tv Nightly Business Report PBS June 11, 2019 5:00pm-5:31pm PDT
. this is b"nightlyusiness report" with bill griffeth and sue herera. ♪ it's time to sa enough is enough. we need to re-think our approach to antitrust and to merger appral. >> mergers in trouble, attorneys general sue to block t-mobile from merging with sprint and that's not the only deal being questioned. >> taking charge. best buy has a new ceo and she's determined to pick up where the last chief executive left off. >> any time, anywhere, the future of gaming a the technology poweringos it. e stories and more tonight on "nightly business report" for tuesday, june 11th. and we do bid you a good welcome everybody, and we begin tonight with big corporate mergers and a push to
stop some of them. today, ten state attorneys general sued to block the coination of t-mobile and sprint which would be reducing the number of major u.s. wireless telecom providers from four to three. the mergers have be in the works for year, but the new york ag is bigger and not always better and that such a deal would be bad for consumers, innovation and workers. >> t t-mobile and sprint merger would not only cause irrepable harm to mobile subscribers nation wide by cutting access it affordable, reliable wireless service for llions of americans, but we're incomelarly affect lower and minority communities here in crossork and urban areas the country. >> the fcc has yet t formally rule on the deal and the justice department is still reviewing it, as well. today's news sent shares of both sprint and t-mobile lower. >> and cvs' $69 billion
acquisition of etna is facing a potential legalge chall in an unusual case the federal judgcould reportedlylock the deal even though it already closed late last year. shares cvs fell 2% in day's session. bertha coombs has more. >> cvs and etna's merger closed last november, but u.s. district court judge richard leon has still not signed off on the justice department's approval of the deal holding hearings on con concerns from consumer groups who said the doj could not go far enough to protect seniors. the doj ruired the company for the etna 2 million member dg d business. the new york post claims the judge appearsse poio tock the merger citing an anonymous source close to cvs. cvs shot back on nightly busillss report that we not be distracted by rumors. an attorney for consumer groups opposing the deal saysed judge
could ask further conditions on the divestitures. judge leon ruledin a the trump administration to block the at&t-time warnernd merger that decision prevailed on appeal, but in this case some antitrust analyst say the judge cannot reverse the legal statute known as the pontiac because it goes beyond the scope of the settlement app such a ruling would likely be reversed on appeal. final arguments in the case are scheduled for mid-july. r "nightly business report" i'm bertha coombs. hedge fund merger tod urged that company to call off its planned merger with raytheon. he says it makes no strategic sense and as we reported yesterday president trump expressed concern that that deal could kill compention. >> w i hear united i may hear raytheon which is another incredible company and the missile systems they make are
incredible. when i hear they'remerging, does that take away more competition? it becomes one big, fat, an beautiful co but i have to negotiate, meaning the united states has to buy things and does that make it les competitive because it's alreadt non-coive. >> shares of both raytheon and united tech came under pressure in today's session. >> in washington, congress opened its antitrust investigation into big tech. it planned several hearings and interviews as part of its probe into whether the dominance of companies like amazon,apple, facebook and google have decreased competition. >> i strongly believe that this investigation isg l overdue. this subcommittee has a constitutional, to have antitrust laws and cpetition toensure they're working. >> the committee plan toeks more a number of issues related to
the industry. today the focus was on the big tech that they have to publishers and the news industry. >> to the markets now onall street, the dow snapped its six-day win streak. the stocks hadped strong on reports of stimulus measures taken by the chinesenm govt to use its economy and that rally fizzled and the industrial averagey the close was down 14 points to the nasdaq fell a fraction and the s&p was down one point. today's pullback has some investors wondering whether the recent rally can be trusted. make santoli is at the new york stock exchange tonight. >> stocks have recovered the ground they lost with the s&p 500 now 3% from the record high, and investors seemed not ready to embrace this bound rally just yet. bankf america merrill lynch said its clients sent a trickle of new cash each if the market is 4%. an indicator of investor seiment calls the free gear index remains in the fearful
zone at 35 on a 0 to 100 scale and the so-called volatility index has necned in recent days as it usually does in a rising market. a sign that traders ctinue to pay up for options that give protection against the market drop over the past month. this persistent caution among investors likely has a lot to do with the confusing economic crosscurrent and the series of crucial events that could swing markets around in coming weeks and the employment report solidifiedxpectations for federal reserve rate cut in coming months and with the fed set to meet next week, plenty of thspense remains over its intentions and wheer a rate cut can support the ecomy and lift inflation should be welcome. une g-20 of world leaders in the end of could be the sight of ati m for president trump and president xi to hammer out a trade deal and the u.s. stands to ready to, tend tariffs to $300 billion inhinese imports around that time. meantime, the s&p itself is near levels where it peaked three
times since explaining some hesitation among investors to buy aggressively right now today's prices and sometimes a backdrop of caution and skepticism is a positive for market performance looking forwd, but only if investors' worse fears are wt realized. for nightly business report, i'm mike santoli at the new york stock exchange. >> a new report shows inflation ticked higher, the producer price index which features wholesale prices businesses received for their goods and services raised 5% compared to the previous month and that was in linh expectations. prices for consumer services led by an unusually lar increase in hotel room rentals and costs for medical careere also higher. jason ware joins us now to talk about theat inflation and what it means for the fed and the economy. he's chief investment officer with lvn financial group. welcome back. >> thanks for having me.re good to be >> there is a wide spectrum of
forecastses on wall street about what the fed's going to with interest rates this year. barclays, for ex three cuts before the end of the year totaling 75 bases points and yesterday goldman sachs said no cuts at all this year. where do you fall on this, bearing in mind what we're seeila about ion right w? >> right. a lot of those targets and predictions are reactionary to what t federal funds future market is saying that there's ao expectation market participants that the fed will cut twice this year. our view is thathile it's certainly possible that they could cut once or twice this year that the likelihood of that happening is fairly low. odds o ithat they continue to ring patie with the economic data. i don't think there's any push to cut rates given the fact that slowing to some degree stillco inues to bounce around for the second part of the economic expansion and the 1.5 to 2%ore
and it's certainly possible and if they were to make any move a it's a c more than a hike and we'll see what happens over the next six, seven months. >> as you mentioned inflation is all over t board depending on which commodity or which measure you choose to lk at but do iu see inflation ticking up your work? >> so the fed prefers to look at core pce. we think that's the right measure to try to evaluate where inflation is. there's not much that we're t suggestt there t that we have any kind of hot inflation. certainly 2% is i anlation levelled if economy is well balanced which is seems to be. the fed seems to have at least ceder yellin seemed to have a bit of a tolero let it run hotter than that, but it's consistently been u for the better part of the last ten years and i think it's likely to remain thehe given body of evidence that we've seen. >> then we have the trade tensions with china and the president has certainly called for the fed to cut rates and to help in the trade war with china. it mak our goo cheaper and
maybe the demand remains strong even as the tariffs go up. do you think that becomes a factor for the fed at all? >> ily certa think if the trade war were to be protracted and pk up tonother level we might start to see a little bit of inflation coming from the a trade war good, but i think it's also worth noting that if there's any economic slowdownths a result o trade war then that certainly runs counter toa nd may provide inflation inertia. what we're seeing is rising wages and we are still north of 3% and have been forra three ht months and that's probably more of an indicator to watch, and there are so many secular disinflationary forces out there that i lid on inflation and it's hard for us to make a strong case to make anything run 3.5%. as long as we are sub 2% on core i think the w fedl be patient and see where things go. >> jason ware with lbn financial
group, thanks for joining us tonight. >> thank you. >> well, you would thinkith all of the information online that today's potential mebuyers would be more informed about the mortgage process than ever before, but that apparently is not the case. diana oack has the results o new report. >> after the foreclosure crisis a decade ago, mortgage lending tightened up and new regulations were put in place andrs consu today apparently think it's a lot harder to get a home loan than it really is, a growing number of consumers said they had seenit, thanks to a myriad of credit sites and nearly half couldn't remember what the core wasccording to a recent fannie mae survey.s consum didn't know or everestimated the minimum credit scoreeeded to qualify for a loan. half t ofse asked were up sure and it's higher than 620 and the minimum is 550. both current hom owners and
renters were eally uninformed. consumers everestimated the required down payment. most didn't know or thought it had to be 10% or higher. >> maybe about 30%. >> about 20%. i'm assuming, but no, i don't know the details. it's very>> overwhelming. n reality, the fha-backed loans with a minimum payment of 3.5% and there are other programs through the u.s. department of agriculture and the department of veterans affairs that offer zero down payment option. consumers can aualify f mortgage with as much as half their income going toward debt a ents, but the majority of consumers said they didn't know what the level wos and others said the limit was 40%. fannie mae's chief economist said it's impossible to know how manyn renters don't e consider buying because of these misperceptions, but he said it had to be some. for nightly business report, i'm diana olick in washington.
>> time that take a look at some of today's upgrades and downgrades. we begin with facebook that was downgraded, with moffity and nathanson. the analyst cited the cornd business potential for growth and the price target now $210, that stock rose more than 1.5% to 178.10. jetblue was upgraded to buy f neutral at citi. the analyst cited positive pricing trends right now and the price target $26. that stock was up 4% today to $19.09. dollar tree was upgraded to overweight from neutral at j.p. morgan. the analyst cites the potential for net income growth and the re generation for cash flow. thege price tis $122. the stock gained to 106.63. wellsr fat low was downgraded to underweight from neutral. the analyst cites the deteriorating outlook for brats and the price2 target was and the stock fell a fraction to
$46.26. >> still ahead, stocks that soared in a short period of time may look like something you want to own, but should you? ♪ ♪ >> there was a changing of guard at bestrr buy. corey took over as ceo and she has big shoes to fill. the retailer has come back from the brink and has caused the stock to outperform the broader market in the past five years rising by 12 so who is corey
barry and what's her plan to keep the streak alive. >>rahel solomon takes a look for us. >> at 44 corne barry is o of the youngest ceos to run a major public company and she'se also of 33 women. >> i am deeply grateful to you and the board o directors for their confidence in me and the tileadership evo is in the best interest of best buy and all its stakeholdhes. >> said almost her entire career as best buy starting in 1999 as financial analyst and itst recently chief financial officer. an investment that's paid off with the minnesota native. serve years ago amid slumping sales andanagement scandals there were questions about its survivor and the company brought in an outsider. >>y tought in $2 billion on the operating side and on the product side by being more efficient and two, they partnered with their vendors to do more shop and shock, so making the stores more inviting
edd more focused on products and more foc on the reason why consumers come int.the s >> they invested heavily on tech services like geek squad, total tech support and in-home advisers. for those that are long term investors and have stuck wit the company, that's an investment that's paid off. the stock has quadrupled since joli took over in 22. >> corey's been doing everything that they're been doing thus far. she was instrumental in helping so i mulate the strategy expect to see more focused on services and more focused on smartphone and more focused on new populations like the babybo ers and those are all going to be key tenants of the strategy moving forward. >> that's why headquarters are in minnesota andar will remain close where she grew up benedict. >> she wants her market ceo to be customer service that can
be matched elsewhere, think amazon andensolution-od products. for nightly business report, i'm rah, l solomon. >> h & r block buys thes are haves are firm. the tax preparation company topped analyst expectations and raisedvits nd, as well. h & r block is ao buying financial solutions company wave financial for $405 million. shares of h & r block were up. % to $between.78. chico's fas reported better than expected earnings and revenue and the woman's apparel retailer did see a drop in comp store sales and lored its full-year guidance and it did s seeonger sales trends in the second half of the year. that sent the stock up more tha% to 369. >> hd supply beat expectations while revue was in line. the industrialib disor had an increase in organic sales and that sense the shares down more than 5% to 40.06.
morgan stanley ceo said today that the bank's second quter trading revenue is nlikely to beat its previous quarter. citi, j.p. morgan and bank of america have already warned of a possible trading owdown for that second quarter, as well, but morgan stanley did rise a fraction intoday's trade at $43.67. after theell, dave & buster's missed both earnings and revenue expectations. the entertainment company also fe short witomp store sales and it lowered its full-year revenue guidance in the process. sharesnitially plum ed in the after-hours trading tonight and did close in theegular session up nearly 2% to 51.53. p. morgan downgraded beyond ayat's stock to neutral from overweightg its price had exceeded wall street's estimates. the stock has surged more than 600% from its $25 perhare ipo price. as a result, a research firm report said that short sellers have lost more than $400 million
betting against that stock. after todas downgrade, though, shares tumbled by 25% to 126.04. first nd meat is not the stock to skyrocket to levels that make analysts andinvestors uncomfortable and it won't be the last, either. more recentigprofile examples include netflix and tesla, but what is an investor to do if you are tempted to buy a stock that has risen 600% or what do you do if you already own it. david sowerby, portfolio mager at ancora advisers. welcome y to ha here. >> my pleasure. >> it's the story of the last couple of months. do you view it ashat they call a bubble stock and how would you assess stocks that have gone too fast?oo >> first, i don't own it because i can own stocks that have a price to sales of almost times sales negative cash flow and negative profit margins anda
i don't think there's enough barriers to entry that makehat kind of valuation that's priced for sabthood, frankly, something you want to be long in your portfolio, and it all comes back to when stocks have excessive valuations, fundamentals don't allow you to analyze andva put a true on the stock when there's what we'll call fomo, fr of missing out, that supersedes the desire to own a stock. o au those lead me to the conclusion whether it's beyond meat or a tesla or a bit coin in january of 2018. those are all bubbles. >> what do you do, though, vid? >> there is a definite interest inan based foods right now. fake meat, if you will. >> sure. >> a lot of fast food chains are starting to offer it.
the health issues thateople face and right now beyond meat is too expensive for a lot of analys out there. what do you see as a growing trend right now? >> bill, i think investing in general and investing 101 is always about discipline and patience and in this case, it's even more so which is simply wait a little while for the market to allow more comtition to enter and then find a company and has ay better valuation fundamentals that i think are better to analyze and patience becomes the virtue. if ye can't patient then have the right size of this which is small in your portfolio and don't be that person that leveraged their own portfolio that leveraged in 2018 or beyond meat and each in the big run-up, of june 2019. >> are there areast of the mar or sectors, if you will, where you see too much enthusiasm and
valuations that are out of line? >> sue, i think the fang stocks still trade for the four fang stocks, a being alphabet and the average p-e collectively is 65 times trailing earnings and that's still pretty, pensi expe when they're trading at 17, 18 times earnings and eveness expensive than that. i think too many of those names are still expensiveoday and they're priced for perfection and priced for sainthood and those are names like it. even on the debt side, quickly, the we works and thend teslas the company debt. i think there are bubbles there, too. overall, there aren't many bubbles in the market, but there are sure some in these pocket >> david sowerby, thank you very much for joining us. >> my pleasure. wo have some sad news tonight in the world of economics and finance. economist martin feldstein has passed away. he first came to prominence as
chairman of the counsel of economic advisers under ronald ntagan and he was also presi obama's economic advisory board any president emeritus and a ti lo professor of economics at harvard university. martin feldstein was 79 years old. ♪ ♪ >> the premiere ent for the fast-growing vid why game industry is under way and that's newe cutting-ed technology is on display and innovative new games are shows cased and tyear, a few new trends are e merging and josh lipton is in los angeles tonight. this year at e3, the $166
billion video game indtry is imagining a world where fans can play games any time anywhere. >> no need for a pc or game console. microsoft talked about new technology called project x toud which will allow fan stream complex and graphics-rich games over the internet and right to their mobile devices. other tech giants are pursuing this same opportunity like google and reportedly amazon. >> industry executives saysre t ing technology sounds exciting and there are still a lot of questions. >> what is the experience like?b what is thiness model like and anything that broadens the mark, and anything that brings more opportunities to consumers will be a good thing for the industry. >> there are also changes coming to the business model ofideo games. fortnite proved that free to play games can be moneymakers. epic games, the private company
that owns fortnite raked in $2.5 billion last year and fo rtnite rival ax l attracted more than 50 million unique players in its first month. >> for all its success, though, he industry also faces rea potential challenges. senator josh holly of missouri introduced legislation that would prohibit video games played by minors from offering certain in-game purchases that he says encouraged addictive behavior. >> if this bill were to pass it could be financially devastating for the industry and they could face billions of dollars for the features and they'reg forward with support from m-sponsors senators blumenthal andkey. for nightly business report i'm josh lipton, los angeles, california. >> and finally tonight the world's most valuable brands, advertising gnt wpp and
research agency cantar released their list today a there's a new company at the number one spot. it's amazon whichhe topped list to do a variety of services it offers right now. apple came in second. google rounded out the top three. apple and google had spent a combined 12 years at the top of that list. in fact, google was in the top spot last yr. >> andhat is nightly business report for tonight. i'm sue herera. thanks for joiusng . >> i'm bill griffith. see y have a great evening. see you tomorrow.