tv Nightly Business Report PBS July 25, 2019 5:00pm-5:31pm PDT
♪ this is "nightly business report" with sue herera and bill griffeth. ♪ fact check. alphabet crushes earnings expectations, intel says the future looks bright, but amazon's record profit run comes to an sd. >> changght plan. american and southwest airlines are shifting strategies as the grounding of boeing 737 max ripples through the industry. new way to save. california is tackling the retirement crisis with ato progm elp seven million workers prepare for the future. those stories and m muche tonight on "nightly business report" for thursday, july 25th. ♪d >> g evening, everyone. welcome. a big night for big tech. amazon, alphabet and intel some
of the largest companies in the sector, are out with their quarterly results just one day after the nasdaq hit a record. the group h been a major driving force behind the makt's rally despite threats from regulations from lawmakers. let's start with the biggest of them all, azon. the company's record profit streak is over. the online retailer reported mixed results, missing earnings expectations but exceeding revenueforecasts. amazon cited high shipping costs and weaker than expected growth in its clouds computing business. investors were disap sent the stock lower in initial after hours trading. and then there's alphabet, the parent company of google easily topped earnings expectations and reported a rebound in reven growt thanks to strength in its advertising business. investorsn cheered initial after thundershowehours trading. we have two reports for you tonight. in a moment, it will be josh
lipton on alphabet but we begin with deidre bosa on amazon. >> reporter: the big qn for amazon this quarter was could they reacti -accelerate growth. at 20% it was short of the levels of the last few yanrs. ile, profits took a hit, missing wall street's expectation and coming down from record levels. o azon telling investors expect more investment ahead as it continues to implement one-day shipping. deidre bosa, "nightly business alphabet stock has been lagging the market this year, in part because of concerns about slowing growth, but the company just said its net revenues actuallyaccelerated, jumping 21%. jason hal steen says hedge funds were short alphabet too which move.explain the i'm josh lipton for "nightly business report", san francisco. here is why these reports are so important. when taken together,zo a and
alphabet make up 13% of the nasdaq composite index, and when you add in dow component intel, together they make up 7% of the s&p 500. and that brings us to intel's quarterly results, which ew past earnings estimates and topped revenue forecast. the semidu cor company confirmed that apple is acquiring the majority of its smartphone business for $1 billion. that sent the stock higher in initial after hours trading. jon fortt has more on intel's results. >> reporter: chip giant intel out with a report for the second quarter that beat on the top and bottom line, ses just stronger than expected. that led to an improved outlook for the full year. intel ceo bobay swang it was really the growth in data, just data applications, the demand for data, that powered the pc business as well as the cloud business which uses intel server chts. that's w led to the
eutperformance in expectations. now, at the same ts intel announced earnings, also announced it was selling its artphone modem business, the majority of it to apple for a billion dollars. that includes 2,200 employees as well as facilities and patents. that's atig deal t was expected. for "nightly business report", i'mon fortt. on wall street, the fed was back in focus today asell with investors growing concerned about the central bank's next move after thi morning's strong durable goods report and also comments from the head of the european central bank. orders for long-lasting goods rose by 2% in june. that was the fastest rateow of we have seen since august of last year. it was well above expectations, and it could mean an upward revision of gdp forecasts a less aggressive interest rate cut from the fed next week. also thismorning, the european central bank's president mario drahgi left the door open for interest rse cut later t year, but he also said w there
not a significant risk of a recession in that region. so investors hoping for a bigex rate cutweek turned cautious. the dow fell by 128 points to 21,140. nasdaq was down 82. the s&p slid by 15. so what will that strong durable goods report and comments from the head of the european cenal bank mean for the fed when it meets next week? we are joined by rob martin, senior u.s. economist at ubs. welcome, rob. nice to have you here. >> thank you for havcig me. i appe it. >> you are expecting a cut of at least 25 basis pnts. does wha happened in europe today with mr. drahgi's comments or the durable goods report change your attitude about what is going to happen? >> let's focus on ae d first. this morning's report on durable goods was one more piece of evidence tha the u.s. economy actually really is doing quite well. it is growi nicel we have had a string of strong reports. so far the fed has looked through them but the evidenc is accumulating. that's going to reduce the risk
of a big cut. >> and also fed chairman powell has been mentioning the global economy, which clearly is slowing down. china, parts of asia, and even europe at this point so a rate cut next week, would that be not just for our economy but for the global economy as well? >> well, it is not so much that they would cut rates for the global economy. it is that they worrywh that ever is dragging down those other economies, whatever is weighing on growth in eu ipe, whatev weighing on growth in asia is also going to affect ecthe u.s. omy, both through the direct ties through trade, for example, and because t u.s. is subject to the same kind of uncertainties. the fed already believes there's a confidence shop working its way through the economy, the weakness in europe is one of thy reasons t really want to cut rates, but the strength of u.s. data, the strength of the u.s. economy makes it difficult fth to go big. that's why there's this debate between 50 basis points or
25 basis points. >> right. >> we see 50, but 25 is clearly on the table. either way, they do want to provide accommotation. >> af times the market looks to what the fed says after its actions. in other words the statent. are you expecting any major anges in the language that the fed uses? >> no, we think they will be pretty comle with their language. whether they go 25 or 50, they don't want tol sighat they're completely done with rate cuts because they're still nervous about the outlook.an they to wait and see how the data is going to evolve, and so i suspectew in their language that they will be closely monitoring the economy coming into the september meeting as well. >> i meano you have admit, it is a rather interesting time for them to be cuttingith the consumers so strong right now,y the empt picture the best in 50 years, and yet inflation is not where they want it to be. >> that's right. so inflation simply refuses top move to 2%. they've got these worries about foreign growth.
they've got worries about that confidence shock. this is what is driving them. so it feels as if there's some tension between what they wantn to do cut rates and what we're seeing in the economy, but to be fair t themhat low inflation and those real concerns about foreign growth push them to some kind of easing in the near term. >> we will see. rob martin with ubs. ro thanks. thank you. . more earnings now. 3m is feeling the impact of a e slowing globanomy right now. the company saw its profits drop more than 30%, sales slid as well. the industrial conglomerate cited weaker demand from in response it cut production and reduced inventory, but it did reaffirm its previous outlook for the whole year, and the stock fell just a fraction in today's session. the ongoing grounding of boeing 737 max is rippling through the airline industry. american airlines and southtest both rep better than expected earnings, but also said the results in the secondd half
coe impacted. southwest now says it won't fly the max before january o next year. that resulted in a mixed finis for the stocks. phil lebeau is in ft. worth, texas, for us tonight. ♪ >> the 737 max headache for american and southwest airlines has turned into a problem that is changing how the criers will operate the rest of this year. >> it is not a good situation. we're not happy about it. you saw here in the second quarter it cost us $175 millione hat will more in the third quarter. >> with 34 max models grounded for at least a couple more months,outhwest says its capacity will drop in the second half of 2019. that makes the most of a smaller than expted fleet, southwest will stop flying out of newark and it will focus its new york operations on laguardia airport. as airlineeep extending how long it will be before they expect to fly the max, they ale
with more questions than answers about the beleaguered plane's future. >> we remain in limbo as we wait to hear from the faa as to they come to the conclusion that the aircraft is ready to go back in s bvice again. ing will pay billions of dollars for the hundreds of max grounded.t have been for airlines, the money will not be enough to cure max issues, expected to linger well into y nextr. >> we're unhappy that it has taken so lon and we're in the dark on it, just like you are, on a number of thnical matters. >> reporter: american and southwest believe they will eventually get past the grounding of the max, but it won't be quic nor will it be easy, and it will likely take well into next year to the damage of not having the plane. phil tllebeau, "nibusiness report", ft. worth, texas. an faanwhile, today official said there is still no timeline for the boeing 737 max to return to service. the acting administrator said that when the airplane's issues are addressed and the max isfe
it will return to service. yesterday boeing ceot told analys was confident the max could be back in service as early as october. it is time to take a l some of today's upgrades and downgrades. u.p.s. was upgraded to buy from neutral at bank of america/merrill lynch. the analyst cites what he calls ecommerce revolutio the company's plan to expand deliveries to seven days. the price target is $130. the stock rose 3% to 118.25. at&t was upgraded to neutral from under perform at credit suisse. the analyst says videocr suer losses have peaked. the price target is $29, and that stock rose more than 1. to 33.81. caterpillar was downgraded to neutral from b at buckingham. the analyst cites a lack of catalyst that would drive the stock in the n term and sees a higher probability of lower earnings growth. the price target is $140. despite the downgrade though,
thehares rose2% to 134.71. still ahead, if they build it, builders say they'll come. ♪ i'm diana olick in san antonio, texas. i'll have a new twist on the fastest growing segment of the housing market coming up on "nightly business report". ♪ ♪ e is ♪ ♪ in washington the house passed the debt ceiling and t
budget deal. it sets discretionary spending at about $1.4 trillion. the agreement also suspends the borrowing limit for two years. that measure now goe to the senate, which is expected to pass it in the coming days. nissa plans to layout more than 12,000 workers.ts that's 9% of global workforce. the restructuring comes after theak aut saw profits essentially disappear, falling more than 98% compared l tot year. the company has faced a number of challenges, not the least of which is the arrest in japan of its former chairman, carlos ghosn, eight months ago, and the tensions that caused with nissan's partner renault, which ghosn also ran. it was a rou day in the market for ford following its earnings report, which we told you about last night. the automaker issued a disappointing forecastor the year. analysts are concerned that the line-up of vehicles launched in next year could further delay an improvement in profitability. the stock fell more than 7% in today's session.
clearly the auto industry is in transition as it cuts back on the number of traditional sedans that it makes and gets ready to roduce more electric and autonomous vehicles. what does that do to earnings in the meantime? joining us is mt de lorenzo with kelly blue book. thanks for joining us tonight. >> great to be here. >> it is a transition period right now. ird is targeting 2022 to be able toroduce some of these electric vehicles that it plans to produce, but in the meant he whatpens? i mean they have to cut back here and there and invest an awful lot of money. >> well, they do. they're playing it out in terms of the transition because of their scale. their bgest selling vehicle is a full-size pickup truck and that's what the market is demanding right now, those and crossover suvs. so in the short term they bet heavily on the truck market. i'm sure they're going to see some returns from it because t margins typically in that part of the market are a lot higher
an they are in the traditional sedan market. >> but as bill mentioned, they either have to invest a lot of money or find some other avenue to -- to the direction that the rest of the auto industry is going in. does that mean partnerships? does it mean mergers? what do you tnk? >> think in the short term or medium long-range term,re they going to be relying on partnerships. the deal with vw to use the meb platform which will be primarily for the car side of the business, and then they also have that $500 million investment in rivian which e builctric trucks and suvs. so think what they're trying to do is layoff a lot of development costs and infrastructure costs in terms of production facilities to these partners and hope that the demand for electric vehicles and autonomous vehicles t rises where they can make that switch over internally and develop and build those vehics on their own. >> you anticipated my next
question. what do you think the deman will be for those electric vehicles? i mean i guess -- i don't know. it may depend on how old you are and your experience with those ca, right? >> i think that's true. i think in the short term, electrics will tend to move quicker up in sales. there's still a lot of regulatory hurdles that have to be surmounted before we can get to full level five autonomous vehicles being on the road. once we get to that point, then we look at howhe ownership model is going to change. and if people stop owning cars or start sharing cars, there rould be a in production, and that could have an impact on earnings down the road. they could be in a position where they're not building as many vehicles because not that many w vehiclesl be needed. >> right. >> since people will be sharing them and they will be around the clock. >> so many questions, so many changes coming, we know that.
matt di lorenzo with kelly blue book. thanks for joining us tonight. >> thank you. stong results give starbucks a jolt. that's where we begin tonight's market focus. the company topped estimates thanks to increase in same-store sales here in the u.s. and globally. starbucks added about 400,000 members to its u.s. loyalty program a it raised i.t. full year guidance. shares initiallyer rose in a hours trading. they closed the regular session up a fraction at 90.98. also after the bell, t-mobilpo ed mixed results as it beat earnings estimates but fell short in revenue the mobile carrier saw an increase in subscription and raised its guidance. the shares were volatile in the after hours and they close the regular session down a fraction to 79.91. ab inbev beat estimates thanks to seeing beer tales grow, fastest in five years. the world's largest brewer also had more consumers buying higher-priced productan as the co has been trying to sell more expensive premium drinks.
the shares rose more than 4% to 99.49. bristol-myers topped estimates fuelled by strong sells of its eloquis blood thinner. the drugmakerd lif its full year guidance. shares rose 5% today to 45.40. comcast beat earningsti tes but fell short on revenue expectations. the company added more customers to its high-speed internet service but saw a decline in its video and phone businesses. shares were down a fraction to ed to mention that comcast is the parent of nbcuniversal which produces this program. hershey topped estimated. hershey raised prices to offset higher labor andaw material costs. shares rose 2% to 149.72. an increase in travel bookings helped royal caribbean beat estimates, but the cruise
operat lowered guidance partly due to cancelled trips to cubahe because of return of the u.s. travel restrictions to that country. shares were down almost 2% to 113.04. and align f technologyl short of earnings estimates due to what the company called a tougher consumer environment and slower sales i china. the maker of the inadvivisalign braces. shares plummeted to 290. mortgage rates are close to a low. now, justgo year the average rate was 4.5%. and dpite the lower mortgage rates, demand for rental homes is growing andil rs are stepping up to m t thatneed, redesigning andim agining the single family rental. they're becoming landlords in the process. diana olick ison in san a for us tonight.
>>or millennial ta waters and theirwant to get out of rental apartment and into a larger single family home. >> we have beenooking online for what we want to buy or rent and this is up our alley. >> it is a brandew community built entirely as rentals. aile some builders will sell few to investors at rentals, it is one of the gatedy rental o projects. >> about 93% of the apartment stock consists of studios, one and twobedrooms, few three bedrooms. we saw a growing need out of the downturn to pvide three and four bedroom homes for the nt 's society. >> he is taking the vertical apartment model and turning it horizontal, offering three and four bedroom homes with two car garages but including high-end amenities like a gym, common areas, a dog park and washing station. the rents are comparable to nearby apartments and the
maintenance is o all site, lowering costs for ahv. wolf says he does not intend to sell the homes any time soon. long term ve in the cash flow game. so if you hold these properties for ten plus years or even ss,en plus ye the residual cash flow is worth more than the sale one time. >> reporter: last year about 43,000 homes wereuilt to rent according to the u.s. census, the highest in nearly 40 years. instors are pouring into the space, which i why big builders like lnnar and t brothers are building to sell to them. renting used to come with a social stigma. the average income of rentersewn thisommunity is in the six figures. many of them can afford to buy a home. they simply choose not to. >> the trend, different articles on millennials buying houses. i think the biggest thing is the hidden costs they might incur. >> the yards here are small and the houses closetogether to lower cost per ahv.
>> there's a lot that goes into the recipe for success. >> renters here p utilities and a landscape fee and the rent, just the rent. >> for "niretly business rt", i'm diana olick in san antonio. coming up, to bridge the retirement savings gap. ♪ ♪ ♪ we have been reporting quite a bitn the push in washington to get more americans to save retirement.
well, several states are also tackling that problem. california is the latest. it now requires small businesses to either join a state-sponsored retirement savings program offer a private plan. sharon epperson has our str:y. >> repor27-year-old ramone gonzalez believes in having a game plan at orwork, and his own finances. >> reiving about $250. >> reporter: a production supervisor at web bake coffee in gonzalez isifornia, saving for his future in a new workplace retirement plan called cal savers. >> i will have a nice lump sum when the year is over. >> reporter: r bay was one of the first businesses in southern califolia to enrts 47 employees in the state-sponsored program, allowing private sector employees to savet and inv in an individual retirement account at work. >> we are openo full and part-time employees, and soon to those independent contractors or
gig worker >> reporter: while not a traditional 401(k) plan, it is designed to hel bridgehe savings gap for workers who do not have access to an employer-sponsored plan. more than 7 million california workers have no retirement savings plan at work. two-thirds are at small businesses with fewer than 100 employees. 49-year-old maria del carmen ansteel vasquez who cleans offices in therancisco bay area, is now starting to save for her own future and her family. >> she is very happy that she has this type of savings plan, but she has never had before. >> reporter: the founder and president, lorenzo harris, says he can offer employees includina mari much-needed benefit that also benefits the business. >> it is comprehensive. cal savers allows us to help to level the playing field when it
comes t attracting and retaining good workers. >> reporter: through cal savers employees can put away a portioe of pay into an account that works like a roth ira. contributions are made in after tax dollars and the funds can be withdrawn tax free in. retireme the maximum contribution in 2019 is $6,000 or $7,000 if y are 50 or older. >> employees are automatically defaulted at aavings rate of 5%. that 5% comes directly out of the wages, and a c employe increase that amount. they can decrease that amount or opt out all together. >> reporter: most ofshe employee at red bank coffee are participating in this portable program, and if they switch jobs they can take their accounts with them. ray mo g ramone ramone gonzalez has no plan to leave the company soon, but he has a plan to build his financial security. >> it ftls good to work a a place that is rewarding and to
ap rewards later on. >> reporter: for "nightly business report" i'm sharon epperson. before we go, aook at t day's final numbers from wall street. the dow fl to 27,140. the nasdaq was down 82 andhe p 500 slid 15. that will do it for "nightly business report" tonight. i'm sue herera. thanks for joining us. >> i'm bill griffeth. have a great evening. see you tomorrow. ♪ ♪
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