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tv   Nightly Business Report  PBS  January 9, 2018 5:00pm-5:31pm PST

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>> announcer: this is "nightly busi w great expectations. stocks finish at records, just as corporate america gets ready to report their earnings and the bar is high. forging ahead. the president meets with republicans and democrats on immigration. and some of country's biggest companies are watching very closely. class is in session. in a first, a public high school has been built on the campus of a silicon valley company, putting a new spin on technology in the classroom. those stories and more tonight on "nightly business r. good evening, everyone, and welcome. how about we start tonight with some fake news for a change? for a change, stocks didn't set fresh all time records today. but you know better than to
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believe that. they did it again! and there's no "oops" attached. the major indexes, all of them, closed higher today than ever before. you've heard that a lot lately, but here's something you haven't. the s&p 500 is having its best start to a year since 1987. and not since 1964 has the s&p 500 set six consecutive records to begin a year. investor optimism is high. here are the happy and not at all fake numbers for the day. the dow advanced 102 points to 25,385. nasdaq added six. the s&p 500 was up four. now comes the moment of truth. quarterly profit results. and as bob pisani reports, expectations a. >> reporter: it's been an amazing start to the year. the s&p is up six days in a row, about 3%, its best start since 1987. earnin season is now upon us. prices and evaluations are at
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record highs. it's fair to say expectations are also very high. this past quarter has been very unusual. analysts have been even more optimistic than they usually are. they typically start optimistic and then lower earnings expectatio into the quarter. that didn't happen in the fourth quarter. with prices this high, investors are clearly hoping there will be bigger beats than usual and then likely punish numbers with disappointin numbers more than usual. guidance is also an issue. the companies that gave guidance each quarter, one-third will typically raise guidance, two-thirds will lower guidance. thanks to tax cuts, investors are expecting more companies to raise their guidance than typical. that could be a problem since many companies are not entirely sure how much the tax cuts will help their earnings and may be reluctant to say anything this early. then buybacks and capital expenditures, again, thanks to tax cuts, ve are expecting comp annou some combination of more buybacks or increase capital expenditures. can the ceos really deliver on
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these high expectat? a pretty tall order. their early returns give some cause for optimism. 19 companies from the s&p have reported earnings so far. oracle, carnival, fedex, carmax. among them the average earnings growth has been 18%. sales have averaged 11% growth. that's good. that's well above current expectations, a gain of 11% for earnings and 7% for revenues. we'll see what happens from this point on. if the companies start pushing buybacks and more capital expenditures, it' possibl this rally could just keep on going. for "nightly business r" m bob pisani at the new york stocexchange so let's pick up where bob left off. will earnings growth fuel the next leg of this wall street rally? here to discuss that and offer some insight into who may be the winners and losers this earnings season is art hogan, good to see you, art. >> thanks so much, it's good to be here. >> earnings season, what are your expectations?
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we've said the bar is very high. and bob really repeated that in his report. what are you going to be looking >> three things. either we want to see a continuation, i think bob pointed that up very well, typically during a quarter we start out very optimistic and the average drawdown in estimates is about 4.2% over the last call it five years, that's been average. we've drawn down estimates for the fourth quarter by .3%, we really haven't lowered the bar. that's pretty healthy. the second thing you want to look at is, what do companies say about guidance? that would be great, 11% earnings on average with 7% revenue growth will be terrific, it will look like the last two or three-quarters. this is the first time we'll hear from corporate america how much their effective tax rates are coming down and what does that mean for earnings in 2018. as much as i think this will be a great fourth quarter earnings reporting season, it will be the most confusing and interesting and important guidance season
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for 2018k accountants will be vy busy trying to figure out what the effective tax rates are heading into next year. >> i believe you believe, and i've heard an awful lot of people say it's going to be a bit of a rough quarter for financials. that's in the rearview mirror. but the rest of the year going forward might be pretty good for financials. >> yeah, i couldn't agree with you more, tyler. that comes in three flavors, right? so the tax reform in and of itself is good for financials. the effective tax rate for the financials is in the 30s, that will go down to the 20s, there's a 10% tailwind. repatriation money, typically financials domestically versus financials internationally, that's a benefit. rising interest rates. the fed raises rates two times this year, they're thinking of raising rates three times. we're seeing 2.5 for the first time, and the spreads bet the 2's and the 10's are
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broadening out. it will be a tailwind heading into 2018, probably the number one sector in terms of how we think tax reform, deregulation affects secto in the next year. >> you say there are a couple of bumps in the road, possibly on the fundamental side of things. what are they? >> well, first and foremost, obviously trading at 19 times. we're pretty fully valued, right? we think that 19 times is probably appropriate in the current environment, with very low interest rates and very low inflation. if we do get a surprising uptick come down a little ainly think bit, especially if we see interest rates come up. keep a close eye on inflation, we'll see the cpi next week. that's one thing to look out for. >> you're watching for a possible governmen shutdown, maybe some korean dialogue that may be a little bit incendiary. we'll keep those all in mind, art, thank you so much. appreciate it. art hogan.
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the price of oil rose to its highest level in more than three years. domestic crude gained 2% to settle at nearly $63 a barrel. opec and russia keeping supply limits in place to help reduce an oversupply of the commodity. it's expected that u.s. inventories will fall for an eighth straight week. in washington, president trum pushe for a bipartisan ag on immigration. speaking during an extended meeting with congressional republicans and democrats, the president suggested a two-phased approach. firs a deal for the so-called dreamers and t a comprehensive agreement. >> i also think after we do daca, and i really do believe we should be successful, we should look in terms of a permanent so and to the whole situation with immigration. a lot of people in this room would agree with that also. >> big business will be watching how these talks play out since the issue has always been an important one to the economy. ylan mui has that part of the
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story. >> reporter: as the battle over immigration heats up here in washington, many workers are worried they'll be left out in the cold. special protectio for the undocumented childre of illegal immigrants, known as dreamers, will expire in march. about 800,000 people will be affected. 91% of them are employed, including at some of the biggest companies in america. da came to the united states as an undocumented immigrant from brazil when she was 11 years old. since then, she's graduated from college d landed a job as a financial analyst at johnson & johnson. her protected status allows her to work legally. losing it could mean losing her livelihood as well. so she's sharing her story with her company's ceo.ashington >> he told me he was keeping my story in mind. and i've tried to raise awareness of these issues at work because i'm confident that there must be other dreamers in my company. but it's very scary to come forward and disclose your status.
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>> r johnson & johnson is part of a broad coalition of major corporations that are backing a path to citizenship for workers like daniella. by one estimate, forcing all dreamers to leave the country would cost the u.s. economy nearly $500 billion a year. >> how can we help these people gain the appropriate rights in the united states, how can we make sure they can be drivers of the economy? that's what this is all about. >> reporter: both republicans and democrats say they're determined to find a solution. but compromise remains elusive. and daniella viera's american dream now comes with an expiration date. >> we're desperate. we don't want to lose our jobs, we don't want to lose our home. we don't want to to go back to someplace we've never known. >> reporter: for "nightly busine" i'm nearly one year after donald trump became president and promised to stop america's growing demand for autos built in mexico, the numbers have not improved to his liking. in fact they've gotten worse.
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new data show the number of auto exports to the u.s. hit a record high in 2017. phil lebeau has more now on the surge in mexican-made cars a. >> reporter: t mexican-made car and truck is still very much a staple of america's auto industry. f veh exported from mexico to the u.s. jumped over 10% last year. an all-time high of more than 2.3 million autos. what's behind the increase? america's growing appetite for suvs like the chevy equinox, and trucks like the ram 1500 pickup. through november of last year, fiat chrysler, which builds the ram, and general motors, saw huge spikes of exports from their plants in mexico while ford was down almost 20%. that's becau builds cars in mexico and their sales are down as more people look to buy bigger vehicles. for president trump, the numbers
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show that his threats to slap a big border tax on mexican-made vehicles has had a limited impact. yes, ford scrapped plans for a final assembly plant in mexico after repeated attacks by the president. and several automakers, including the big three, have said they'll invest billions of dollars expanding auto plants here in the u.s. still, mexico's auto industry is only getting stronger. it exported a record 3.1 million vehicles last year, with three out of four coming north of the border. all of that could change if the trump administration follows through on threats to alter or tear you want north american free trade agreement, a move that could add thousands of dollars in taxes to vehicles built in mexico. but until that happens, gm and other automakers will continue building south of the border. gm says that the demand for trucks and suvs here in the united states is one reason why
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it continues building in mexico. the plants here in the u.s. that also build those trucks and suvs are running at capacity. there's nowhere to build those vehicles that are in demand except to build them in mexico., "nightly business >> to read more about mexican car imports, please head to our website, separately, the white house today said the president will travel to the world economic forum in davos later this month. it's a gathering of world leaders and business executives. still ahead, connected homes, connected people, and connected cities. it could be a .
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apple responds to two of its investors as we reported yesterda jana partners callister's urged apple to take a responsible approach to helping parents protect children. apple said, quote, with today's ios devices parents have the ability to control and restrict apps, websites, movies, songs, and books, as well as cellular data and otherfeatures. intel's ceo says the company will issue updates to all its processors released in the past five years. they will do that before the end of the month. the announcement was made at a conference in las vegas. it follows the disclosure of massive security vulnerabilities in its chips that we told you about last week. >> our processors, products, introduced in the past five
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years, intel expects to issue updates for more than 90% of them within a week. t we believe the performance impact of these updates is highly workload dependent. >> those security flaws could theoretically allow malicious programs to steal data including passwords, personal photos and even e-mails. that was just one of the hot topics discussed at the ces conference in las vegas which gathers a who's who in technology. it also the place where new gadgets and devices are put on display th julia boorstiner >> reporter: the consumer electronics show is drawing 170,000 attendees and 4,000 exhibitors. checking out the latest gadgets and software and listening to big name ceo key notes. the show's organizers, the
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consumer technology association, drawing fire last year for not booking a single female keynote. responding this year by adding photos of women speaking on big panels to its key notes page including the ceo of a&e networks, who is weighing in on the future of tv. hulu, a year after announcing a streamin tv package, announced it now has 17 million subscribers between its live and on demand offerings, up from 12 million back in may 2016. this has companies from verizon to disney invest in more direct to consumer offerings launched this year. >> connected homes, connected cities are happening. content is one big piece of that future. another big tech trend here, the exploding category of voice assistance. amazon, roku and others battling to attract the 17 million people expected to use these devices by next year. google is announcing it's
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integrating its assistant in more devices including a car display, and new ways to control your home. >> what we're excited about is a new category of devices called smart displays. this is where you have an assistant who can hear you from a distance, answer you loud, bu somewhat display that when it makes sense, can show you what you're seeing. >> reporter: a rival is using this rv outside the convention center to showcase all the ways amazon's voi assistant alexa can be integrated in your home. >> roku connect makes it super easy to connect your devices to your tv. >> reporter: roku looking to make their tv device the center of the home, to make it easier to find, watch, or listen to more content than ever. for "nightly business r" boeing delivers a record number of airplanes. that's where we begin tonight's
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mark focus. the aerospace giant capped off 2017 with 763 deliveries, et cetera most ever in a year, helped by global economic growth strong airline profits. the company is optimistic on cargo and customer passenger trends for this year. it expects passenger capacity to increase as much as 6%. boeing's shares soared more than 2% to $318.43. a stronger than expected holiday season led target to raise its fourth quarter and full year earnings forecast. the retailer said shoppers had an appetite for a variety of items during the period, pushing sales up nearly 3.5%. target initially expected sales to max out at 2%. shares rose nearly 3% to $69.14. the clothing chain express said it struggled to get shoppers into its stores during the holiday period and as a result, the company is slashing its earnings and its sales outlook for the quarter and the
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full year. express' shares plunged 20% to $7.37. boston scientific reported preliminary results f the year that outpaced expectations. the medical device maker expects earnings for the quarter to fall in line with estimates. shares of boston scientific up 8% on the session to $27.96. the lighting company acuity brands dropped, weakening profits, below analysts' expectation. shares fell 15% to $157.95. cloud computing okami technologies is reportedly working with morgan stanley to explore a potential sale. bloomberg says the company is under pressure from activist elliott managemen and is exploring strategic
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alternatives. nordstrom after the bell said rising sales at its off-price nordstrom rack brand helped same-store sale pick up during the holiday season. the retailer upped the lower end of its full year guidance and now expects net sales to rise more than 4% for fisc. shares volatile in after hours trading. it is january, so for most of the country, it is cold. but as temperatures drop, a number of stocks tend to heat up. domi chu has a list of names that have historically been winter winners. >> reporter: so are there stocks that perform better during the wintertime? we asked our data partners at kenshow to take a look at the ten winters we've just seen. we define winter as the end of november through the end of march each year. turns out a handful of stocks do
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quite well during those seasonal times. home depot, if you're out there buying shovels or snow, salt, anything lik to melt the snow, maybe you're going to home depot. those shares performed well, up an average of 11% each of the last ten winters. it's a positive trade 80% of the time. netflix, people talking about hunkering down, binge watching your favorite shows online. those shares of netflix up about 35% on average, positive trade 80% of the time. netflix obviously has a lot of other things going for it, but that may be part of the story. auto zone, are you out there buying antifreeze for your car, batteries, scrapers for your windshield? those shares up about 11% on average, a positive trade 90% of the time. domino's pizza, because it's too cold to go out to eat? that trade is up 24% of the time, on average 90% positive trade for domino's pizza. vf corp., the company behind brands like timberland boots and
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north face jackets, that company and that stock on average up 7% during the winter months during the last ten years, a positive trade ten out of the last ten winters. it to all of these trades will play out again this time around. but when it comes to the cold weather and winter months, people look at these stocks as investment opport history is a guide. we'll see if that becomes true this time around. for "nightly business r" i'm dominic chu. coming up, education meets technology, resulting in something that's never been done > first, treasury yields are on the rise, the dten-year around 2.5%.
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remember eastman kodak? i bet you do. that company was once a leader in camera and film before falling on hard times. today it is making a big switch. kodak is joining the cryptocurren crazy. it plans to launch kodak one, a blockchain based image rights management platform and kodak coin, a photo-centric k surged 119%. a former google employee was fired after writing a memo criticizing the firm for pushing diversity. now he's filing a class action lawsuit along with other former employee against the tech company. both men say they were ostracized and punished for their political views. the complaint seeks monetary damages. tech companies are pushing into america's classrooms. they supply laptops and software programs, and learn to code
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lessons. but oracle is taking it one step further. they're putting an entire school on its corporate campus. aditi roy is in redwood city, >> reporter: welcome to design tech high school. a new $43 million state of the art public charter school. but what makes the school one of a kind is that it sits on the campus of oracle, the first ever public school built on the campus of a tech company. >> welcome to the design tech high school's new home at oracle. >> reporter: tech students like jolene take classes on subjects like coding or wearables. that's where she and another student came up with the idea of an antitheft purse. oracle helped the team get a patent. they want to eventually bring it to market. >> it's so cool to know that an idea i had actually got the opportunity to be brought to life and developed to this
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stage. >> repor it's just one example of how oracle is partnering with the school, which has been around since 2014. oracle was involved early on, but now that they're neighbors, the school is leveraging oracle's resources more than ever before. employees are mentors. students can intern across the basketball team will practice in the company gym. and company shuttles will be used as school buses. and students will work in the two-story design realization garage. >> the real potential that exists for us is all the oracle employees on e o side of this building. >> reporter: it may seem the students are being primed to some day work for oracle. the company says that's not the point of its involvement. >> it is a long term kind of leap of faith investment. so that's what philanthropy is. you try and make the best intervention that you possibly can. amid a national shortage of
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software engineers. and u.s. students are behind their peers internationally. it's not just oracle. other tech companies have been heavily involved in education. google supplies apps and chrome books for half the primary and secondary students in the u.s. sales force has pledged $100 million on san francisco public schools. and ceo mark benioff is hands on, meeting with principals and treating the project like a venture capital fund. facebook has developed tech prep, a website that teaches students how to code. alw ech's involvement i succeeded. in 2010, mark zuckerberg donated $100 million to new york public schools. but the money failed to turn the schools around. still, students here say their new home makes them feel like anything's possible. >> being here on oracle's campus is -- it feels like we're
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finally home. >> reporter: there a some skeptics who worry that oracle will be too involved with the school. but design tech's co-founder tells us oracle has assured them they will run as an independent school. for "nightly business r" m aditi roy, redwood city, california. befor we go, here's another look at the record day on wall street. e dow advanced 102 points. nasdaq added six. and the s&p 500 was up four. that will do it for us tonight. i'm sue herera. thanks for joi us. >> and i'm thanks from me as well. i'm tyler mathisen. have a great eveni.
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>> this is "bbc world news america." funding of this presentation is made possible by the freeman foundation, and kovler foundation, pursuing solutions for america's neglected needs. >> planning a vacation escape that is relaxing, inviting, and exciting is a lot easier than you think. you can find it here in aruba. families, couples, and friends can all find their escape on the island with warm, sunny days, cooling trade winds, and the crystal blue caribbean sea.