tv Nightly Business Report PBS January 8, 2018 5:00pm-5:31pm PST
♪ >> announcer: this "nigh with matheson and s. new record -- the s&p 500 and nasdaq closed at all-time highagain. no wonder more investors ask is this the greatest bull marketim? >> smartphone addiction. two big apple investors want the company to do more to prevent overuse by kids. is it apple's responsibility? >> and the long haul. as the economy keeps on trucking so does the trucking industry. those stories and more tonight on "nightly business r for monday, january 8. >> good evening, everyone. welcome. d t 2018 gains. it wasn't a rip-roaring rally to start the week, but it was enough to push the s&p 500 and nasdaq to new records.
investors remain upbeat about the economy and confident that it will continue to pick up steam. so here are the final numbers. the dow pulled backdroping 12 points. the nasdaq gained 20 and the s&p 500 gained four. with a string of record runs in 2018 some may start to think this bull market is shaping up to be one of the strongest ever. mike santoli picks it up from here. >> rep the bull market set to reach its ninth anniversary ever which means investo who expect generous gains from here over the coming years are betting this bull run can become the greatest of all time. in terms of market gains, valuation, and the public exposure to stocks only the final years of the 1990s surge are higher than the climb that began in march of 2009. it might sound scary for those who remember the '90s market and
the wealth destruction that followed but the comforting news is while today's market ranks number two it is quite a distance from the excesses of the one that closed the 20th century. the s&p gained just ove 300% from the lows set in 2009 compared to a 580% advance that ran from the 1987 crash to early 2000. while stocks are richly valued today they are not as expensive as at the 2000 peak. finally retail investors had 80% of financial assets in stocks and were feasting on public offerings 18 years ago. today they hold closer to 70% in stocks and popul investments are sober index funds. this explains why some strategists are expecting a more energetic phase as public excitement grows and the new corporate tax cut offers a fresh story line for further gains atop strong global growth and a healthy consumer.
it may sound too good to be true and it always makes sense to ask what could go wrong when the crowd is fixated on the good news. as long as stocks keep clicking the co greatest ever bull market will only get louder. for "nightly business i'm mike santoli. >> investors who focused last year on growth stocks were rewarded. large cap growth funds were up nearly 30% in 2017 while large cap value funds rose just under 16%. will growth continue to dominate this year or should investors now start to nibble more in value stocks and mutual funds? joining us to discuss that, kevin karen with washington crossing advisers. good to see you. i just love for those who don't know the terms of art to hear from you the difference between a growth stock or fund and a value stock or fund. what are the distinctions?
>> the growth stocks are companies that trade with higher multiples of earnings or multiples of book value and value will be lower. you may think why not buy the cheaper thing and the difference is growth. in the last year or so as we have seen growth pick up in the global economy and earnings grow pick up for the tech sector in particular we have seen the growth investors more willing to pay higher multiples to own the growth sectors. so the growth style by far has outperformed the value sector. >> what do you say to those who sans whether talking about value or growth are still richly valued, no pun intended? >> they are. not just growth and value but the overall stock market, it's trading with a value that's relatively high compared to the underlying economy. roughly $28 trillion is the value of the u.s. stock market. the economy is $18 trillion.
by that measure it's fairly rough and rich. also price to earnings is fairly high overall. >> mm-hmm. >> the high. growth in particular is higher. >> so what are you doing in the portfolios you manage that ours extrapolate and apply in their lives? are you paring back your growth allocations and looking at more value companies and funds? >> yes. so coming into 2018 we have done exactly that. we have been overweight growth on prospects of a better growth in the economy. we have seen that. we are getting a little bit concerned about the relative valuation between growth and value. we have trimmed back the growth allocation from overweight to neutral and lifted our value weighting from underweight to neutral, citing better relative valuations for the value sectors. how do you feel about the economy over basically what wil continue to drive stocks. >> really solid. there is little in the data that concerns us here. the earnings are growing nicely.
the employment data seems to be fairly good. the overall outlook for inflation and intert rates is relatively benign. there is nothing in the us. we would assume the near-term outlook for recession, for wou encourage us to remain overweight equities compared to bonds. thankmuch. you are uy there tonight. go home. >> thank you. >> good to see you. in washington, the treasury secretary has reportedly asked congress to lift the federal government's debt ceiling by february 28th according to bloomberg. will run out of cash to pay the bills by late march or early april if congress doesn't raise the borrowing authority. th treasury secretary has said repeatedly he would prefer the debt limit raised well before the government faces a potential defa dow component pfizer will
fault research into alzheimer's parkinson's treatments saying they are reallocating into other areas. they faced setbacks recently. there is no known cure for either alzheimer or parkinson's. bio tech company axovent will no longer produce a dementia drug. sales fell with axovent seeing its value more than halved. >> that was just one of the very hot topics discussed at the biggest health ca event of the year. meg terrell spoke to a number of ceos at the jpmorgan con >> reporter: rainy weather kicked off the jpmorgan conference in san francisco. it's the biggest event for
health care 450 companies present to 9,000 attendees. this year we got a deal from celgene to impact impact biomedicine gaining a drug for a rare form of bone marrow cancer. we spoke to the ceo. >> it is a hematology play. second, it is a highly unmet medical need. this is a rare cancer but until now there's been only one fda approved drug ever for the disease. following the deal biotech stocks were under pressure as some may have hoped for them to do bigger deals in the space. many wonder if the u.s. tax overhaul would spur m & a. we spoke with dave ricks about the impacts of tax reform. >> we are worried about the lopsided nature of foreign competitors with better tax competitors. now addressed. strategically that's the most important thing out of the tax
reform. it will allow us to invest without thinking about the tax rate so much. but rather put plants and labs where it makes sense, where the serving are. overall it was a successful package from a pharmaceutical sector. other topics this week have been drug pricing. it was during this week last year president-ele donald trp made the comment that the industry is, quote, getting away with murder when it comes to the pricing policy. as companies were updating on the drug pipelines and other b was an issue of gender diversity on display. of the more than 450 companies presenting here at the conference, only 20 have women ceos presenting. that compares with 22 presenters at the conference named michael. we spoke with one of the women earlier. if you look at the senior team, vice presidt and above, over half of our team members are women. but it's not j gender. it is a broader question of
diversity. making experimental medicines and advancing them is tough and having d and part of what makes us successful. som for the industry to work on in 2018. for "nightly business r i'm meg terrell in san francisco. there's been a big push by silicon valley to move into the very large and very lucrative health care industry. theodore boza has that angle tonight. >> this year more than 20 million americans are predicted to be using smartwatches. many of them will be using them for more than just telling the time. they will be tracking how many steps taken, how many calories burned and resting heart rate. could a smartwatch one day save your life? apple is trying to find out. the tech giant is teaming up with stanford medicine for a first of its kind research study that will use the apple watch to detect irregular heart rhythms that could lead to stroke. it's not just apple. other big companies like
alphabet, amazon and facebooke to remake the health care industry. a few reasons tech is moving into the space. one, it $3 trillion industry in the united states. two, it is ready for innovation and disruption. and three, these companies know consumers and have the scale, data and reach to deliver. in recent years their involvement in the health care industry has surged. according to cb insights participatio in health care equity deals by the ten largest u.s. tech companies has increased ten-fold in the last five years to nearly $3 billion last year. some of those deals include amazon's participation in a financing roun guardrai. apple acquired bedit and alphabet bought a health monitoring start-up. their efforts are bigger than just those deals. alphabet has been expanding its unit dedicated to life sciences. apple has health kit while amazon is quietly moving in for
the moment and facebook is making it easier for pharma to advertise. healt executives themselves are thinking about disruption and innovation in terms of technology. biogen ceo says the biotech industry needs to take the lead in changes and be what he calls the tesla of the industry and set new models. >> we need to bring this industry closer to the consumer, closer to the patients. we are meant to provide support to the patient who is sick, not to take advathose. >> reporter: some analysts say the road ahead for tech and health care won't be without bumps as they learn to understand regulatory procedures and patient/clinician relationships. fo "nightly business r i'm deirdre boza, san francisco. >> still ahead, screen time. should apple curb growing smar
two prominent apple shareholders made an unusual request. they pressuring the company on a social responsibility issue not a corporate one. the focus is on children and whether the company should do more fight smartphone addiction in kids. josh lipton has the story. >> reporter: belie it or not, the average american teenager got his first phone before he was a teen at roughly 10 years old. that teenager today currently spends nearly five hours a day on it. that doesn't even include taking and texting. jana partners and another apple shareholder who own a co
shares are concerned, citing that over the weekend. the shareholders are worried the iphone could hurt children saying as one of the most innovative companies in the history of technology apple can play a defining role in signalling to the industry that paying special attention to the health and development of the next generatn is both good business and the right thing to do. they point to alarming data that children are increasingly distracted by digital devices in the classroom and that teenagers who spend too much time on such devices are at higher risk of depression and even suicide. one of the researchers cited in the letter say children and their parents would benefit if they weren't overusing the devices. for apple in particular they make their profit when someone buys the device and owns it. it doesn't matter how often they use it. what the research shows is for teens the happiest teens are those who have the phones but use them about an hour, maybe two hours a day.
it is beyond that when issues start to show up. >> shareholders want apple to convene a panel of experts to study the issue, partner expe conduct further research and offer parents new tools and options. apple already offers parents help. they can take an active role in restricting the apps and features that their children use on these devices. some might counter that the responsibili isn ultimately with phone manufacturers but with their parents. that's often the social media apps like facebook and snapchat where young people spend their time, but they say apple can do more and argue that addressing the issue today will boost the long-term value for all shareholders by creating more choices and options for customers. for "nightly business replip to >> as josh mentioned today's typical teenager may spend nearly five hours a day glued to the smartphone and the lack of face to face time could be
detrimental to their well-being. is it the responsibility of companies to educate parents on the risk associated with their products and services? with us is dan eaton, a business ethics instructor from san diego state university. nice to have you here. >> good to be with you. >> what do you think about the basic premise that we put forward? what is the responsibility of a company like another smartphone maker to the customer and the customer's parents? >> well, the responsibility of any company is to make sure consumers are sufficiently well informed of the risks that come from using their products. when you talk about whether it is company, the e yuuser or the parents, yes, it is the responsibili of both. it's good for the bottom line. this is not about corporate social responsibility. it is also about protecting shareholder value so two big
shareholders with $2 billion invested want proaction now. >> it is interesting these shareholders who are apple shareholders have gone to apple. could be samsung or another manufacturer, google or whomever. what they seem to be calling for a more proactive solution to come up with wrinkles or products they put on the phone that make it easier for parents to limit or monitor both the time or the ways -- and there are products out there, but they are not -- apple already does some of it, but they are not as easy to use as these people are calling for. >> it doesn't seem to take anything away from apple's bottom line to make them easier to use. the bottom line is there is no device that e the insistence of a teenager, period. you can say that again. >> we both have kids that use
them. we know what you are talking about. it sometimes the responsibili of these companies to make it easier for parents to exercise the control. barbara booth, our strategic editor, has an excellent piece of cnbc.com about the things parents ought to do. it is with them the ultimate responsibility rests. companies can do more and they should do more. it is good business. this is not just about saving the world. it is about protecting a vulnerable population which is children and about giving parents a tool to do their job better. >> do you think most parents are even aware of how much time their kids spend on a phone and would they be more proactive if they realized it or how integral the device is to their daily life? >> they are probably not aware, but they will be more aware now having watched this segment. the bottom line is allowing this device which controls the amount of enable them to place controls regardless of how much they know about their own
children's usage. there was a report that children are happiest when they only use it about an hour or two on the devices. this technology will enable parents to ensure their children are as happy as they can be without getting addicted. i mean, the piece that barbara booth ran talked about what's referred to as digital heroin. it's easier to deal with the risks that will endanger their financial ste in apple. >> we are all jealous you're in san diego and we're not. >> okay. there you go. dan eaton with san diego state go pro may be open to selling itself. just hours after the wearable camera maker said it was cutting jobs, reuters said the co jpmorgan to help explore a potential sale. the company which has been
experiencing weaker demand said it was exiting the drone business, cutting ceo nick woodman's salary to a dollar. earlier woodman said a potential merger would not be out of the question. >> if there are opportunities for us to scale awareness of gopro globally by being part of a bigger company that's something we would entertain. we need to run the business as though we are going to be independent. we are planning accordingly and looking forward to benefitting from the improved sell-through we are seeing on the products at new pricing. we are looking forward to profitabilit in the second half of 2018. >> gopro shares plunged nearly 13% to $6.56. the restaurant and gaming change dave & buster's slashed the full year profit and sales outlook after reporting a drop in same store receipts during the holiday period saying weak foot traffic at the beginning of the quarter never picked up steam. despite the disappointing guidance they said the new
stores are performing well. sales cratered 22%. they finished at 43.79. same store sales at kohl's rose visited. as more they expect their offerings to continue to attract shoppers. it is hiking their profit outlook for the year. sales rose to $56.90. >> tenet health care said it will cut more jobs than planned as the hospital operator tries to keep a tight lid on costs. they expect to 2,000 positions saving them $250 million. shares were off 3%. despite reporting solid holiday sales the discount retailer five below saw shares pressured after it gave earnings and revenue guidance for the current quarter that trailed analyst estimates. shares were down 7%. the footwear maker crocs is increasing sales and gross
margin outlooks saying it expects operating costs to be flat compared to last year. shares fin day up 8% to 13.23. after the bell, urban outfitters reported a stronger than expected rise in sales. they were initially lower in after hours trading but finished the regular session down 1.5% to 33.74. .> coming up, why one industry a failed atlantic city casino may get a new lease on life. the former revel casino was purchased by a colorado developer for about $200 million. the developer called the
acquisition a dream come true. he plans to re-open it this summer around the same time the former trump taj mahal casino will re-open under the hard rock brand. the former revel will be called the ocean resort casino. well, last year was the most expensive on record for natural disasters. hurrican harvey, irma, maria an ravaged the western part of the country caused more th0 billion in total damage. according to the national oceanic and atmospheric organizations 2005 was the most disastrous causing more than $200 billion from hurricane katrina. >> tecata is expanding their recall. the air bag maker is recalling 3 million more faulty air bag inflaters. more than 19 aweso are
affected. thos recalls and the criminal s against them forced bankruptcy prote filings. >> when the economy grows as it has been doing more goods need to be transported and that's resulting in a spike in demand for 18-wheelers. mo brennan hits the gas. >> reporter: as the economy keeps on trucking, so too does trucking. dema for trucks is skyrocketing. that means higher rates. freight exchange ser dat solutions says the price for the common kind of truck jumped to 2.11 per mile in december up more than 25% from the start of 2017 marking the highest monthly average rate since at least 2010. analysts say it could go higher. >> it will be higher rates for shippers. the biggest question is whether or n they can get the capacity. if they are not willing to pay up, they're not going to get the capacity. that's the clear pattern being
established now. for consumers it means higher prices at the shelf. it means higher prices delivered. they h getting a discount on shipping. those days are over, at least for the foreseeable future. >> rep more manufacturing robust holiday season, rebuilding from hurricanes and new regulations are playing a part. last month a new rule took effect that makes drivers track hours electronically. that's taking trucks off the road and just as volumes are soaring. the big winners are the xpos, fed exes, werners. if you own the truck and trailer, you are in a great position right now. >> reporter: resur of vehicle orde according to a.c.t. research. fleets reserved the most class 8 trucks, those used for long haul, in a single month in three years. that's something that could
benefit manufacturers like daimler and volvo, but it's not just trucking either. volumes of goods moved by railroad, barge and plane are all growing. it's good news for the companies moving them, but bad news for retailers and shippers. stronger demand also means higher costs. for "nightly business r i'm morgan brennan. >> that's "nightly business " f. i'm sue herera. thanks for joius. and i'm tyle. have a great evening. we'll .
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