare earth minerals are excite common, even here in the united states, but the mining process is not environmentally friendly. stringentnvironmental regulations forced the closure of rare earth mines in the u.s. which is why china now accounts for roughly 90% of the global supply and thats its most
powerful bargaining chip in the trade war.nl the u.s. mine is in mountain pass, california, b the mineral's mine there must still be refined and right now the only refineries in the world are in, you guessed it, china, and starting june 1st the mine shipments to china for refining will be hit with a 25%ic tariff wh will mean higher costs for u.s. companies and higher prices for their customers. >> by the way, that mine in california is building its own refining operation, and hopes to have it in operation by next year which would sharply reduce its dependence on china. and there is a new development this evening in another trade story tonight. the white house is taking a formal step to kick-start the approval of the usmc assetia sep for a vote over the summer. >> now to housing and another ing, pointing read on the s market, but there could be some unexpected hope. diana olick explains. >> potential homebuyers out
shopping in april should have had a lot of incentive to sign deals. low mortgage rat and cooling prices, but they didn't. signed contracts to buy existing homes fell unexpectedly compared to march and were lower than apri of last year a that's the 16th straight month of annualeecline. whil they were shopping the annual fixed was relatively know ehanged down 5% last fall. home prices w still higher than a year ago, but the gains were smaller. both are a double-edged sword. >> house prices have been slowing so they don't want ton step if they think there might be an outright decline. they don't want to catch a falling knife, so to speak, but if they think rates t are going be down for a while and they'll say i'll wait until aouse that fits my profill is available because rates don't seem to be going anywhere. >> rates went lower in may and this year fell to the lowest level in a year and a half, 3.99% according to freddiema
the trouble is there are too few ale.r priced homes for supply is plentiful on the high end and tight on the low end. >> even if you can get credit on a low ierest rate, if you can't find a house that fits your financial profile there'so not much can do. >> even as more babyoomers age in place and don't put their sellersfor sale and as come to grips with the new realities that is new pectations for prices. for "nightly business report" i'm diana olick in washington. >> and later in the program, with mortgage rates below 4% are rates on other loans falling, as well and is now a good time to? bo we'll explore that just ahead. in the meantime, time to take a ok at tonight's upgrades and downgrades and verizon was downgraded from neutral to buy at ubs, the analyst is skeptical of the 5g technology that will lift the stock in the short term given the rollout.
the stock fell 2% today to 56.83. teva was downgraded from underperform to buy from bank of america merrill lynch and the analyst there cited the generic's drugmaker's, poesh you are to the opioid litigation currently under way the price target $9 and shares fell at $8.84. citigroup was upgraded to buy from neutral at goldman sachs. the analyst says city can grow revenues and increase returns thout interest rate hikes. the price target is $77, but thl stock f a fraction to 63.61. w comcas upgraded to buy from neutral at guggenheim. the analyst says broadband subscriber gains wil help margins improve. the price target is $52. the stock fell a fraction to $49.47. as you probably know, comcast is the parent company of cnbc which produces this program. still ahead, are you covered? as hurricane season approaches insurance rates are climbing.
♪ ♪ ♪ uber lost more than a billion dollars in its first going public, but that was right in line with expectations. the ride-hailing companyaces to one day turn a profit. the good news, revenues rose 20%. the stock was volatile in after-hours trading and deirdre bosa has more on uber's results. >> uber is so far from being profitable and the company continues to lose money as it ends big to battle competitors
sharinghe world in ride and food delivery. it lost a billion i dollarsthe first three months of the year and this also markshe first analyst call with shares still trading below their initial public offering price and he has to reassure investors of uber's long-term vision and its path to profitability. uber's cash burn is unlikely to end any time soon. cfo nelson chai saysil uber not hesitate t defend its market position, but on theig ht side, he has noticed less aggressive pricing by competitors. for "nightly business report" i'meirdre bosa, san francisco. >> united airlines stressed that the max plane will be put back into the air when it's safe to do so and there's no exact timetable either. >> we from an operational perspective were a couple of months out and it was august 4th and we'll continue to monitor and see what the process goes through and we will be
incredibly communicative to our customers and transparent when the flight comes back i and think you've heard i pledge to be on the first one and it's just one of manyhis that we'll make sure that we reassure our customers thatt's safe to fly. >> and united airlines has said it will not charge passengers for switching flights if they're willing to fly on the 737 max jet. >> hurricane seaso officially kicks off this weekend and given the pickup in wild weather across the country, businesses and residents who are looking for insurance may have to brace for some tough news.we contessa breports. >> a massive tornado swept through winwood, kansas, this week. >> weeard there was a deck out there and the deck went and you could hear the brick falling. >> it's one of more than 1,000 tornados to hs the nation thi year according to the national weather service. 30% more than a typical spring. >> we contacted t insurance companies this morning. you know, they're
and we're at their mercy right now before we can do too much. >> big insurers, state farm, chubb, aig, metlife and others all have exposure to the catastrophe losses from thi spring's severe weather. late-season snowstorms and massive snowmelts, hail, wind, and the flooding. so much water across farm fields and historic towns. flooding even closed locks on the mississpi river and shut them to commercial barge traffic and now the start of hurricane season. the national oceanic andc atmosphe association or noaa, predicts as many as 15 named storms this year, two to four of which could be major hurricanes. a the forecasts are accurate, that would be near-normal season. the insurance information institute says homeowners who live in areas that h have be by hurricanes in the last couple of years are likely to see their insuranceo rates g up, and specialty wind storm insurance rates are rising by 10% to 20%
according to industry experts. businesses and homeowners who don't already have insurance may find themselves in a tough spot. the national flood insurance program isch seduled to expire tomorrow. aisaster bill continues to have language to extend it and that bill has been stuck in congress andasual tee cruciale says it' congress tackle long-term re-authorization and that doesn't face frequent lapses. the ceo daviday sampson thousands of living in flood zone properties are at risk for not being able to buy or sell a home. thousands more will be prevented for purchasing and renewing flood insurance through the national flood insurance program and all of that makes a challenge protecting what for most americans are their more valuable asset and their home very difficult before hurricane season starts saturday. for nightly business report, i'm
cont>>sa brewer. ate word tonight the house just passed a two-week extension of the national flood insurance program and they block e vote on the disaster aid bill which would provide alonger extensi extension. more folks are shopping at dollar general and it is reporting earnings and revenue that surpassednalyst expectations. customers spent more on grocery, seasonal productand home goods. the stock today rose more than$ 7% t sxeeven that is a new all-time high. another discount retail store, dollar tree reported better than expected revenue. the companies also tested a expanded pricing strategy that includes selling products that cost more than $1 and tariffse cutting the forecast for the year and shares were up more than 3% to $98.31. ginnett is reportedly in merger talks with gatehouseia m
according to "the wall street journal," they help the companies trim costs and bring together the two largest newspaper groups in the country. shares of ginnett were up more than 1.5% to $7.75. >> fedex will now deliver pa dages sevens a week starting next year. the company's president says he believes that this will help the compy serve the fast-growing e-commerce market. >> customers are increasingly ordering online seven days a week and our online e-commercen merc are demanding ase n-day service so we're leveraging the existing introis structure to start this new sars starting in january and we are improving the density by bringing in more packages inhouse. >>el the stock 1% to 158.01 and occidental petroleums being sued by billionaire investor carl icahn and
occidental paid too much money for anadarko petroleum and calls the $38 billion deal fundamentally misguided and icahn called a special shareholders meeting to replace directors and shares were down a fraction to $51.91. after the bell cos o reporte better than expected earnings and revenue. the store saw a rise in membership fees. the stock was volatile in after-hours trading and i closed the regular session up a fraction to 241.54. also after the bell, the gap cut its full-year earnings fdecast reported weak same-store ales and sales at gap's namesake stores fell 10% in the quarter and even old navy which had been a bright spot posted a surprise drop in same-store sales and the stocks fell sharply in after-hours trading and it closed the session down 1% to $20.60. >> as we have been reporng the eld on the 10-year treasury
note has fallen to levels we have not seeince september 2017. that means lower mortgage and auto loan rates and a renewed interest in personal loans. joining us to talk about all of that tonight is greg mcbride and he's chief financial analyst at bank rate. good to see you. than for joining us tonight. >> personal loans and they've come more popular in part because of the lower rates and also tax changave made them more attractive as well, right? >> n yeah, relative basis, the tax law really changed t deductability of interest on home equity loans and people looking to put new roof on they need ten, $20,000, $30,000 and they need it quick. personal loans havebecome an attractive way to do that because you can apply online and have the money deposited in your account within 48 hours and g people witd credit they're finding rates that are compable to what they wou get on a home equity loan and without the appraisal and having three-day
rescission period before the funds are disbursed and they stand out. >> this is a low interest rate environment. what if thattarts to change? >> think the real risk here, sue, is when the economy flows we will see delinquencies and defaults really surging on unsecured debt, credit cards and personal loans particularly those that were made to consumers with marginal or weak credit. for now, there's a lot of competition among lenders primarily for the consumer whos strong credits and for borrowers that are risk year, we're seeing pull back a little bit. >> who are the lenders? >> if i of the a home equity loan, do get it? do you go to a bank or where do i go? this is something banks offered. so what wooe seeing is a lot of what you might call sin tax that has come into the space and sofi
and avant and entities liketh tt are not necessarily bank, but with the advent of technology, they've developed a way to get money in people's ands very quickly and very easily >> and these are generally shorter term loans than, say, a typical home equity, correct? >> yes. a lot of this will depend on now mu you borro and maybe more if you're borrowing more money and that's also why we're not seeing the rate comes down like we are say with mortgage rates over the last few weeks and the rate plunging and it brought it down to the lowest level because they're more toward short-term rates. >> thanks for joining us, greg. >> thanks for having>> me. oming up, will the force be with disney and its big theme park investment? ♪ ♪
>> indisney, has long dominated the theme park business and now the company is expanding its footprint with star wars-themed arc tractions in california, raepth the largest single expansion in that park's history, but it comes at a time o increas competition. julia boorstin takes us to a land not so far away in anaheim. >> let's see se oifg identification. >> star wars is expanding the california park. it opens to the public friday with another similar land nd ning in or lando in the of augus >> star wars is an immensely a popular party giving those
to are in the parks a chance immerse themselves on a grand scale in a much, deeper way is a big deal and ihink it will be extremely positive for the division of the company and for star wars, too. i think it will lift the entire fr of star wars. >> technology is incorporated throughout the land including the ability for visitors to unlock droids and a mobile game you can play throughout the space. >> this is the main hold of the millenalum fcon. it's the centerpiece of the mai attraction here at star wars galaxy edge, a ride called smuggler's run, ands even thi space here is entirely high teh andinteractive, so there will be special effects like this one -- inspiring visitors to come and play along. >> disney raising prices ahead of the debut o this new expansion. parks chief saying they haven't seen anything negative impa on attendance.
>> bookings are very, very strong. we are trying to manage our, demaf you will. we are in a important fogz that we have a lot more demand than we have have supply, neeven a brand new land whichds expec to be to capacity. >> this is a range of new attractions based on other parks program nickelodeon is opening in new jersey in the fl and lion's gate entertain am world is set to launch this summer in china. >> perhaps the best comparison to disney's big bet on star wars, universal studio, zarding world of harry potter land which has bolstered nbc universal's park division and i6 opened in 20 with two rides and the costs reporte$500 million to create and universal is adding another harry potter-themed ride this summer to the three it already has at the orlando park. they're all looking to get a agreeing piece of the theme park businey with the indus projected to hit $20 billion in
revenue in the u.s. alone this year. for "nightly business report," , m julia boorstin in anahe california. >> before we go, here's a look at the final numbers fro wall street. the dow rose 43 points and the nasdaq was up 20 and the s&p 500 added five. that is nightly business report for tonight. i'm sue herera, thanks for joining us. >> i'm bill griffet have a good evening. we'll see you tomorrow.