tv Nightly Business Report PBS August 7, 2019 5:00pm-5:30pm PDT
♪ is "nightly business with suel griffeth. ♪ dramatic ceback. stocks stage a furious rally. the dow reversi nearl 600 points and the s&p 500 had its biggest comeback of the year. the rate debate. today's initial sell-off came as bond yields continued to fall. historically falling rates are od for stocks, but could this time be different? and hiding in plain sight. you know your laptop or computer could be ck, but what about the monitor or your office phone? the everyday things in the workplace that are vulnerable to attack. those stories and much more tonight on "nightly business report" for wednesday, august 7th. ♪ good evening, everyone. welcome. bill has the evening off. you can call this wild
wednesday. it started with a trio of central banksnt cuttingest rates, and that led to a sharp drop in ghnd yields, ghting the concern over trade tensions between the u.s. and china. at, in turn, led to a flight to safety. investors piled into things like government bonds and gold. in fact, gold traded above 1,500 dollars an ounce for the first time in six years. stocks sold off. the dow down nearlynt 600 p early on. oil also sold off, falling more than 4%. t then the buyerstepped in and stocks reversed course. the dow finished down only 22 points to 26,007. the nasdaq rode 29 and the s&p climbed 2. the indexes 2% reversal was its biggest comeback of 2019. bob pisani has more. >> reporter: it was another wild day on wall street, the dow plunging almost 600 pointsly ear on before rebounding to end f essentiallt on the day. it was one of the great
comebacks of the year. mounting trade tensi heightened fears of a possible global recession, that has put more pressure on central banks including our own federal reserve to keep cutting interest rates to get ahead of a sharper downturn. there were just several aggressive rate cuts announced overnight by central banks, in thailand, new zealand and in hyindia. that'suy yields are plunging across the globe. the yield on the u.s. ten-year treasury note falling to a neary three-year low. as luter rates pressure on bank profits. stocks bounced off the day's lows when the yields on the u.se te came off its lows in the middle of the day. the two traded in tandem allay long. despite the strong rebound in consumer staples and tech stock goes, the more trade sensitive ' industrials d budge much. they under performed today. since the start of august when
ditional tariffs were announced they're lagged the broader market. no sur those are the global sectors most exposed to tradover all. for "nightlbusiness report", i'm bob pisani at the new york stock exchange. as bob mentioned, those cuts by those central banks alo with falling rates puts our federal reserve back in the spotlight. steve liesman takes a look at whether the fed is under even more pressure now to cut rates. reporter: normally the central banks in thailand, new zealand andndia would not be seen as big global movers and shakers, not like the fed, the ecb and bank of japan. twhaent the case today when the tree central banks sentl a sig heard around the world as they cut interest rates, unexpectedly in the case of thailand and more expect in india and new zealand. at sent global bond yields downward, eventually taking stocks with them most of the day. the message to markets, the possibility we are in a race tob thetom on interest rates
around the world. in fact, president trump he tweeted out today, our problem is the federal reserve too proud to admit their mistake of acting too fast and tightening too much and i was right. they must cut rates bigger and faster. it would be easier if the fed understood, which they don't, that we are competing against other countries, all of whom want to do well at our expense. whatever the motivation, central banks from around the world from russia to australiao brazil have been cutting rates and doing so since april. re in the united stat markets expect further rate cuts from the federal reserve. futures markets trade with a 100% probability of a september rate cut, another quarter point expected in october, and even a third one expected in december. the fed c knows i't maintain rates that are so far from other countries. th i problem may be that i cuts, other banks will simply cut more. for "nightly business report", i'mve s liesman. now, the upside to lower rates, mortgage applications. ey surged last week. but as diana olick explains, not everyone is reactingewo the
low rates. >> thank you for calling. >> homeowners didn't waste any time last week calling lenders the refinance, mortgage applications the re-fi jumped 12% for the week an u a whopping 116% compared to the same week a year ago. this as the average rate on the 30-year fixed dropped precipitously to the lowest level since november 2016, all e thanks to escalating trade war with china. the rate was nearly a full percenta point higher one year ago. that means more thanon mil borrowers today could benefit from a re-fi by lowering their rates at least a quart of a percentage point. that translates into a savinbo of $150 a month on a $300,000 loan. >> a lot of people will tak the lower mortgage payments and say, oh, you know, i wanted to fix up or itchen or the bathroom the garage or do a little bit of landscaping. so, yeah, it helps to juice up home improvement, renovation, but also all kind of spending. >> thank you so much. >> home buyers however were not
im aessed. mortgalications to purchase a home fell 2% for the week. that's the fourth straight week of decline, despite lower interest rates. purchase applications were nearly 7% higher than a ago.r mortgage rates continue to fall this week, so you can expect to see me borrowers rushing to re-fi. s as for buyers, it is just more implicated. low rates certainly help to afford a home, but the reason rates are low,ea that is about the strength of the economy, makes buyers nervous and less likely to want to make such a huge investment. for "nightly business report", i'm diana olick in washington. over the past week or so the market has generally been lower since president trump said the u.s. would impose new tariffs on beginning ds september 1st. our eamon javers asked the president today if he was surprised by the market's reaction t >> market reaction is to be expeaved. i might expected even more. at some point, as was said, we have to take on china. china is losing so many,
thousands and thousands of companies are leaving china now because of the tariffs. we're ingo a ver position as to whether or not a deal will be made. china tell you this, would like to make a deal very badly. tralow, many of the c banks are reacting to concerns about slower global growth because of those trade tensions between the u.s. anda. ch it was exacerbated monday when china's yuan, its currency, hit its lowestga levelinst the dollar in a decade. sinc then china worked to stabilizehe currency. as eunice yoon tells us, today was no different. ♪ ji >> reporter: b is sending the signal if there is a currency war it won't be because china. the authorities here today were intervening and managing the maets in order to hold up the value of the currency. first thing this morng in the mainland chinese markets, the people's bank of china sethat it calls the midpoint at 6.996 to the u.s. dollar, just stronger than 7.
the way theorystem here is that the central bank fixes the value at the start of trade every day to influence trading. currency traders were also talking about reports that chinese sete banks w stepping into the market, both here in china and offshore, to support it. this is another standard way that the government tries to manage the currency's value. the move follows a statement by the central bank viceovernor that china believes it is response to keep the yuan stable. there's been a lot of debate about what motivated the chinese to allow the yuan to weaken past 7 earlier this week, but it is becoming clear day by day that the chinese government wants to make sure that the currency stays under control. for "nightly business report" reports, i'm eunice use in beijing. and the important relationship here is, of course, with the u.s. dollar. moel prec the relative strengths of the dollar, and thats incredibly important for u.s. companies and markets. think caterpillar, exxonmobil, coca-cola or 3m. they are all u.s. compani that
lots of business overseas. if you're invested in multi-nationals, pay attention to the u.s. dollar. the stronger the dollar gets, the more of a country's currency it takes to buy products that are sold in dollars. with prices up, it figures fewer american products are likely to be sold in china and elsewhere and some u.s.products, even oil, are facing tariffs. that drives up the price even more. so one question investors have to ask, willigr prices allow it mpany to offset the fact is selling fewer goods? if not, profits are reduced. the inverse is also true. for example, china's exports become cheaper to buy here, which reduces the impact of any tariff u.s. might place on those goods. so now the question is how much of an impact is a strong dollar having on those multi-nationals. seema mody takes a look. >> reporter: president trump may want a weaker dollar, but with a
record n of central banks cutting rates around the world in 2019, that's going to be a harder objective to achieve. wall street's strategists are now betting that a stronger dollar will likely become a bigger pain for companies that make a large portion of their sales overseas, like consumers staple sector which on average makes about 45% of their revenue outside of the u.s. analystsaution if the dollar continues to strength, it could make american products less attractive to customers overseas, especially in emerging markets where the consumer tends to be more price sensitive. multi-nationals could bring down the price of their products, but that could then impact profitability. in the first quarter, north american companies lost more than $23 billion due to the impact of currencies. the most in morehan three years. analysts say -- internationally exposed names like kimberly-clark, proctor &
gambneralu gamble, general mills. investors say much has to do with the companiesea ang dividend yields. >> dividend-paying names tend to be a little less volatile than the maet, and they do offer stability in this type of situation. st, you know, look for company specific stories. >> reporter: with central banks coming more accommodative, invesco says it is making highei nd-yielding multi-nationals specifically in the consumer staples space more attractive, but it can change if a stronger dollar continues to eat into profits. for "nightly business report", seema mody. so joining us nowo put a of this into perspective is andreasarcia amaya, the founder and ceo of his own well it management firm, zoe financial. nice to have you back. >> thanks foraving me. >> we posed the question at the beginning and the premise that when rates are falling it is usually positive for stocks. but you haveates falling all over the globe and actually
negative rates in many countries around the world. so is it different this time? >> so when rates are falling and the globalconomy is doing fine or global growth is agreerating, i would that's usually a positive thing. when rates are falling like the way they have the last couple of days as a result of people basically looking at the geopolitical situation and seeing the tensions es that's a different story, right. that is essentially people looking for a safe hd,en therefore, buying treasury bonds as a result of thedsreasury yi falling. for that, usually it is not a positive for equities. >> right. so what is annvestor to do at this point if it looks indeed as if we' going to continue to see these lower rates, maybe negative rates in more parts of the globe? is the safe hav status of the u.s. still the place to be? e learned ink what the last couple of days is that all of our crystal balls are broken, right. we didn't know what was going to happen two weeks ago, now we clearly know -- i think everyone
knows we didn't know this was going to happen, especially with the cal it the trade wars urrency wars. this reminds us equity markets tend to be more volatile. if anything, this y been more calm. the volatility is more normal than we have seen inrior weeks. that's one. two is that you should have a personal financial plan ye shouldulling up to check to see if anything has changed over the last two weeks. if nothing has changed with that personal financial plan, then your long-term investment ontoiv objectives should not change th the geopolitical nsions. >> does that include riding out increased volatility? do you need to adjust that you cial plan if, indeed, think we will have more volatility ahead? ou>> so volatility whenre buying equity, volatility if you are a tolong-term inv is actually to your benefit because you're not trying to retire tomorrow. ifou are thinking five, ten years out, short-term volatility allows you t have higher expected returns on the equity
stocks versus on t bond side. >> so what do you do now? do you -- if you have an overall investment plan -- and we justh lighted the multi-nationals, many of which have fairly decen. divide do you take the opportunity on a day like this when we at one pot saw the dow down 600 points and add to a posion? is tha the best safe haven at this point? >> so this is something people rarely say, but days like today do nothing, right. if when people make decisions based onas emotion, on what they see on the headlines, usually in the long term that ends up not being the right choice. so if you have -- if you don't have a personal financial plan i would say that's the actionable item, is get a personal financial plan tour e that these kind of short-term volatility doesn't dissuade y from your long-term objectives. >> so if you want to be in equities lger term, wha areas are you seeing value in now and areas that perhaps might give you a little bit of safety or at least reduce volatility? >> so the best way to think
about it is if you h a strategy in which you say you wanted 70% equities and 30% bonds and the market falls 5%, d 6%, that sho trigger a rebalancing to buy equities wiout emotional decision attached to it. use the benchmarks you set for yourself andse them wisely when the market gives you the opportunity to get back to where yo should have been in t first place. >> a quick comment on the gold market. we mentioned the fact it hs highs we have not seen in several years. would you hedge your equity position in gold or not? >> i would not. gold is one of those asset classes that i personally do not understand what it does and wn it does it. if i can't explain it, it is very hard to explain to the client why we owned it in the first place. it seems to be right now good hedge against essentially more volatility in the equity market. sometimes it doesso that. times it doesn't. so i personally don't see it as
a great hedge to vn atility the short term or the long term. >> all right. on that note, thanks for the advice, good to see you again. >> thank you for havg me. >> andreas garcia amaya with zoe coming up next, disney was one of the biggest dra on the day following earnings miss last night. here is what the ceo says the sumpany is doing teed in the future. ♪ ♪ ♪ and there's a look at the shares fdisney, the stock down about 5% following the company's earnings which we toldou about last night. that miss was attributed in part
to disney building itstrming business. julia boorstin sat down exclusively with disney ceo bob iger to talk about the company'a gy. >> reporter: disney ceo bob ierr saying the city's lowest expected results launch of the streaming business. with cord cutting continuing to weigh on the media networks business as well as the paid immediate raw providers such a at&t, i asked iger about how concerned he is about projections that cord cutting will accelerate. are we concerned about cord cutting? yes. it has been an important business for us. but it is the reason we areng pivo strategically, to give us an opportunity to not only contend with the transformation going on in the traditional space but to thrive and basically completely different >> iger says the company is investing to succeed in the streaming wars, announcing disney will sell a bundle of
disney plus and hulu with ads for 5.99, a discount. >> our goal all along was to achieve scale, particularly with disney plus, as soon as possible. to basically sign up as many subscribers as possible and get them into the service, giving them a chance to enjoy the great tual property and the product that will be part of that service. we thought that this bundle would be a great step in the direction of achieving that >> it is not just about the subscription revenue. disney will earn from the services. aer telling me that getting broader audience for hulu will help grow its ad revenue, which heays is valuable revenue stream. for "nightly business report", i'm julia boorstin in los angeles. "the new york times" sees a rise in digital subscriptions and that's where we begin tonight's market focus. the company reported mixed results,areatingngs expectations but missing on revenue. "the mes" says it is making strides in its digital subscriptions but expects what
it says is a challenging second half of the year with its digital advertising unit. sharese fell m than 12% to 3125. cvs topped estimates thanks to an increase in same-store sales, rescription drug sales and its recent acquisition of the insurer aetna. the company all raised its full-year outlook. the stock rose more than 7% to 5812. cvs rival walgreens will shut down about00 stores or 3% of its u.s. locations as part of its plan to cut costs. the company says it will deliver annual savings of more than $1.5 billion by 2022. the stock was up 2% to 5248. drug developer cambrix struck a o be acquired by premiere of funds for more than $2 billion. they say under the agreement the shareholders will receive $60 in cash for each share. teambrick surged.
pharmaceuticals p better than expected earnings and reaffirmed its profit forecast. the drugmaker said its ceo w dld be leavi to personal reasons. stock up more than 3% to 729. fedex is ending groun delivery services with amazon. inis comes as fedex ended its air shi contract with amazon in the u.s., but will still deliver international shipments. edex shares were down a fraction to 160.66. amazon was up a fractiono 1,793.40. after the bell roku reported better than expected r tults thanksan increase in active user accounts. the video a streaming companyo raised its full-year outlook. shares initially rose in after yurs trading and t closed the regular session up more than to 197. also after the bell, lyft posted a smaer than expected loss and a beat on revenue targets thanks to more riders as well as casing pricepetition with its rival uber.
the company also raised its ll-year guidance. shares initially rose in after hours trading. sessionsed the regular up more than 2% to 60.29. coming up, hidden threats. >> what looked like basic devices all over your devices can be hacked in ways you will never believe. that's all coming up. ♪ ♪ ♪ ♪ here's a look at what to watch for on thursday.
we get a snapshot of the labor market with the release of weekly jobless claims numbers. with currency issues front and center, wholesale inventori for june is something to watch for. a higher than expected reading would be bearish for the dollar. another area in focus is so keep an eye on the natural gas storage numbers. that's what to watch for tomorrow. and finally tonight, the phone in youroffice, the industrial fan system in a lab, the printer. all of these devices contain tiny computers that can be hacked and used toain sensitive business data or cause damage to networks. cybersecurity pros say more needs to be done to keep these devices secure, and now some manufacturers are listening and making security a competive advantage. andrea day has our investigation hiding in plain sight. >> no demo is complete until we've tried to physically destroy the device. >> reporter: when you interview
this o you may wind up evacuating. >> all right. let's get out of here. >>ut let's get of here. >> reporter: he founded the cybersecurity firm red balloon here in new york city. this is where the magic happens? >> this is where the magic >> reporter: and here the goal is to make embedded devices more secure, and that means breaking in, taking them apart, and exposing flaws. >> yes! >> 100% of these devices can be compromised in some way. >> reporter: 100%? >> 100%. >> reporter: embedded devices are like mini computers. inside almost everything you can powe up, from smart home devices to medical gear and cars. at every financial exchange power plant, air traffic cantrol almost every company in the world. >> this is probably the most important cybersecurity threat that we have today because these computers control eve single espect of our critical infrastructure tha depend on every single epday. >> rorter: and according to a report by market research firm radiant insight, the global embedded system market is
projected to be worth 214 billion by next year. this is a small version of an air filtration system tt's in a lab that he is working with right now. >> you don't want the dirt ae air to come out ever, and this computer will allow that to happen. >> reporter: they hackevices side the fan's controller, not only forcing the dirty air in the wrong direction but ultimately shutting it down and it goes up in smoke. >> that is awesome. the porter: but he says issue goes way beyond this demo. the team recently uncover a major vulnerability in more than 100 devices made by cisco, the largest manufacturer of equipment. according to redtaalloon we are lking about a potential attack that could sell for mlions. they l sisco know what they found and the company published this critical advisory. sisco turned down a request for an on-camera interview, instead releasing a statement saying in
part, sysco is committed to transparency and is not aware of any malicious use of the vulnerability in this advisory. sysco will release fixes for this vulnerability. we wanted to find out what other industry leaders are doing to d protect embed devices and reached out to hp and huawei. both companies were not part of red balloon's findings. hp is the largest manufacturer of printers that contain embeddedy. dev andy rhodes is the global head of hp'sommercial pc business. his company's advertising claims to have the world's most sece printers. >> we put this special code into the printer so it is always devices.or malware in >> reporter: huawei did not agree to an interview orrode comment. back to the sysco findings, we asked the company if a tool exists right now to know if a device has they told us in part, an audit
tool is not currently available. we recommend customers review the security advisory to assess the best way to protect their network. i'm andrea day for "nightly business report". >> and beforego let's take a look at the day's final numbers from wall street. it was a wild one. th dow finished down 22 points to 26,007 but it had been down nearly 600. the nasdq rose 29 the s&p 500 climbed 2. the index's 2% reversal was the biggest comeback of 2019. that is "nightly business report" for tonight. i'm sue herera. thniks for j us. have a great evening. we'll see you right back here tomorrow. ♪ ♪