tv Nightly Business Report PBS June 21, 2019 5:00pm-5:31pm PDT
♪ ♪ this is "nightly business report" with sue herera and bill griffeth. ♪ tensions escalate. the president abruptly calls off an airstrike on iran, rattling the energy markets and sending oil prices higher. big win. a new casino opens, but will the local massachusetts community get all it gambled for? pipe dream. west virginia was supposed to get billions from china's state-owned energy company, but that's not what happened. those stories and much more tonight on "nightly busiorss report"friday, june 21st. . good evening, everyone, and welcome. the dow flirts with record territory. more on that in a moment. but we begin tonight with energy. oe entire complex came i focus on heightened tensions
between the u.s. and iran. president trump said he wastr ready toe but he called off an attack just minutes start.its planned the strike would have been in retaliation for the downing of an unmanned american surveillance drone earlier this week, and any threat te the f flow of oil through that region gets the attention of energy investors. amon javers starts us off from the white hous >> president trump reversing course thursday evening and giving an order to standdown t u.s. militar forces who had been poised to strike targets in iraq of t iraq. the president suggesting he did that because he was current about the potential for iranian loss of life. hu sat down with nbc's "meet the press" host todd earlier today at the white house and here is how he explained his decisionmakiast night. >> did you green light something or had you said if we do it i'll do w this? wh the order you gave? >> nothing is green lighted until the very end because things change. >> okay. so you never gave a final order. >> no, no, no. we had something ready to go to.
they came in about a half hour before and said, sir, we're about ready to go. i sai iant to better definition -- >> were planes in the air? >> no, we're about ready to go. no, but they would have been ld tty soon and things w have happened, to a point where you wouldn't turn back or couldn't turn back. c so thee and they said, sir, we're ready to go, we would like a decision. i said i wantom to knowhing before you go. how many people will be killed? in this case, iranians. i eoid, how manye are going to be killed. sir, i would like to get bac to you on that. great people, these generals. they said -- cam back, said, sir, approximately 150.ho and iht about it for a second. i said, you know what? they shot down an unmanned drone, plane, whatever you want to call it, and here we are sitting with 150 dead people thatould have taken place probably within a half hour after i said go . ead. >> ye
>> and i didn't like it. i didn't think it was -- i didn't think it was >> now, it is a little bit unclear where this leaves president trump. what is he goi to do about iranian hostility in the region? the iranians have said that they may move forward on their nuclear program in the coming weows. not clearhat options the president would consider. he did say that striking down a drone was different from striking down a manned military vehicle. at is nobody on the u.s. side was killed, that's why the president says he decided hold off on airstrikes against iran this week. for "nightly business rort", i' eamon javers at the white house. and there was another velopment that affected energy prices today, an explosion early this morning rocked an oil refinery in philadelphia. the 150-year-old facility is tha est such refinery on the east coast. it processes hundreds of ousands of barrels of crude oil daily and turns it into gasoline. news of the explosion and fire sent gasoline futures sharplyer
hitoday, and the price of domestic crude settled at its highest level in three weeks after a one-week gain of rouly 9%. mike kelly joins us to discuss what it all may mean for energy pces. he is head of research at sea port global mike, nice to have you here. >> sue, thank you for having me. >> what are tmplications of the explosion last night in terms of the backdrop of a 9% gain on the week in crude oil prices? how much is thatooing add to either advances or is the market going to take it in stride? >> yeah, so two items really dealing with today. it was not a boring day to be an eners analyst, tha for sure. so the philadelphia refinery fire, i think that's goi to be more temporary in nature. that may drive, you know, prices fo gas leechb -oline -- what co pay at the pump in the northeast, 5 to 10% higher, but
we'll make that back. to.l import more if we need iran is the nearest big-term issue, the biggest driver that could send crude prices -- if this escalates $10 to $20, given how important iran is in the international markets as a supplierndf crude. >>long those lines, mike, another wall street energy analyst said something this week i'm intrigued about. she said she feels that the price of crude oil, whether it is domestic or brent nor, s would be above $100 a barrel if it were not for udu. pion. she said if this happened five years ago, oil would be at $100 a barrel. what do you think? >> yes, i agree with that 100%. we were in 2014 $100 what we averaged. then we had a thing called shale and fracking and we figured out how to a unlock unbelievable amount of black oil here in the u.s. and that changed the game. >> so does the united states become the flex producer in effect that saudi arabia used to be? they're both -- they're both kind of flexible players.
right now, you k w, saudi will -- they're taking barrels off the market to basicallyom me for u.s. -- u.s. crude. u.s. becomes a flexibleilroducer when prices get too low, and then they just -- $45, they say, hold up, this doesn't make s sense, and thep and you get a little bit of rebound in oil prices. that's kind of the way those two key players will keep crude, we think between kind of a $45 and $65. >> on that note, mike kelly wit seaport global securities. thank you very much. >> thank you. a bit later in the our market monitor has names he says can weather these geopolitical tensions. to the market now, it was a choppy session today that saw the dow briefly trade above i all-time high close, but it failed to hold those gains. at tclose, the industrial average was down 34 points. we finished at 26,718. nasdaq was down 19, and the s&p slid by thr after hitting its own all-time high yesterday. it was a strongeek though for
the major averages as investors cheered the prospects for a rate cut by the fed. and a number of fed officials today made the case for an interest rate cut. minneapolis fed psident kneel kashkari said he pushed for a cut at this week's meeting because he feels it is too low. bullard said he wanted the central bank to approve an insurance rate cut this week as a guard against weaker growth and low inflation. the vice chair said that the case for monetary policy accommodation has increased. may,home sales picked up in rising more than expected thanks in large part to ler mortgage rates, but that boost for buyes could comack to bite them. dicka o explains. >> the difference a little bit makes. >> home fuyers areling more confident in the market. sales of existing homes just
2.5% in may compared topr. falling mortgage rates are behind the bump. >> when the mortgage rate falls it increases the purg power of home buyers, so when the rates were falling, the buyers are taking advantage of better opportunity and large purchasing and, therefore, they are able to bid higher on home prices. >> mortgage ratesegan falling at the start of this year, taking a sharp dip in march when a lot of theay contracts were signed. at the sam home prices were shrinking and competition was slowing. but falling mortgage res are double-edged sword. they help buyers afford more and they bring moreer b into the market. both increase competition and reignite the firunder home prices, and that's precisely what happened in may. home prices were up 4.8% annually, the biggest gain since last august. lowerates combineith still very low supply mean cooling ices are clearly over. >> lower mortgage rate is clearly goud for theng market, but what we need is more
supply. if we have more supply, home prices would not be rising oron reacell rating. >> reporter: but with current owners staying inheir homes longer and builders still underperforming the market or demand, supply is not exactly on this summer's horizon. for nr"nightly business report" i'm diana olick in washington. caterpillar was downgraded. he says weak first half economic data may lead to slower second demand for the farm equipment. despite the downgrade the stock rose a fraction to 133.90. cash vast was downgraded. the analyst cites the company's challenges in europe. carnival reported earnings yesterday. the price target is $55. the shares fell more tn 4% to $46.63. labcorp was uraded to buy from
hold. deutsche bank, cites increasing optimism over t research business. the stock rose more than 1.5% to 170.80. wynn resorts has made a big bet on massachusetts, and in return a massachusetts townas made big bet on wynn. they will both soon find out if their hard-fought wagers have paid off. contessa brewer is in everett, ma ma.achusetts for us tonig boston has never seen anything like it. the $2.6 billio encore boston harbor opens this weekend. the thing is, it is not actually in boston. >> it is almost like a>> rebirt he five-star casino resort is opening this weekend in gritty, hard-working everett. the mayor worked hard to see this come to life. >> we were a tired, old, industrial city, kind of transforming, a lot of scrap yard and used car lots, especially down in this area. and this is just -- this is just
transformation -- it is unreal. >> 15 upscale bars and restaurants, a grand spa and conference center an of course, the gaming floor. wynn resorts is already exerting an upward pull. nearly 6,000 workers hired, nearby property values on the rise, new businesses include a slew of breweries. it is built on a toxic waste site in 2017 wynn resorts had budgeted $30 million to clean it up. it spent 70 million, and this week the water was declared so clean you can swim in it. >> we're excited because our international customers are already talking about they want to come visit, they want to come to boston. >> but getting here was a long slog. local newspapers took a hard stance a ginstbling in general and wynn resorts in particular, and nghboring cities including boston fought wynn tooth and nail. revenue sharing agreements helped overcome opposition. then a year and a half ago wynn
resorts was s by serious allegations of sexual misconduct against founder and fmer ceo steve wynn, which he denied. he left but the company was fined $55 million by nevada and massachusetts regulators, pushment for the way it handled the allegations. after intense investigations and publichearings, wynn resorts was allowed to keep its gaming. licens and what was the next step? the company reportedly engaged in talks with mgm to sell all of this. it didn't happen, in part because the everett mayor took a strong stand against it. >> why did youee it as such an untenable deal? >> oh, no. i mean, you know, we don't make- we don't downgrade a place. >> already massachusetts is seeingfhe benefits legalized casino gaming. more tn $370 million collected in tax revenue from two smaller casinos. encore boston harbor is expected to blow them out of the water.
contessa brewer , " rghtly busineort." still ahead, the tourism industry's new challenge. death of tourists in dominican republic. the 18 largest u.s. banks have cleared the f ost hurdl the fed's annual stress test. the central bank says that the financial institutions would survive in a crisis. the fed releases the second part of those test results nextat we. part will determine whether banks can b and buy back shares. the deaths of american tourists in republic has grabbed the attention of both main street and wall street. that e country'nomy relies on vacationers, and there's some evidence that travelers are cancelling their trips. seema mody hasmore. >> reporter: over 2 million
americans travel to the dominican republic every ye f, butlowing a number of mysterious deaths on the island americans are rethinking whetheo they want travel there. so far, nine americans have died at resorts in the dominican republic in the last year and dozens more have reported lnesses, raising concerns about the safety and security of tourists. tourism officials oe island say as of now the cases are isolated events, but rorts ggest tainted alcohol could be the culprit. the federal bureau of investigation is working with local authorities to investigate the deaths, but the results are not expected for weeks. ith so many unanswere questions, travelers are thinking twice. >> we have a survey out in the now. rig the early signs are that demand has been curtailed somewhat. how long it lasts i think will be really up to the dominican republic government and the result of the fbi investigation. >> reporter: according to a new survey, 60% of travel advisors have cancelled trips for clients
to the dominican republic in last week. data from ford keys, which analyzes over 17 million flight bookings a day, paints a similar picture with flight cancellations up 45% in the first half of june compared to the same period last year. this comes at an inopportune time for the travel and leisure industry, which has been investing in building n properties on the island over the past couple of years. analysts at suntrust expec the decline in tourism to have a negative impact on companies like playa hotels, which has 2 exposure to the island. cruise operato carnival andn, royal caribboth with stops in the dominican republic, are monitoring recent events andhe reviewingnformation from the state department. online travel platform book.com said while it seeing increased cancellations to the dominican republic, many of the customers rebooked trips to other caribbean island and mexico. experts say the trend is likely
to continue. >> we have seen some cancellation and rebooking to other islands in the caribbean, ularly puerto rico and other destinations that might have a safer reputation than the dominican republic is experiencing right now. >> for "nightly business report", seemadody. uni health is buying health care payments company equion. that's where we begin tonight's market focus with the "wall street journal" say that the health insurer agreed to buy the company for more than billion. theyou likely merge -- -- dealership sales. carmaxe shares r more than 3% today to 85.64. > medtronic is increasing its
dividend to $0.54 a share, up from $0.50. it is the 42nd stratght year he medical device maker has raised its dividend. shares were up araction to 99.38. the bidding war for sotheby's may not be over. we told you earlier in the week it was to patrick drahgi for nearly $3 billion. they rose to 5892. to our weekly market monitor, who has names of some etfshat address two investment themes, technology and geopolical disruptions. greg lukean is the founder and ceo of his o firm, lukanst innt and an lalytics. welcome back. >> good to see you. >> you havef an that diversifies beyond the fang stocks, is that the idea? >> that' exactly t idea.
most technology funds have benefited largely from four or ive names that have lifted them, whereas fxl has exposure to about 90 names and gives more even exposure across the board. in fact, the top -- top ten holdings only comprise less than 22% of the fund. next on the list, we're going international. it is a diversified markets etf, emerging market specifically. the symbol is spem. >> yes. so this gives an investor broad exposure to emerging markets across the world. emerging markets didn't do well last year. they've underperformed u.s. markets this year, and those economies in aggregate a actually growing at a higher rate than the u.s. economy.rd and the t one is another etf that invests outside the united states, but, you know, this theme of trying to weather
global disruptions, how would that help with that? >> well, good question, tyler. i appreciate that. we believe that the global disruptions, so much of them are already baked into the price of these equities. so this owns comnies like unilever and nestle. if you eat hagen z or ben & jerry's ice cream or drink carnation's instant milk, you are using the companies in this and the companies have not performede well. geopolitical stresses, the terror threats are already baked into thos. pri >> how do you feel about the market overall at this point, greg? i mn we've got a loz of headline risk lately. are youul overallsh on the market despite your giving us hedges against volatility aik the >> we are still very bullish on the market, andhere was really interesting price movement this
week with gold, which can be a warning sign. so we're cautious, but we still see in the service sector, the numbers there are still good. manufacturing is slowi down obviously as a result of what's going on with tariffs as companies adjust to -- to the disruption that's going >>on. right. >> and so overall we think it is still healthy. >> all right. >> the growth in manufacturing has >> greg lukan with lukan investments and analytics. thanks for joining us nknight. >> t tyler. >> i will tell tyler you said hello. coming up, pipe d am as president trump tries to negotiate a trade deal with china that's enforceable at the nationalre level. t home, the biggest deal the administration has already done with china is serving as a cautionary tale, coming up.
tte of west virginia was supposed to get nearly $84 billion from china's energy giant, a boon for its blue color financial an manufacturing workers that he hadded givet presidenump his widest margin of victory in 2016. as kayla towji found out, that romisewo years later is a pipe dream. >> reporter: under the foot hills ofac appa sits a gold mine of natural gas. that is what china wanted when it reached a deal in 2017 with west virginia, more than everything the state produces in a given year. an $84 billion promise, endorsed by president donald trump and president xiin jinp billed as a game chang to the mountain state. >> imagine tha magnitude of we're talking about here.
>> this is the best thing that could possibly happen. >> really and truly, it is coming. >> reporter: 18 months later, west virginia's governor jim justice acknowledges the reality is much different. >> has there been any money that ina energy has directly invested in west virginia? >> no, i don't think so. >> reporter: china'sst e-owned energy giant was expected to help fund three initiatives, the state's new gas burning power plants, a so-called seam cracker that turnso gas i a byproduct for plastics and fibers, and an derground reservoir called the appalachia storm hub the goal for those involved, invest in the state's infrastructure and send the resources back to china, but ina is nowhere to be found. >> the stumbling block is ours countriend the trade issue that we have. after we get through that, i think there could be a green . light to >> reporter: the production of the cracker stalled. the department of energy says it won't be operational for at least three more yea at its
proposed location, an asphals lot fenced by wire. then there's the storage hub. >> flexible storage for ethene and propane. >> he joined officials in chi t to tout original deal. >> reporter: when you went to china and learned itould be an $84 billion pledge, what went through your mind? >> that's a lot of cash, is exactly what i thought. >> reporter: he says he would welcome a chinese investment but expects the 3.3 billion he needs to come from elsewhere. >> reporter: so far as you knowi is participating in this? >> what we have seen thus far is vestment out of the continental united states while our investor slates proprietary at this point, we have only been invested in out of the continental u.s. >> reporter: dennis zander has
been drilling in west virginia for the past 45 years. he doubts china could come clost to the mart wanted to. >> reporter: are there $84 billion worth of shovel-ready projects here? >> no, no, no. >> reporter: would there be in ten years? i not thatm aware of. >> reporter: would there be in 20 years? >> i doubt it. >> reporter: in a provided to cnbc, china energy says its project in west virginia int currely progressing as planned. however, because this stage of work involves business secrets it is not suitable for media interviews. it is uncar how many stages the deal entails. the document is a memorandum of understa between the two parties. it was never made available to the public and it is not legally binding. woody thrasher signed off on that document when he was the state's commerce secretary. he's now running for governor. >> reporter: why get the state excited about something that could be years off or could not happen at all? >> well, i don't think there's any question there was a lot of significance that too place with president trump visiting with president xi, and i drithi
there was a great desire to show we're going to work together and work on the trade imbalance. i think the temptation was too great not to annnce the deal. >> reporter: why not announce the deal when there was a document or an agreement thatd woequire china to make good on its investment? >> well, that's at a level that's really at a national level in terms of sort of the enforcement. >> reporter: it is a state deal. >> well, it is actually a private company that's going to invest in the state of west virginia, and it is theiron. and any company in the world can invest in the state of west virginia. y >> reporter: a signed it. >> correct, in support of that investment, but it is not an enforceable document where we moneake them spend their >> reporter: for "nightly business report", i'm kayla taoshin west virginia. >> by the way, there's a current legal battle to make the document pun so that the pesple of virginia can see what exactly china had planned and when a state judge hasuled against that, but the decision is being appealed right now. so we reached out to the washington players involved. the white house declined to comment. the commerce department, which arranged the deal andts
announcement, said that work does continue but it cannot guarantee success. yo can read more about this nbr.coon our website at here is a look at the final day's numbers on wall street. the dow down 34. nasdaq, down 19. s&p slidhr. for the week the major averages were all up more than 2%. that does it for us tonight. i'm sue herera, thanksor joining us. >> i'm bill griffeth. have a great weekend. >> he is. >> see you monday. ♪ ♪ ♪ ♪