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tv   Nightly Business Report  PBS  June 10, 2019 5:00pm-5:30pm PDT

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is >> announcer: thi "nightly business report" with sue herera and bill griffin. >> solid gains, a tariff threat is dropped, companies are doing des and that helps the dow reclaim 26,000. mega deal, united technologies and raytheon a merging to create an aerospace powerhouse that the companies say will redefine the defense industry. great tax debate, billionaire investors say it's e okay to r the capital gains tax rate, but that may not be what's best for individua investors. those stories and much more tonight on "nightly bs report" for monday, june 10th. good evening, everyone, and welcome. rs started the week with some welcome news. two major mergers were announced and a deal was reached over the
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ekend that averted tariffs on all imports from mexico. that lifted sentiment on wall street, which in turn lifted stocks. the major indexes built on last week's big gains turng in their longest win streak in more than a year. the dow jones industrial average rose 78 points to 26,062.s the q added 81 and the s&p 500 was up 13. bob pisani spartarts us off tont from the exw york stock ange. >> stocks were in rally mode on this monday with the dow rising for its sixth straight day seeing its longest winning streak since may of last year although the market ended well off the highs. trade talk optimspm once again ks the move higher after president donald trump said the u.s. and mexico reached an agreement to suspend tariffs in finitely. it's no surprise the trade sectors led the market higher, ade sensitive groups, semiconductors, retailers, industrials, they all outperformed but wh a roller coa coaster weis has been. had historic highs in early
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may, the s&p dropped 7% in the next 5 weeks or so on china trade wars and then mexican tariff worries. but it's rallied back in the next wee we're up 6% in a week, knocking right on the o doorthe old historic high for the s&p 500. we did get through 2,900 today, though closed below that. that's the good news. the bad newsres stockst cheap anymore. they're pricing in a lot of good news. remember we did not have a china deal even though the market is acting like we do have one and we have not had great economic numbers out of the u.s. or europe recently so weaker global growth is an issue with or withoutnrade. gains walmart, american express and microsoft. in fact, mcrosoft broke the $1 trillion ma today and aerospace and defense names also rode the rally, lockheed mart got a boost from this announced mega merger between raytheond ad uni technologies. for "nightly business report," i'm bob pisani at the new york stock exchange.
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>> and yes, as bob just mentioned, united tech and a raythe joining forces. it's one of the biggest corporate deals of the year so far and during today's trading session, both stocks movedn opposite directions. as morgan brennan reports right now, this merger puts a lot of products and systems under one roof. >> reporter: it's a move that's stunned experts. a merger of equals between raytheon and united technologies. we wind up with a great company that is about 50% domestic, 50% international, 50% defense, 50% commercial.ry it's a stable, resilient company moving forward and it's all built on this great technology base. >> reporter: the all stock deal is expected to close next year as united technologies spins off its otis elevator and carrier ilding system segments. it would combine one of the world's largest defense contractors with one of the top aerospace suppliers. to create raytheon technologies, valued at more than $100 billion and second only to boeing in ldsales. this wring missiles like
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the tomahawk and missile defensk programs l the patriot system together with airplane avionics and jet engines made not only for boeing and airbus but for the f-35 joint strike fighter jets as well. raytheon technologies could be positioned to benefit from more defense spending and more commercial orders. while greater sle could also mean the ability to weather any future slowdowns more >> the commercial aero side, we expect growth around 6%, 7% annually for the next 5 years. tom, with everything that he's won and the modernization focus of the d.o.d., he's probably looking at about 5% or 6% growth, so this is not about one company growing and the other not. >> reporter: they expect a illion dollars in cost synergies by year four but really, it's all about thelo techno. 38,000 patents, $8 billion in research and development, and more than 60,000 engineersen hough their products don't overlap, the underlying e technologies,t a.i. and analytics or engineering techniques could be applied to
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different proacction lines ross commercial and defense. still, the news was greeted byp ident trump with at least initially some skepticism. >> when i hear united and i hear raytheon, which is another incredible company, the missile systems they make are incredible, when i hear they're merging, does that take away more competition? it becomes one big fat beautiful company. >> reporter: raytheon and united ch say they're complementary, not competitive. they say they'll create more u.s. jobs and they p to reduce costs to the government since they'll be able toid aggressively on future defense contracts. for "nigh i'm morgan brennan at the new york stock exchange. but thatyasn't the o deal today. salesforce is buying tableau software for about $16 ngbillio mahis one of the largest software acquisitions ever. as typically happens, the company being acquired rose sharply while the acquirer fell. josh lipton dives into the
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details. >> reporter: groundbreaking. that'how analysts are describing sales force's decision to buy tableau software. it's one of the largest software quisitions ever. analysts say the deal is transformative, because it means salesforce ceo marc benioff can offer his business customers something they desperately wa, more ways to gather, order, and analyze the data they collect. that's what tleau does. it has more than 86,000 customernd including verizon netflix. >> what an amazing transaction for the tableau shareholder. i mean, they are about to be in a business where their biggest competitors were going to be amazon and google, and all o ga sudden the bought out at a 50% premium. i mean, that is -- i mean, we're breaking out the champagne on behalf of the tableau shareholder because that was a great outcome. >> reporter: cloud companies from amazon to google all understand that this is a hot market to capitalize on and they're workingovo ie or acquire their way into advanced
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analytics.oo it's why ge just last week bought a data analytics company called looker for nearly b lion. analysts say this deal is a shot across the bow at microsoft, extending the rivalry between salesforce and microsoft from sales tracking software to the analytics fomarket. busome, this deal also sparked concern that benioff knows he can no longer grow his company as fastde indeply and that he will now have to go out and pay for that growth. for nightly business report, i'm josh lipton, san francisco. now that tariffs on mexican imports have been averted at least for now, attention turns back to china and a new report out today from that country anowed a decline in chinese imports, perhap indication that the trade war is reducing demand there. and the icy relationship between the u.s. and china was punctuated over thend wee when treasury secretary mnuchinde fended the use of tariffs and said that there could be more
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coming. feunice is in beijing us tonight. >> reporter: chinese data expert for may beat eectations. manufacturers front loaded shipments or rushed orders after president trump threa slap more tariffs on $300 billion worth of goods. experts jumped%, blowing past consensus of a fall of 3.8%. imports suggested lackluster domestic demand. the trade surplus with the demand widened to $27 billion. most analysts believe weakgl al growth and the trade war will hit thehances of a recovery in the second half and lead to more stimulus. separately, chinaesponded to mnuchin's assertion that president trump and xi would meet at the g20 in june. the foreign ministry refused to confirm theng meeting, sawe have noticed the united states has repeatedly expressed this expectation. c if there iscrete news on this, china will release it in a timely china is likely assessing the
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risks of having president xi jinping meet with president trump. the chinese won't want president xi to publicly humiliated at the same time they'll want to appear like thest cont partner and the u.s.-china relationship, which suggests that they would want to have the ,eeting. the bottom li though, is that from the chinese perspective, a trt p-xi meetinge g20 is not a done deal. for "nightly busine report," i'm eunice yoon in beijing. so, what does all of thisor meanhe fed and the odds of a rate cut? steve liesman has that part of the story. >> weekend deal with mexico to avoid tariffs, markets are still betting on a series of interest rate cuts from the federal reserve this yeae the chaf a rate cut is priced in futures markets running around 80% so what would it take for the fed to lower rates? the fend meets next week they're expected to stay on hold but perhaps signal possible cuts coming in july. a cut might come if presidents trump and xi either don't meet
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in japan laterhi month at the g20 gathering or if they meet and can't strike a deal. the president sat id additional tariffs could be levied on chinese goods. a weak second quarter growth could all seal theoreal a fed rate cut. some fed watchers expect a mini-easing cycle consisting of two or three rate cuts. >>t supports asset prices and credit conditions, softens the dollar a little bit, it would help sectors like hsing that are beginning to benefit from lower ten-year yields. is it totally transformative? no. does it help lean against this extreme uncertainty frde tra yeah, it does. >> and there are those who say the fed may decide to hold the i . new york fed president says he knows what markets are pricing in for the fed but he declined to endorse it. it the bottom line is that the constantly we're by shocks and the question is, assessing the magnitude of these shocks ie critical andust don't really know at this point if
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it's required to have deep cutt and rates te market is pricing at the moment. >> there's some risk that if fed doesn't deliver but another round of tariffs or even tariff threats from the trump administration would likely o force the fedut rates in response. for "nightly business report," i'm stooeve liesman. and from interest rate cuts to raising the capital gains tax, just last week,re billion hedge fund manager stanley druckenmiller said he would not have a problem with a hirer capil gains rate but what about individual investors? joining us with his assessment, ben phillips' founder and chief nvestment officer of event shares. thanks for joining us tonight. you know, among proponents, one of the arguments in favor of raising the cap gains tax is that many wage earners already pay a higher tax tn capital gains tax rates, so raising the cap gains rate would just lev e playing field. what do you say? >> well, you know, we lked at past examples in '81, '97 and
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2003 when you saw the tax gains rate actually cut and you saw an increase in tax revenue so for the individual we actually think that higher gains taxes means that they're going to be less willing to invest in stocks and it reduces potential future growth as entrepreneurs are less willing to invest and so we think that means lower stock market returns and lower incomf retirees who are trying to ionetize their stock portf >> yeah, i was going to say, you make thent phat basically for retirees who may still have significant exposure to the stock market, this actually cuts back on their ability to spend quite const'erably. >> tright. it's kind of a double whammy, right? you have first the lower equity returns, lower stock market returns so you have that plus you have t hit from the taxes so if we're talking from going 20% to, let's say, 35%, that's almost doubling the taxurden on a sale so you sell $100,000 stock position instead , you know, just paying $20,000 to uncle sam, you're paying $35,000 toncle sam. >> and we often think of just
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the stock market when we're talking about the capital gains rate but this applies also to small business owners in man cases, doesn't it? >> absolutely. i think it's about a 50/50 sbetweenck sales and other capital gains which include business sales so you think of an entrepreneur who, let's say that, you know, they put in ten years of sweat equity, no cash equity, sell their business for a million dollars and you're talking about another $150,000 that they can't invest -- reinvest in the business if we go from a 20% to a 35% tax rate. we thik that's a drag on growth. small businesses are the engine e r job creation. they're the engr innovation and u.s. economy so if we throw a wrench in that, we think that's bad overall for u.s. grow s. >> you als it's an easy tax to avoid, just don't sell your shares. >> that's right. it is one of the easiest taxes to avoid so there is some of that encouragement for might ncourage a buy and hold investor so there might be some of that but we have to ask the government, what is the intention of hiking the tax there?
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what would that mean? and they want to raise revenue but actually it's counter that. you high cap gains tax, lower tax revenue the pt three tim it's happened. >> thanks for joining us tonight. >> thanks for having me. > time to take a look at some of today's upgrades and downgrades. tesla was upgraded to buy from neutral at roth capital. the analyst cites the potenfoal stronger demand from china. the price target oc $238, the rose 4% to 212.88 dlargs. analog devices was upgraded to buy from sell at goldman-sachs. the analyst cites an improved growth outlook and exposure to multiple revenue drivers. the price target is $114 and the stock rose more than 5.5%. still ahead, amazon issues a new credit card to help consumers build their credit but is there a catch?
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>> therapeutics has filed for bankruptcy. the filing comes days after thec pharmaceuticpany agreed to pay $225 million to settle federal chaes over the sales of its opioid drug. first drug manufacturer to turn to bankruptcy due to opioid-related lega expenses. as you know, it is the story that we have been following for years from the first state investigations to doctors who were targeted by the company. and back in 2015, ewiwe did a series focused on the issue call "pushing pain." > also as you know, big tech is facing antitrustrurny in washington these days and that includes facebook which has ambitions far beyond its core social media platform.
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julia has more for us tonight. >> reporter: the s.e.c. will be taking a hard look at not just whether the tech giants are too big but also whether the tech giants are unfairly using their dominance inheir core competito. i think theocus is going to be on facebook and google. they both have very dominant positions in niche markets. for facebookit's social networking. with google, importantly, it's advertising technology or ais tech whhe piece of technology that publishers use to sell ads online. it's also online search andth ose markets, they have a veryna domint position. >> reporter: with facebook now competingein a wide ran of es businessrom video games and esports to job postings and movie ticket sales, one question is whether facebook is using its dominance in social media to promote, say, its ownatg service. the ftc will scrutinize facebook under the federal trade commission act. according t one lawprofessor, who says it's more flexible law and could recognize new forms of power and abuse, saying the ftc
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could decide thatin dt platform is a gatekeeper and abusing competitors on the platform would be unfair competition. google was fined a record $2.7 billion by the eu in 2017 for giving an illegal advantage to its own online shopping service in search results. the ftc investigated google for thisn' but d fine the company. president trump in an interview with cnbc monday cri large eu fines against u.s. big tech but said the antitrust issue is worth exploring. >> i think it's a bad situation but obviously, there is something going on in terms of monopoly. >> reporter: experts saying that regulatory scrutiny is likely to be much more about policing these companies' behaviors rather than trying to break the. >> i do believe the agencies are going to look closely at big ch but i think it's going to be much more drawn out and sort of in the trenches and details than people think. i just don't think we're going to see these sort of sweeping wholesale changes or break-ups
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that some people are talking about. >> reporter: now that facebook enables itssers to makehone calls and sell products, they'll have to be careful to show it's not ngdisadvantagiew rivals, including the likes of mobile carriers and ebay. forne "nightly bu report," i'm julia boorstin in los angeles. a rican airlines extends flight cancellations ofax 737 planes past labor day and that's where we begin tonight's market focus. he airline carrier says it's canceling more than 100 daily flights because of the grounding of the37 max planes through september 3rd. later than the previously planned august 19th date. boeing says it has finished a software patch for the 737 max nplanes but aviat officials have not signed off yet on those fixes. the ane was grounded in march following an ethiopian airlinesc crash, thed fatal crash in five months involving a max. shares of amerin airlines dropped a fraction to >$30.76. kraft heinz says it's completed an swernl accounting
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investigation and changed its financl practices that triggered a regulator probe and stp decline in the food maker's stock price. they say they are taking actions to strengthennt internal ls over reporting. shares rose. private equity firm apollo global is buyingal online dig photo services company shutterfly. t apollo is goi pay $51 in a share that values shutterfly around $2.7 billion. shuttefly was up more than 2% to $50.25. and merck is buying tilos therapeutics. the acquisition gives merck control of a pipeline of cancer, fibrosis and autoimmune disease treatments. amazon is launching a new credit card for prime mem with no credit history or bad credit. the card will be called amazon
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credit builder and it will allor to build up their credit through a secured card while getting perks like 5% cash back on purchases. what are the pros and the cons? well, greg mcbride joins us now to talk about that. greg, nice to have you here. >> thank you, sue. >> you eeknow, it as though it's a good idea for those who are, quote, unquote, unbanked, don't have access to credit, but it seems the devil is in the details. one instce is an extremely high interest rate. >> very high, even by retail card standards, the interest rate is over 28 retail cards by nature tend to with igher rates to begin but even 28% is really at the top end. >> and that's on a secured card, so you deposit money and that becomes your credit line and yet you're still paying the 28 o ther thing that strikes me is you can only use the card to buy items on amazon. that's a new wrinkle. >> yes, and this is a -- what's
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called a closed loopard so like a lot of retail cards you can only use it at that particular retailer so this -type card but having a secured card that's kind of a new wrinkle and you're right, you make a deposit that's equal to your credit line, anywhere between $100 to $1,000 really takes away a lot of the risk for the issuer and also for theard holder but again, paying 28%, you don't have to keep a balance for you have more than wiped out any cash back they're giving you on those purchases.n >> it comes do discipline, does it not, in terms of if you get one of these cards, you need to pay off the balance completely. >> absolu ily. i mean, a lot like a sharp kitchen knife in the right hands, it's a very useful tool. the wrong hands, it can be dangerous with an interest rate of over 28%, if you're carrying a sbalance, tha dangerous. if you're trying to establish credit, don't fall for thisti that you have to carry a balance in order to build credit. you don't. you can maksmall token purchases, pay it off in full every month, build credit very
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effectively tha way, not incur finance charges and if you're a prime member, you can get 5% back onhose purchases. >> but it does highlight the number of people who are either underbanked or unbanked completely. they're king advantage -- they're looking into this opportunity to reach those people who wouldn't otherpose have an unity to have a card, right? >> yeah, bill,ea i this has been, really, i think, the area where a lot of unancial instons and even some nonfinancial institutions have been trying to tap into this market. te unbanked and the underbanked consumer, viewit as a potential growth area, but on the other side of that, if u're the consumer, you've got a real incentive towh d you can to pay that bill on time, not run up balances that you can't pay back and then ns eventually tte to an unsecured card. >> greg, as always, thank you. greg mcbride with bank rate. coming up, help wanted, the power of wind and the job skills that are in demand.
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the number of job openings remain near a record in april and it exceeded the number of un ployed americans by the largest margin on record. according to the labor department, there were about about 7.5 meaning that employers are still having a hard time finding the right workers. >> and that isspecially true in the wind power industry which is experiencing record growth right now. many businesses there are hanging out the help wanted sign and kateogers went to one of thos companies in shenandoah, pennsylvania. >> reporter: in 2018, jason was at a cross roads, after losing his home and landscaping business in youngstown, ohio. he decided to pursue a six month
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program for wind turbine technicians. >> i was real interested just in he small turbines at home, trying to build one myself. i decided that maybe i didn't know enough about it. maybe i should go to schoo for it. > reporter: that maybe turned into a career forhim, who's now a senior lead technician for a renewable company in shenandoah, pennsylvania, with 114,000 jobs supported by wind energy in 2018, from construction to manufacturing, the amecan wind energy association says workers like him will be in demand f years to come with projects under way nationwide. turbine technicia make a median of $50,000 annually but in the face of a tight labor market, companies are aggressively recruiting across state lines, offering signing bonuses and competive benefits with 60 wind facilities and another five in development, they say talent retentions a top concern. >> we've been doing a lotthe local colleges and schools and
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even starting in the high schooa because it doesn't require a four year degree. it's really a commient to safety, first and foremost, mechanical aptitude and problem solvers, and so when you look across our work frs o technicians, they come from all different backgrounds. >> reporter: manufacturers do make parts but the supply chain is also global so tariffs on imported chinese goods could hinder job growth moving forward. >> we would have been hiring more people if it weren't for the current tariffs, and if the tariffs increase as the president is proposing, that will either further reduce o growth or could at some point lead to a decline in the number of jobs in the wind >> reporter: political uncertainties aside, technicians like clayton say the job is rewarding. >> it's like working on a big car. it's satisfying. it pays good. the benefit's aregood. you know, kind of makes you feel like you're doing a little bit
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good for the environment. even if it's just small. >> reporter: f "nightly business report," i'm kate rogers in shenandoah, pennsylvania. here's a look at the final numbers on wall street today. the dow rose 78 points, the nasdaq added 81 and the s&p 500 was up 13. and that is "nightly business report" tonight. i'm sue herera. us.nks for joining >> i'm bill griffith. have a wonderful odening, ever see you tomorrow.
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