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tv   Nightly Business Report  PBS  June 20, 2019 5:00pm-5:30pm PDT

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♪ this isgh "y business report" with bill griffeth and sue herera. new highs. the s&p closes at aevel never seen before and bond yield falls below a key level and investors wonder what is next. on home prices, mortgage rates are falling but it may not be in the best interests of buyers. new perk. what would company is doing to helpav employees for retirement and pay down student the same time. those stories and much more tonight on "nightly business report"or thursday, june 20th. . and we do bid you a gd evening, everybody, and welcome. there were a number of notable movements in the markets today. on wall street, for example, as you heard the s&p closed a new high, with the investors cheering the idea federal reserve may cut inter t rates
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nemonth. that seems to be how the market interpreted the central nk's pledge to sustain the expansion we told you about yesterday. oil prices are up more than 5% on geopolitical concerns and oil stocks followed suit. finally, interest rates continued lower with the yield on the ten-year treasury dipping below 2% for a time today to a three-ar low. he close, the dow rose 24points for a 26,753. the nasdaq added 64, and the s&p 500 was up 27 at that record. bobasez sawny following the action from the new york stock exchange. >> what's behind the rally? there'sot of yu foreuphoria about u.s./china trade talks. energy led the gains, crude oil spiked almost 6% after iran struck a down u.s. drone in what
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was called an unprovoked attack. it is amid recent attacks on oil tankers in the persian golfers. the market took aip briefly midday on president trump saying iran made a big mistake, quot unquote, and hinting that the u.s. could consider a strike against iran, but it bounced back soon after when the president appearedpeo sculate perhaps the drone was shot down in error. after all, trade also playedpa in today's moves. stocks moved higher on a headline coming from the south china morning post that china and u.s. negotiating teams may be meeting as early as tuesday next week before the big g20 summit. what's missing from the rally? we're lacking some fundamental fire just look at carnival cruise line today. it is cutting its full-year forecast because of weaker european booking goes and more travel restrictions. carnival closed down 8% and took down rival cruise line operates n it.egian with
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i'm bob pez sawisani at the new stock exchange. > joining us brian leavitt. nice to have you here tonight. >> thank you. nice to be back. >> pou make thent we are still in a long-term bull market. there's more to go. why do you feel that way? >> yes, i mean investors need to get used to the fact that this is a slow growth world without a lot of inflation. what that means is even though this cycle has been going on for a long time, we haven't built a lot of excesses in the economy. we're not seeing the inflation thrings forward fed interest rate hikes, and it is very rare for cycles to end without oo series of interest rate hikes. the reason why the markets have beenesponding the way they have in recent days is because the fed has backed down off their tightening sta,e. you kn with valuations where they are and the global economy okay, this could go on a lot longer than people suspect. >> and, in fact, you are among tose who feel fed will cut rates maybe a couple of times this yea before the end of the year. i'm curious, you know, fed chair
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jerome powell reminded everybody yesterday of the fed's dua mandate of maximum employment and stable prices. what is it that's calling for a rate cut rightow do you think? >> well, what is calling for a rate hike right now -- o >> a cut? cut.m sorry, a inflation expectations have fallen meaningfully in the united states and arounan the world so if you think through the last number of years, the fed triedo raise rates in 2015. while they did, they had to back off of it. they did it multipl times in 2018, slowed the economy, and now they have to back off of it. so every time the fed tries to step in with aifferent policy stance, i.e. tighter policy, the markets react, yields go down, borrowing costs go up, the economy slows. nthe markets go d and the fed backs off again. so this is no different thane what saw in early 2016 and, you know, the fed is rightfully
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doing i inflation expectations are simply too low in the united states. >> we haveea someine risks, do we not? we have an upcoming g20 summit, weet don't ha we don't have a trade dal with chnd now renewed tensions with iran. >> we also have headline risk. if w will wait until there's absolute certainty to invest, we will neverre invest. yoright, the trade policy is disconcerting. the big risk with trade is that it will lead to a flight to quality, strengthen the u.s. dollar and slow down the u.sga economy. so that is a risk, but the reality is what that means is the federal resve is goingo lower interest rates and stay easier for longer. so, you , three years ago investors would have been talking about brexit, what did brexit mean. brexit meant easier policy around the world and markets that continue to higher. so if we get a bad outcome between the u.s. and china, that's not good from macro perspective, but what is more important is what does it mean for investors. suspect you might have a
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battle of volatility around it but the fed will respond and markets go higher. >> on that note, thanks so much, brian. brian leavitt with invesco. >> thank you. as we mentioned rlier, investor optimism apparently is being driven by the hope that the federal reserve will lower its bench mark interest rate, t is it the right time to cut?li steve esman takes a look for us tonight. >> reporter: a bullish stock market reaction to the fed's announcement this week, suggesting a stock and bond market that are virtually certain the fed will cut mates nextth and even more beyond. there are reasons for the exuberance. eight fedfficials recast at least one cut and seven of them are forecasting two. fed chair j. powell said the balance sheet run-off -- that is the quantitative easing that it habeen reversing, could end earlier. powell also hinted at a possible full hal i point cutnstead of just a quarter. that's the call o morgan stanley, which said in its fed report, quote, a july rate cut 50 bases points or half a point is coming. down side risks in global growth and trade have dragged the fed away fro neutral.
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the federal market community owill want take ab aggressive stance. is m tket too bullish? rate cuts generally come with a weaker economy and that could mean earnings disappointment. from the other side there remains the possibility the cut never happens because the trade deal rikes a with china and the economy turns out better than expected. >> with the summit with xi, i w think il be a positive outcome. i think they both need a deal. they both need a success. i don't think the tariffs will go up on july 1st. i think the employment report on july 5th will be fine, and i hink that the second quart gdp number will be fine. >> and then there's the market level. in 1995 the fed cut rate when like today stocks were at or ear an all-thigh. that worked out well as the economy and the dow marched on for years totome. it cut rates near an all-time high in 2007. that ended poorly for the economy and the stock market. so investors have to puzzle over whether the rat come is coming, how much is coming and if it does couple it be enough for the
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economy. for nrk "nightly business report", i'm steve liesman in washington. low interest rates have been good for dividend-paying stocks this year. they've been hot and could get hotter if the fed cuts rates further. joining us to talk about that, n pres chief investment strategist at point view well it management and a big fan dividend paying companies too, at the same time, right? >> yes. absolutely. >> i was going to say, are we taking more risk -- certainly you get a better yield from a lot of the stocks than you wou from treasuries for example right now, but are you taking more risks because of the prices right now? >> well, certainly -- i mean now that the interest rates have fallen so muchecause of anticipations of fed rate cuts, dividend stocksngre loo more and more attractive as people who are traditionally in fixed income are now lookir over th shoulders and looking at some of the better yielding stocks and saying, maybe this is where i can pick up some more yield. this is particularly true because credit bonds are ao very tightly trading relative to treasuries.
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>> right. >> what i like about dividend-paying stocks right now is if interest rates continue to go lowe they look that much more attractive. look, we hit an all-time high today, bill. what happens if something doesn't work out, that there's a breakdown in trade negotiations or the fed doesn't cooperate? the market could retreat. gain, dividends give you some stability, somecushion, which gives you some protection to the down side. >> but you are particular about what you lik so you say that you have picked three or four stocks for us that would work in a low interest rate environment, and perhaps a lower interest rate environment. >> we like sealth carecks. that's the other growth sector besides technology but it has fen held back due to political concerns, medicat all. we are looking at some of the there and loes o and behold they're paying some of the best yields. i would cite pfizerre r & d pipeline butch 3.4% dividend w has grown over the last five
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years by 5% a year. i would look at cvs, integrated itwith the merger aetna, 10,000 pharmacy stores across the country and c yieldingse to 4%. tha differ denievidend increase% over the last decade. >>e showed exxon and wells fargo in the dividend category but not all are created equally, at least a couple you're not looking at because they might be too expensi? >> to characterize it broadly, you have to be careful of ckvidend bank s because the only thing work is a high dividend paying stock where they cut it andhen look out below. i'm looking at at&t right here, which is yieldin about 6 1/2%, significantly more than verizon. you have to scratch your head and say w. they diversified heavily into content as well as traditional telecom. it is hazard to see how the synergies are working. they have a tremendous debt load. verizon is staying focused, if
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there's a hiccup perhaps in the satellite business, they have trouble with the debt and have to cut the dividend, look out below. retailers unless they have a great strategies against the different rend, they have a big risk. >> ath and beyond you are looking at closely. >> yes. >> dave dietz, good to see you. >> thank you, bill. lower interest rates generally translate into lower mortgage rates which is what w happened thik. while it may seem like good news for the housing market it is not all that great for buyers. diana olic explains. >> falling interest rates are helping morehouse hunters make the math work on a monthly yment. the average fixed rate has fallen steadily since april, lowering t payment onvery home for sale. but lower rates are bringing out more buyers, fuelling competition yet again, just as fast-rising home prices were finally slowing down. >> the recent drop in the 30 year mof
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30-year mortgage rate gives you a reason to believe that the slowdown won't last verylong. >> reporter: in fact, price gains are suddenly widening again. th median price of a home sold in may re 3.6% annually, the largest jump in seven months according to red fin. pres are gaining the most steam on the low end of the market where prices a leanest. permits were lower. what the builders are putting u is largely on the higher end as they battle high costs for landa labo regulatory compliance. >> the only issue is that as rates go down you still have low inventory, and that wi limit sales. so prices are going to go up, sales will not be as strong. >> reporter: the supply of existing homes for sale was gaining but is now shrinking again, especially for affordable homes.s. part of that is due to increased inveor demand. at the end of last year, investors made up over 11% of home purchases, the highest rate
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since core logic began tracking in 1999. the vast majority of those buying are small investors coming in with cash. for regular buyers, the sting of higher prices and the increasing competition from all-cash investors are both negating the benefit of lower mortgage rates and taking the heat out of what so b thought mig a hot summer forng hou. for "nightly business report", i'm diana olick in washington. t the economy now. the number of americans filing for unemployment benefits is stillringing to its lowest levels in decades. initial jobless claims fell b 6,000 last week. that was a bigger drop than expected. and the number of peopl already collecting unemployment benefits, known as continuing claims, that's near the lowest level since the early 1970s. and the gauge of manufacturing activy in the philadelphia area fell this month to its lowest level since bruary. the report cites a decline in prices for the drop as well as a slide in new orders and shipments. time to take a look at some
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of today's upgrades and downgrades. we begin with shares of hshey tonight. they were downgraded to eutral.ight from the analyst cited the stock's valuation and its histghically premium compared to peers. price target, $125, that stock fell a fraction to 137.64. apple was ini with a hold rating in new coverage of deutscheank. th cited a potential low in thenticipated introduction of 5g phones next year. that stock closed just below the level at 199.46 this of today. tesla's price target was lowered sharply at s goldmhs down to $158. the analyst believes volume estimates are high and he seeth stock trending lower. goldman's rating on tesla does remain a sell. shares fell 3% today to $219.62. still ahead, health care costs are expected to rise for
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mpanies even as they put more programs in place to lower them. ♪ apple issued a warning of sorts. ceo tim coo says that if the next round of proposed chinese tariffs go into effect, ty uld reduce apple's contributions to the u.s. economy and weigh on its global competitiveness. the threatened tariffs of up to 25% would impact nearly all of apple's products, including the iphone, the ipad, air pods and repair international tax law has been a focus of u.s. lawmakers for a while now. remember two years ago republican leaders in the house
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pushed to rewrite the code to prevent companies from shifting profits overseas. today two prominent democraticr senaroposed a new idea, one that they say will help american workers. ylan mui has details from >> reporter: democrats unveiled a new proposal today that would raise taxes onrooreignts to help unemployed workers here at home. the idea comes from two powerfu senators, den, the democrat on the finance committee and chris van holsnd who s on the banking committee. they argue that the current tax system encourages companies to build factories overseas. >> we want to take away incentives to move jobs overseas being make sure we incentivize employers here at home and then ensentivi ei incent them to hire americans who want to work that are out of work. >> reporter: to fix i they call for closing the loopholes or creating a minimum tax on e oversenings that would
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apply to every company. not everyone believes there's a problem. reans overhauled the tax code last year in hopes of stopping companies from parking profits overseas. >> combine with the reduction in the corporate tax rate and with the international o provisions, m view is the incentives to invest in the united states impryed, certaimproved over the old tax code. >> reporter: but the senator said making sure those compani pay their fair share could raise a lot of revenue, money that could go towards subsidizing jobs for america's long-term unemployed. what is really an effort to get people back into the system, re individuals who once you are out of work, it is harder and harder to get aec jobse employers look at your work history and it becomes a chronic problem that hurts the family and hurts the whole economy. >> reporter: that's how they're generating interest from presidential canredates who both embrace ingham bising ambi policies and looking for ways to pay for them.
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amy klobuchar made tackling the international tax code parhe of agenda for the first 100 days in office. joe biden wanted raised taxes on foreign earnings when he was vice president. i'm ylan mui in wa sington. lack makes its wall straight debut. that's where we begin tonight's market focus. the workplace communication softre company began trading an app opening price of $38.50, well above the $26 reference price set by the new york stock exchange. slack came public in a direct sting instead of the traditional ipo, and the ceo says it was the best route for his company. >> i think a lot of investors who -- who are used to a model where they get a small allocation, they wanted a big one, they direct listing. at least they have the opportunity. one of the hopes for a company like us ist t there's not too much volatility, and we are hoping that this model --
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>> w but the stock up more than 1% to 118.67. kroger reported better than expected quarterly earnings. the grocery store chain saw same-store sales come in flat but digital sales rose. kroger affirmed its full-yea guidance but the shares fell more than 2% to 2,313. merck held it's first investor day in five year and laid out the key strategic way to drive value. >> we are here to sho today w have great opportunities to grow revenue beyond keytruda with vaccines, animal health ta business, hos specialty
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business, the on- kocology pipe beyondkeytruda. >> merck shares fell to 84.60. walmart has agreed to pay more than $280 milliono end a seven-year-long investigation into a global corruptn probe it settles charges that the retailer ignored evidence of internal corruption that helped fuel its overseas expansion. as part of the settlement, walmart acknowledged wrong doing. the stock ros a fraction to 110.32. rising health care costs have been a maj issue for corporate america for quite sometime, and a new survey shows the headache is not going anywhere anye t soon. bertha coombs has more. >> reporter: health care costs keep rising and next year the growth is expected to accelerate. private employer costs are expected to increase 6% in 2020 according to pwc's health research institute, up fm an average of 5.5% growth last
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three years. one big driver?ec high-priced lty drugs. >> would be of the reasons that we have the drug costs increasing would be there's a higher proportion of drugs employers are buying, are specialtydrugs, and those tend to be more expensive than non-specialty drugs. so over time that ll increase the cost. >> reporter: while specialty medications to treat complex conditions like hepatitis and cancer make up one-fifth of all employee prescriptions, they account for mor than 40% of overall drug spending. over the last decade employers dealt with the problem by makg rkers share more of the cost, but pwc says raising deductibles and co-pays isn't working. >> almost one-third of employees with -- with high deductible health plans actually cannot afford their deductible. so that's a big wake-up call for employers. >> reporter: employers are now focused on tacklg high prices headon, pushing insurers and
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pharmacy benefit plans for better mals, ande large firms are contracting directly with medical providers to steer workers tohe most cost effective care. >> they're looking at setting up their own primary care networks riandry care clinics on site to better tak care of employees at a lower cost. they're looking to help nudge their employees to lower cost sites of care. >> what it means for workers? a repriev on deductible increases, but expect narrower chois for care and more of that nudging to take preventive steps to fight chronic conditions a stay healthy. for "nightly business report", i'm bertha coombsom andg up, solving a catch 22. how one company h isping employees save foretirement while still facing high levels of student deb
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as student debt levels ntinue to rise, some employees have been opting to pay that down instead of saving for retirement, but nowie some cos are offering a new perk that helps workers doar bo. epperson is in pleasanton, california, for us tonight. >> reporter: recent grad javi rjavier is building technology that could save patients. >> it is a complex setting but it is very rewarding. >> reporter: the 24-year-old biomedical eng had three job offers coming out of grad school. he chose this one atbo , a global health care company. not for the salary or medical benefits, but because it was the only one with a program that could help him save for retirement while paying off his student loans. >> it was the main linchpin to
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why i accepter. an offe >> reporter: employees usually have to contribute part of their pay to their 401(k) plan in order to receive matching company funds. abbott's freedom to save program gets rid of that requirement. as long as he used 2% of his salary to pay off his student debt, abbott will make a 5% pretax conibution to his 401(k), even though he's not putting in a dime. the money is fully invested in two yxers. abbotttive steve fusell says the program pays f itself. >> the cost to us is actually very minimal. there's actually afive-to-one pay back because of our retained talent and avoiding of cost of turnover in this group. >> reporter: nationwide seven out of ten recent grads haveut takentudent loans. graduating with an average debt ut $30,000. that's hurting their ability to save for retiremt. research shows that college grads with student loans only
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save about halfs much as those without loans by the time they're 30. some employers recognizeow difficult this debt burden can be and they're trying to help. >> we'reo starting see more and more employers offer this type of benefit because it carries a long-term monetary value for the employees. >> reporter: accordi to the society for human resource management, 8% of employers offer student loan assistance. aetna,rgest include fidelity investments and price water house coopers. right now none except for abbott help with retirement savings. however, next year the insurance company travelers plans to roll out ail s program. >> it is a valuable benefit ccause people who are just beginning theireers don't have to make a trade-off between savingoff their debt and for their future. >> reporter: he is taking the $150 heould have put in his 401(k) and addin ito his monthly loan payment. that's translating to big savings. >> initially i had $50,000 in
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student loan debts. i will pay my loans four years faster and i will save $7,000 in princil loan interest. >> reporter: for "nightly business report", i'm sharon erperson. is another look at the day's final numbers from wall street. the dow rose 249 points. the nasdaq add 64 and the s&p 500 closed at a arecord. >> that is "nightly business report" for tonight. i'm sue herera. thanks for joining us. >> i'm bill griffeth. have a great evening, everybody. see you tomorrow. ♪ ♪
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woman: this is "bbc world news america." is made possible by... the freeman foundation; by judy and peter blum-kovler fountion, pursuing solutions for america's neglected needs; and by contributions to this pbs station from viewers like you. thank you. ♪ >> this is "bbc world news america." reporting from washing i

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