tv Nightly Business Report PBS June 19, 2019 5:00pm-5:31pm PDT
♪ this is "nightly business report" with sue herera and bill griffeth. ♪ the committee will closely monitor the implications of incoming informati for the economic outlook and will act as appropriate to sustain the expansion. >> the door is open. the fed holds interest rates steady today but signals thatld one ctill be coming. top heavy market. a quarter of the gains this year are concentrated in four stocks. is that cause for concernmong investors? qualityarontrol. why buyers are finding plenty of problems with the new technology designed to keep them safe. those stories and much more tonight on "nightly business report" for wednesday, june 19th. ♪ good evenin everyone. welcome. the federal reserve appears close to cutting intereste rate.
hairman of the world's most powerful central bank said what the marke wanted tohear, that the case for more accommodating policy h strengthened. today the fed held rates steady but raised the prospect of lowering them in the future and stocks rose. the dow jones rose 38 points, as,504. the nasdaq up 33. the s&p added eight. it is now less than 1% away from a record. steve liesman starts us off tonight i washington. >> reporter: the federal reserve left interest rates unchanged at the june meeting but major change in its outlook that's just in. it could cut interest rates m i thths ahead, maybe even at th next meeting in july. the big changes the federal reserve effectively ended its policy of patience where saying it wouldn't do anything for many months. that word came out of the policy statement. instead itmpsized uncertainties in the economic outlook and said it would, quote, act as appropriate to sustain the economic expansion.
as recently as march no fed official forecast a rate cut this year. now eight fed officials forecast at least one i2019 and seven of them forecast two. fed chair jay powell saidos eve who are not forecasting cuts in the survey are leaning that way. >> a number of those who wrote down a flat rate pass agree thae case for additional accommodation has strengthened since our may mting. this added on accommodation would support economic activity and inflation's retn to our objective. uncertainties surrounding the baseline outlook have clearly risen sin our lastmeeting. it is important however that monetary policy not overreact to any individual data point or short-term swing in sentiment. doing so would risk adding even more uncertainty to the jot look. >> what will it take for the fed to actually cut rates? powell made clear the committee wants more clarity in the outlook and how much the dme really is going to weake t he wants see how trade talks with china work out. if the concerns about the
economy areroven right in the data, it seems clear the fed would respond with rate cuts and it could happen as soon as july. for "nightly business report" i'm steve liesman in washington. >> let's turn to diane swan, e chiefnomist at grant thornton. good to see you. you were amonghose who were pointing out we could get what you called an insurance cut today. what did you makot of what we today? >> we didn't get an insurance cut today but we sure got powell punted to july, but i think they're gearing up for take cut in july. steve is absolutely right. they've got a littl more dat they would like to see. they're really worried now that inflation -- i know mry of y viewers say, hey, i'm paying too much for things, but they would like t see a much warmer economy given how long the expansion is. they would like toee a bit of a heat wave and we're not getting it. they're mething concerned about. they really miss that. something else important for viewers to understand is in t statement itself, steve read that part of the statement, they said they want to extend,
actually do whatever necessary to extend theength of the expansion. i think that's something that's really unusual for the fed. we really don't usually hear the fed talking about sustaining expansions. we sear all of this othff that is, you know, more abstract like full employnt, price stability. but the idea they want to sustain the expansion, and i was at the meal that j. powell was at and he was talking to people getting a second chance in the onomy. he only sees the method he has to opening up the economy to more people participating in the economy is to expand the extensio >> the flat talks between the u.s. and china, we saven't realn any progress on that front. >> reporter: exactly. we really need to see progress on that front and backing off of tariffs as well. that's something that the fed ie conc about, that already the tariffs we have -- because the mexican situareon did f up and that scared the fed. that settled down, with the idea would tear up everything from
we see but now will another round of tariffs with china or at least a backing off of tariffs withat china. ill be one of the factors they take into account.io the trade situis one of the things they're concerned about. the issue of uncertainty on t sentimeny got spooked last december because not only did businesses pullack when we had the huge market swoon, and we saw consumers pull back. there was more momentum than there is today and that's something they are worried about. they are still talking about a preemptive at, talkingut cutting before the economy falls apart and insurance. >> diane swann with gra thornton. good to see you,an die. >> thank you. two trade and the changingn out of china. the rhetoric used to be defiant but not anymore. >> reporter: the chinese foreign minister struck a warmer tone today saying that the torrey of u.s./china relations shows
ivat pos outcomes were possible. fake media was quoting president inping as saying that the world wants a u.s./china trade deal and he' willing to meet with president trump to exchange views on fundamental issues. however, president xi also layed out parameters, that the two should talk at equals, accommodate each other's legitimate conrns and they should treat each other fairly, a part of what theyee at the unfair treatment of huawei. i spoke to people on the chinese side that followedhe talk closely and they say china is cautious. there's concern president trump could decide to hit beijing on tariffs on issues that they see as unrelated to trade and economics, such asg the hng protest. he did it with mexicos and the flow of migras over the border, so the way it was explained to me is what wouldsi stop pnt trump from doing it again with china. in which case a tr me deal would ningless and it might be better to wait things out.
i'm eunice uan in beijing. b> way way as was just mentioned is hasome one of the most controversial company in the u world. the. has barred businesses japan.ing business with the concern is that huawei's cozy relationship with the en chinese gover leads to fears it could use its devices to spy on other countries and mpanies, and the ban has clearly had an impact oo its business. de-i h deidre bosa spoke with huawei in china. >> reporter: currently black listed by thenddministration possibly a pawn in the u.s. trade war, chine's biggest tech company huawei is in the midstf a battle and a costly one for a company trying to prove to the world it is embracing transparency and trying to earn the trust of vernment, huawei's ceo was very
unforthcoming. he down played the company's importance and denied its role in the trade war. >> translator: hwei is a very small issue, and on the table of the u.s. side it is not even as big as a sesame. it is not worth while to talk out our issues, and we will counter ourselves to address the issue. we still do trust the judicial system in the u.s., and we believe the judicial system will address the issue. >> reporter: mr. wren, how can you say this? you have 180,000 employees. you are one of the biggest companies, not only in china but in the wwhld. would it be strange to talk to chinese government officials when you are such an important company to china and in t world? >> translator: because we are fully clable to d with those issues on our own. >> reporter: earlier this week the world's number two cellphone maker said it could take a $30 billion hit to revenue on those u.s. sanctions, but that massivere number doesn't s wren. he told me that $30 billion is i very small and that the company does not attach
importance to high numbers, rather they focus on performance. for "nightly business report" i'm deidre bosa in china. ale is looking to move a 15 to 30% of its production outa of china to southeast asia. such a move would reduce its reliance on chinese manufacturing. separately, harley-davidson inked a deal to build smaller motorcycles in china. the bike will be sold in china and likely other asian markets as well. is expected to go on sale at the end of 2020. back here, white house officials were on capitol hill to talk about another looming issue. at would be the debt ceiling, something lawmakers have to incrense so the gover can pay its bills and avoid defaulting on obligations. ylan muay joins us from washington tonight. here we go again. where do thtngs stand r now? >> reporter: well, we are certainly closer to a deal than we wer 24 hours ago.
treasury secretary steven mnuchen alo with acting white house chief of staff nick mulvaney met with congressional leaders today. they're trying to do three things. not just raise the debt ceiling but make sure they can fund the government and avoid a sequester. ry painful, steep cuts to government spending that would take effect by the end of the year if they can't reach this deal. so these negotiations are ongoing and house speak nancy pelosi and senate minority leader chuck schumer put statement saying they feel today's discussions advanced those bipartisan issues. >> he hinted at this a minute ago, butpe what h if they don't or can't reach a compromise? >> reporter: well,wh particular talking about the debt ceiling it could be devastating for investors. that's sething that could shake the face that investors have in the united states credit. however, treasury sretary mnuchen said that if they can't reach a broader deal, the white house is prepared to offer a one-year increase in the debt
ceiling as well as a one-yearco inuing resolution that would keep the government funded at its current levels. he said that president trump wants to keep the government open and does not want the play around with thet ceiling. >> all right. but what is their deadline right nowan to reacgreement? >> reporter: so they do have some time here to continue the negotiations. the deadline for raising the debt ceiling is some time in the faat, likely september or early october. they need to keep the governmenr funded how by the end of the fiscal year which ends on september 30th. >> a little bit of time. ylan mui in washington. thanks for staying lateor us tonight. >> reporter: absolutely. t is time to look at some of today's upgrades and downgrades. u.s. steel was upgraded to buy om sell at vertical group. company'sst cites the decision to idle two of its u.s. plants. the shares rose 4% to 1517. trip adviser was upgraded to buy om hold at suntrust.
the analyst cites the company's growth outlook anden pal revenue acceleration. the price target is $60. the shares were up nearly 2% to 4719. six flags was upgraded to out perform fromeual at webb bush securities. the analyst cites spending oprovements and developme parks in china. the price target is $62. the shares rose 2% to $5267. is> still ahead, a growing concern for adves. i'm julia boorstin in france at the annual advertising festival here, and facebook and google are out in force but so is talk of tech lash. we'll look at what potential regulatory could mean for the other players in the space. that's coming up on "nightly business report." ♪
♪ >> as we menti earlier, the stock market's major averages are nearing new highs and the biggest gains have beenco ncentrated in just a handful of stocks. bob pisani explains. >> reporter: we are just about halfway through the year and stocks enjoyed a strong first half. all three majorre averages up double digits so far in 2019, but the gains have been concentrated in one sector in particular, technology. tech is the best performing tech tore in the s&p 500, it is up 25%, and we should point out that almost a quarter of the gains this yfr hav come from four big names alone, microsoft, apple, amazon and facebook. why? hhe investors have been searching for grond protection from the trade tensions. microsoft in particular has been rallying t all-time highs several days in a row, and that was firmly above the $1rk trilln n market capitalization. the s&p remembers a market cap
weighted index. those fou stocks, they comprise about 15% of the s&p's overall weighting for stocks. remember, may was a very bumpy month for big tech as a whirlwind of privacy and regulatory concerns hit the sector. imarily around lawmakers looking into putting tech titans leash.ghter trade sensitive semiconductors have been at the mercy of the u.s./china trade talks but still up believe it or not more than ss% on the year. for "nightly busieport", i'm bobez sawisani at the new y stock exchange. with the four biggest names in tech, what are the risks and sernd.investors be con erin gibbs is a portfolio nager at s&p global market intelligence. welcome. nice to have you here, erin. >> thank you. >>rn are you con about the top-heavy market or not? >> i am concerned they're coentrated in two different
sectors. i know you called them technology, but when you look at em two of t top five are pure technology, microsoft and apple, and the others are communications, the facebook and google. the last one, amazon, it is consumer remember.nary, it is about buying stuff, not a tech company. even so, those areery concentrated and it is somewhat unusual we have so few sectors presented. when you look at the overall weightings and you say, these top five, these top four are such a big weighted index,t is not that much difference in the past 20 years. it has been a bit of a gradual increase over the past five years. >> right. but when you look back 20 years, it is actually very much in line and much like what we kind of saw the avera weights in the early 00s. so i'm not as concerned about them being big and having mega cap stocks. i am concerned that investors are too focused in much more volatile sectors and they may not be getting the diversification that they really need. >> i mean if there is a concentration you're concerned about, it is that all five c cld
sidered growth stocks, right? >> and that's -- ue stockon't have a v per se in this group, right? >> exactly. and all you have to do is just go dowto sort of the top ten stocks and you start getting some value stocks and some financials, but that's another problem, is that you are very much in these growthck s growth stocks are the ones that have by far the highest prices, and not just higher than value. even historically when you are looking at the past 10 to 15 ars, growth stocksre fored at about 50% higher every dollar that they earn arrsus what a dollar of value stock. you are paying 50% more for every dollar that they earn, and s concerning that you are paying so much more for growth stocks versus the value. it isomething that we definitely want to recommend to investors to be diversified and have some value as well as growth i your portfolio. >> i was just going to ask you if the average investor should take a look at that and maybe say, you know, i need to diversify in some other inctors. >> cer if you have all of these very -- the growth stocks
have been doing well and it is healthy to have an overweight in growth stocks when the economy is growing s well,ut we're actually expecting a bit of a slowdown over the next 12 months, and particularly when we are seeing thencased volatility over the past 12 months where you see the big, huge up day and down days, concerns about chinese tariff wars, whether we're going to have ra raa rate cut. there's big unknowns out there, so diversification at this point in the economic cycle is not a nd thing. >>hat note, erin, thanks for joining us. erin gibbs with s&p global market intelligence. southwest pilots want reimbursement from boeing and that's where we begin tonight's market focus with the pilots ingon for the airline a boeing for compensation to cover legal costs and lost income due to the grounng of the 737 max planes and the cancelled flights that that has caused. southwest, by the way, also said it has extended those t cancellationough early september, but the airline did raise its fu-year revenue even
though its overall fuel efficiency was reduced by groundings. shares were down a fraction to $51.51. meanwhile, american airlines agreed to buy airbus's longest-range single aisle plane. amheican becomes first major u.s. carrier to purchase the new naow-body jet since it wa unveiled at the paris air show earlier in the week. shares of american rose more than 2% today to $33.21. target ceo today publiclyiz apol to customers after cash registers at its stores went down for a couple of hours on saturday, and then a credit card glitch prevented sales on sunday. >> i need to staut by apologizing to thousands of guests who were shopping our s stores onurday and again on sunday. unfortunately, we had issues both days. on saturday an internal issue tied to standard maintenance that knocked us down on a couple of hours. on sunday we had an issue with
our partner, ncr, one of their upstream data. cente so a disappointing week end for us. >> target shares fell a fraction today to6. 86 win beige owe posted better than expected earnings due to lower costs and more favorable tax rate. the vehicle maker missed revenue estimates because of what it called a challenging rv wholesale market. the stock was up more3.5% to $40 even. mga entertainment says it is no longer interested inrying to merge with matel after the rival toy maker rected mga's second merger attempt. mga'sai ceo it was in the best interest of his company not to move for with an effort and that mattel, quote, cannot be salvaged, end quote. mattel's shares were off more than 5% to 11.41. after the bell oracle reported better thanec ed earnings. the software maker topped revenue estimates thanks to an crease in cloud services and license support. shes initially rosen the
after hours trading but closed the regular session down afr tion to 52.68. hundred of billions of dollars will be spent on digital ads this year and much of the money will likely go to companies like google and facebook, but before making spending decisions advertisers are taking into considerati the regulatory binklash agast the tech giants, sometimes referred to as th lash. julia boorstin reports once again tonight from the cannes lyons conference ifrance. >> the annual gathering of advertising giants discussing where to put the $600 billion that will be spent on ads worldwide this kum r year comes amid growing tech lash, criticism of google and . facebo the ceo of the largest ad conglomerate, mark rooeteid, sa breaking up two giants would not help csumers. >> with the shift online they
are more powerful. we have to ask what are we trying to achieve with breaking up and will it make the world a better place. the great benefit of the platfos for consumers is most of the products are free. ey're advertiser funded, advertiser supportednd in balance it is a good save. >> with so many other options out in force here in cannes from snap to twitter, the ceo of another con grglomerate sayser advert will move their dollars if facebook and google don't make meaningful changes around issues of brand safety, not having ads placed next to offensive connt and prifts protections. >> you notice, everyone talks about government regulation breaking them up, but what lreally w happen is our clients will not start spending with them and that will be the biggest effect if it is not coorected. >> rr: a range of companies are positioning themselves as alternatives to facebook and google by focusing
on professionally created content without risks around brand safety. one is at&t's ad tech division. >> that's a big opportunity for an because, y, i think that google and facebook have had a hard time managing the content on their platforms and assuring advertisers that they're not going to e up advertising in a place that is inconsistent with the brand. >> reporter: others such as pintrest and video game streaming service twitch are presence hereir to explain to advertisers the depth of their devoted audiences. while magazine publisher positions itself as a premium filter for youtube. >> advertisers who may not want to advertise on youtube will advertise through us on youtube because maybe they want endemic content for their advertising. >> reporter: as parties are hosted for advertisers, the brands have more options than ever. for "nightly business report" i'm jewel yaulia julia boorstin
france. coming up, why car quality is sta♪ing out. ♪ a new s reports car buyers are finding plenty of problems with the latest models in showrooms, in particular they're seeing issues with the technology designed to make driving a car safer. here is phil lebeau. >> reporter: i you are looking to buy a new car or truck, you know one of the big selling points, technology that makes driving easier and safer. take lane departure warnis. the goals to keep cars from collidingha during lanees,
but a new report by jd power says driver assist techn not always intuitive or easy to use. >> one of the dangers is that automakers overcomplicate the technology and engineers need to remember that they are designing for normal peoplend not for other automotive engineers. >> reporter: while automakers may be strug with driver assist technology, jd powers says buyers areg seein fewer problems withnectivity and infotainment systems. this year's report shows korean brands continue to have the most problem-freeew vehicles with genesis, kia and hyundai leading the way. >> they deliver as much technology as most other brands, but three are very, very good at keeping it simple and giving consumers exaly what the want. >> reporter: by comparison, the luxury brands jaguar and land rover, both owned by the same company, are rated as among the newest models with the most issues. jaguar, land rover, along with mitsubishi, are rated the worst
in initial quality. d powers says new car reliability is still at a record high, but as automakers add new features, especially technology to help us driver safer, the challenge is making sure not only that that technology works but that it is easy to use. phil bulebeau, "nightlness report", chicago. the billionaire founder oft blac is giving the university of oxford $188 million to research the ethics be artificial intelligence. it is believed the largest single gift to oxford since the renae. steve schwartzman said he hopes that gift will help the rollout of the technology and limit the disorder to society. and finally tonight, an exclusive club h a new member, bernard arnow is now worth $100 billion joining mike bezos and bill gates. he is chairman o lvmh, the richest person in europe and owns a 97% stake in the fashion
house christian dior. here is a look at the final day's numbers on wall the dow rose 38 points, the nasdaq up 33. s&p 500 added eight, less than 1% away from a record. that is "nightly "siness repoor tonight. i'm sue herera. thanks for joining us. >> i'm bill griffeth. have a great evening. see you tomorrow. ♪ ♪
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