tv Nightly Business Report PBS March 14, 2018 5:00pm-5:31pm PDT
>> announcer: this is "nightly business report," with sue herera and bill griffith. tough tariff talk. stocks come under pressure on renewed concerns of a trade war and a lot of companies could be in the cross hairs. turbulence at united. the airline is in the news agai but is the real problem the carrier's corporate culture? savings gap. oregon is t trying help close that, becoming the first state to help workers f save retirement. hose stories and much more tonight on "nightly business report" for this wednesday, march the 14th. goo,evening, everyo and welcome. one of the biggest issues looming over the stock market is the risk of trade war. today, that issue buckled to the surface. the commerce department signalled tha few product
exclusions to the tariffs would be granted to u.s. companies. and that prompted some of our s allies to they could impose their own trade measures if necessary. the dow jones industrial average well 2 to 25 24758. the nasda was off 15, and the s&p was off 14. as we reported last week there is talk that the white house is considering tariffsn up to $60 billion of chinese good. not surprisingl that's not going over well in china. eunice eun reports for us from beijing. >> reporter: the chinese reaction today was a reiteration of comments andha themes the authorities have been touching upon in recent weeks as a trade war looms. at a regular press briefing the foreinntry said that u.s./china trade relations should note a zero sum gain.
the ministry has made similar statements in the past.e ths also a commentary in the official state news agency blaming the u.s. for the apparently large trade deficit saying the u.s. statistics are faulty, and said if washington wants to narrow the trade deficit it should ease restrictions on high-tech exports. that's another long standing positi that the chinese argue. yet another theme, the chinese statistics bureau said tod that the tariffs wouldn't hurt china much because the china coul sell to themselves. the bureau was trying to calm some public concerns. and there are concerns that president trump's tariffs could be expand to include some basic chinese goods such as footwear, apparel, as well as toys. these exports are big employers here in china. and that's a reason why, despite e public pronouncement, what we are hearing on the ground is that the autrities here are concerned about a trade war, that they are frustrated with
what they saw as lack of results after president xjinping had sent his top man on the economy to washington and that they are drawing up their own list p of americducts to retaliate if necessary. for "nightly business report," i'm eunice eun in beijing. american companies are trying to figure out how the tariff on steel and aluminuwi ll impact their business. cayla tausche travelled to middle buryndiana for that part of the story. >> reporter: for each cargo trailer rolling off the assbly line at look trailers, 75% of it is comprised of u.s. steel and alumin aluminum. matt arnold prefers domestic materials because they are higher quaty and his business is highly regulated. with the new tariffs in effect more competitors are shiing away from foreign steel, driving up demand and his costs immediat >> the abruptness and the nature of the way this is happening
seems heavy handed. we don't have the flexidlity he ability to raise capital. so it's very important for us that thiso not be shocking, so strong. >> reporter: t problem, arnold says, tariffs go into effect next week but shuttered mills could take up to 18 months to reopen a supply the market with the steel an aluminum it needs. arnold says it's unsustainable. >> there is a lot of uncertainty and a lot of apprehension. what we've seen is some competitors hold back. but we have had to move forward and we have had to raise pricis. so we've got to do it immediately. and we are doing it as fast as week. orter: the average trail here retails for $3500. that's up 9% from last year. arnold's father raised prices 10 to 15% after t last steel tariffs, and the business suffered. full-time employees were cut to just three days a week. arno says at some point his industry will recover. bu fmer governor mitch
daniels expects a negative effect on indiana t lasting. >> we are the number two auto state, the number one rv state. major in -- number one state in terms of manufacturing intensity, percentage of our whole economy that's involved in manufacturing. so even in indiana, number one steel state, there is some real risk that the net of this could be negative both in terms of simple job count and of course cost to >> reporter: at the trailer company, expansion plans are on hold as it waits to see h the latest trade fight plays ow. for "nightly business report" i'm cayla tausche, middle bury, indiana. >> now, in this trade fight becomes a trade war with china there cours be some winnd losers. and a lot of them. keith parker joins us to share s some of the n he feels could be affected the most. he is u.s. equity stregist at ubs. thank you for joining us. >> thank you. >> given ourve extenrade relations with china there are a
lot of companies -- i saw yourpo research . there are like 50 companies on this list here. it is a cross section of all industries in the united states, rit? >> yeah i think we see the risk of risings tensi and sticker shock with $500 billion of imports from china. there's quite a lot that could play out. but we think that the broad fect of a more broad tariff is unlikely and what we are seeing now is potential talk of select tariffs on import of consumer goods. other things that we import quite a lot from china, cell phones, tech hardware, semis, apparel, et cetera, and then i think there is the risk of retaation, so thoseompanies selling in china or to china from u.s. on the export so i think both of those types of companies may be at risk. >> we put together some s the nahat are on this list. as bill mentioned, there are a lot of them. but there's -- really kind of an inordinate bias towards
technology which i think a lot of people would not expect. >> a lot of those tech companies have production in china selling to chinese companies. >> uh-huh. >> and so there could be some risk there. but, again, you know, i this does escalate, there are chanceo ntially of chinese, say, discouraging the buying of u.s. brands in favor of dtiestic prod within china. >> i mean, some of the chip stocks for example, have reen on ere in the united states for a year or so. they could be affected by that, micron and others, right? >> there is a potential, i think,ou know,he technology supply complain is very much intertwined andintertwined with china. and so the ties of trade definitely bind. but the semisto story from dema and cycle, and poe sengs tension super cycle demand from automation, virtual re iity, et
cete there. but you do have that looming risk on the horizon where some of this china risk could be potentially discounted into some of these types of stocks. >> as we look at the on your list you cited gary cohn's departe as a worrisome factor auto. now we know that larry kudlow is going to be going into that position. he is a globalist. more of a globalist. does thatreassure you at all? >> i think the market doesn't like change, and we'll hear wha rry has to say once in the post. you tow, i thinkt the market is worried about the rhetoric cominge out of the wh house currently. but there is some reassurarde. we have h larry for years. that the message that he is likely toiv d will be delivered clear and eloquently. i think that should be a positive >> could you tell parker from ubs thank you for joining us. >> thank
>> speaking of larry kudlow, a as we just mentioned he will replacehn gary co as the c national econo council director. we have look at how he might impact econocyc po >> president trump made the off by telephone to kudlow on tuesday evening. kudlow accepted telling the president he would be honored to take the provision. kudlow comes to the job at a time had he the president has been trending in a protectionist rection talking about tariffs on china, tariffs on steel and aluminum imports into the made to. but kudlow himself is a opponent of broad based tariffs. uat sets a fascinating tension between kudlow and the president of the united states. i spoke to lar kudlow earlier today. he told me that he believes he will be able t speak h mind freely about tariffs in this white house. but ultimately, he said,s the director of the national economic council his job is t offer his advice but once the president's decision is made it's me and kudlow says his job will be to simply execute on it. larry kudlow comes on the job
after a career at cnbc as a television commentator and anchor. he worked at bear stearns on wall street, he served at the federal reserve and also at the office ogement and budget in the white house in the reagan years. one of the challenge will be, this is a very different washington than it was in the 198 tos. for show i'm ayman jabbers at the white house. a key economic ioricator fell the third month. retail sales dropped 1% in bruary dragged other by reduced spending on cars and gasoline. it is the latest report to suggest that the m economy not be overheating afterall. following the release of that report jp morgan lowered its first quarter economic growth estite to 2% even from 2.5%. it is a time to take a look at some of today's upgrades and downgrades. ford's rating was raised to i don't have weight at morgan stanley. it's ford's first upgrade by the
firm in four years. the analyst sites ford's turnaround plan and the value of its f-150 franchise. the price target was hiked to $15. the stock rose 2% to 11.02. >> nvidia's price target was raised at rbc capital. the firm says there are enough positives to drive the stock to new highs like spending and gaming. the analyst maintains his outperform rating and the city council rose a fraction to $278.74. >> sunoco's ratingas cut at goldman sachs. citing head winds for t committee company including vised earnings calculations. s ntury aluminum's rating raised to overweight from neutral at jp morgan. the analyst cited the trump administration's tariff on imported steel whi has prompted sentry to increase its capacity. price target was lifted to $29.
with day's selloff shares were down 5% at $20.45. still ahead, united airlines makes headlines again. t is it the result of mismanagement or perhaps a poor corporate culture? insider tradinges cha were brought against a forme employ yi of equifax. the exchief information officer milliony sold almost $1 worth of shares after learning of the data breach at the company but before the companyh made hack public. the company now faces more than 240 class action lawsuits. the s.e. today brought
charges against the founder of hear the knows accusing elizabh holme of massive fraud. this is the tame person who was onceompared to steve jobs and who became the first self made femalelionaire at least on paper. we look at sarah knows hear the knows's rise and fall. >> reporter: it garnered a valuation ofil $9on in 2014. the company promised to revolutionize the blood testing industry claiming it could perform a multitude of tests on just a single drop of blood. it w founded by elizabeth holmes a young stanford dropout often compared t steve jobs. the company boasted famous board directors including two former secretary of states. but success started to unravel at t endf 2014 when the "wall street journal" published
the first of a series of stories illuminating problem with its blood testing technology. the ceo doubles down. >> t what happens when you work to change i think so this. first they think you are crazy. then they fight you. then all of a sudden you change the world. >> reporter: but the trouble continued with multiple government investigation opened into the compa n. may, they said it voited two years of blood test results. in july of that year, medicare andvi medicaid ss banned holmes from owning labs for two years. the company was saiea to be bankruptcy by the end of 2017 before it secured a $100 million loan. today a settlement with the s.e.c. s.e.c. where they neither admit nor deny fraud the s.e.c. wouldn't comment on whether other agencies may be pursuing a criminalrcase. nightly business report," auto i'm meg terrell. cigna beats estimate but the stock false. that's where we begin rktonight focus. a rise in profit and revenue at the owner of ndkay's zales
jewelers was overshadowed by a week fullier outlook and -- by a weak full year k.outl they said it will cut costs and improve e-commerce to drive its erowth over the next three years. hares lost their luster, so to speak, calling 3020% to $38.22 exess reported revenue and profits that topped expectations helped by sength in on line ales and outlet sales. same store sales fell more than expected. shares pell a penny to $7.39. >> walmart is expanding its online grocery delivery service to 10et areas. it now expects the reach more than 40% of the united states. right now theervice is offered in just six markets. walmart said it will continue t partner with ub he were to help deliver those customers' orderst walm shares fell nearly 1% to7. . united health group is
estedtedly no longer int in acquiring all or part of envision health care. bloomberg said united health was at one point potentially interested in worki with private equity firms on a deal for the health care company.h united hearoup shares fell a fraction today to $225.38. shares of envision were down more than 7% at $39.41. >>nited airlines is under fire again for a dog, which died, after a flight attendant made the owner put that dog in the overhead bin. he company has since apologize but is poor corporate culture at the company perhaps to blame i eric gordon joins us, a professor at the university of michigan's ross school of busickss. welcome nice to see you again. >> hello, sue. >> these two airlines, unite and continental merged a number of years ago. p the but tblems of those two and now one airline haven't disappeared.
you think culture might be the key. why? >> i think culture is the problem.wh here's you can't manage everything. you can have a manager on every plane telling the flight attendants what to do. you can have a manager at every gate telling thent gate a what to do. what you need is a culture which setsms n so that all of the people that you can manage every minute w knowt to do. and when crazy things come up that aren't in your ruleok that people just naturally know, it's the culture. they kno how to handle it in ways that are right. you have t guess that the united culture is a culture where they have learned to handle just about everything wrong. but you have to admit, though, eric, that there is a strange ctncidence t it always seems to happen to united eairlines, whether they dragging a passenger off or the luggage gets lost or the kidts sent to the wrong place. and now the dog has died. is it bad karma that this airline has? or what's going on here do you ?
th >> so i think they started off with bad karma. and the karma effect was multiplied by this merger. the merger is complicated. it's two different cueures. they hever gelled. they are spending a lot of time and effort trying to get thing like the reservation systems combined. what they haven't spent time on is improvinghe culture. and you know, it's reason by a ceo who came to unitedrom a freight railroad, moving lumps of coal in a freight car is different than moving people in airplanes. bad culture exasperated by this merger that has mine every complicated. >> yes, it certainly has. eric, thank you. always nice to see you. eric gordon is with the university of michigan's ross school of business. >> my >>pleasure. coming up, what one state is doing to help fill the gap in retirent savings.
we told you earlier in our program about ford's stock tting upgraded. well, separately, the automaker is recalling nearly 1.5 million cars because their steering wheels c come off. ford says the problem may have caused two accidents and one injury. the affected models are the ford fusion and the lincoln mkz years 2014 to 2018. the ceo of toys r us told his employees that the retailer will likely close all of its u.s. ores. the company plans to file liquidation papers this even in advance a bankruptcy hearing scheduled for tomorrow. this move threatens up to 33,000
jobs i the coming months. it is no secret of course that americans nd to save more for retirement. but now one state is stepping in to fill the savings gap. sharon epperson has the details. >> the beers that we have on tat are o top. >> reporter: when this small business owner decided to go from a career in biology to beer, his focus w crafting the perfect pint. giving employees a way to save r retirement may have been a goal,ut not one allison was able to brew up on his own. >> you spend a lot of time, lot f energy work these people, developin relationships. and they become family. and you really want the best for them. u want them to be able to provide for themselves later in li >> reporter: now, thanks to a program that is the first of its kind in the country, employees at reach great breenng are g the chance to save for their future through a said-run retirement plan called oregon saves. >> we are giving small
businesseshe same kind of opportunities that some of the larger businesses have. lo cost savings for employees at no cost to the employers. >> reporter: about 55 million american workers in the private sector are not offered a 402 k plan through their employer. most of them, 32iomill work at small businesses, which have fewer than 100 employees. why is that a problem? >> study after study shows that people are 15 times more likely to be saving for retirement if they arefferedccess through their employer. >> reporter: oregon saves requires employers whoo not offer a 401(k) to automatically 5% of an employee's wages after taxes and send it t their individual retirement account or ira. workers can contribute a mimum of $5500 a year. the plan is managed by the state, andor wrs must opt out if they don't want to participate. but so far, many, being given the chance, are doing it. people whoabout 5500
are actively contributing to their accounts at this point. ere are about 20,000 who are somewhere in the processhen their pay periods take place. t d in the end, we expect t there will be about a million people who could potentially participate. >> reporter: the tap room manager is contributing 5% of his wages to his plan, he says it is the first time he saved for retirement. >> it's always in the back of your mind but you always use your youth as an excuse and say oh, i can always do that later. and you know, now its alater. >> reporter: critics say there too much paperwork for companies that already offer 401(k) plans. yet more states are following oregon. seven had e cted legislation for their own retirement plans, with illinois and california expected to roll out theirs this year. anher 24 states hav introduced legislation to start their own retirement plans. w are hopeful that other states will see the success that oregon is having in designing
and rolling this program out and make similar programs available in their states. >> reporter: josh allison hopes offering a retirement plan will attract the bestlo ees who will help ensure customers keep coming back. >> one thing that the savings plan will allow us is people a l be able to view this as long term career rather than just api stepngstone. >> reporter: for "nightly business report," i'm sharon epperson. >> cheers. it was ten years ago today that bear steerns notifd the federal reserve it would have tb file fkruptcy protection. the fedg instead try to limit the damage with an emergency loan but a few days later thent cel bank then told bear steerns it was going to be to find a buyer. one emerged. jp morgan, who offered a paltry $2 share for the once venerable wreelt. >> about. the purchase price was eventually revised slightly higher. but then soon after the country witnessed the wst financial
crisis in generations. it has been a decade. if the same thing today, under the new banking rules the fed would not be able to make tha e samergency loan. and speaking of that, the senate is voting tonight on banking legislation. kf it passes, it would be a step towards rolling bome of the rules that weapon into effect following the financial crisis.r it's to believe it's been ten years. >> it has. that does it for us tonight. i'm sue herera.in thank you for g us. we want to remind you this is the time of year your public television station seeks your support. >> i'm bill griffith, thank you very much for that support. have a great evening. we'll see u tomorrow.
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