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tv   Nightly Business Report  PBS  June 25, 2019 5:00pm-5:31pm PDT

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in a world of lower interest eems tothe research show i think this is fairly widely accepted, that it's better to act preemptively. >> but the fed chair also suggests an interest rateut in ly is not a done deal. as stocks fall. >> megamerger offers to buy allergan for $63 billion as drug makers look for new ways to to go. inmuionals are considering whether to shift production out of china has
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tensions with the u.s. remain tightened. those stories and more tonight "nightly business report" for tuesday, june 25th. and good evening, i'm contessa brewer in for sue herera. >> welcome aboard. good to have you back. we begin with the federal reserve, which has been a iving force of course for stocks. the market has been looking for an sbes rate cut as early as next month. any suggestion one is coming, investors cheer. any suggestion of something else, stocks falter. and that's what happened toy. fed chair gentlemjerome powell e fed o grappling with whether reduce interest rate and while he said there is a case to be made for lowering them preempively, he said he did not know how long all the current economic uncertainties willast and h warned against monetary policy that responds to short-term political interest. today, the dow fell 179 points. nasd down 120. s&p 500 slid by 27. dominic chu sarts as off.
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>> jerome powell saking at the council on foreign relations saying the federal reserve wille act as appropro sustain is expansion. he says uncertainty over trade and global growth has increased, but he is grappling over whether these uncertainties will continue. still, powell saying the economy has perform reasonably well this year in that the baseline outlook for the fed remains favor bable and that policy should not overreact to one data point. powell also hinting atble insurance rate cuts pointi inin vergell it ct sooner and more forcefully. >> i think in a world of lower interest rates, the research seems to show and i think this is fairly widely ak cemented th accepted, it's better a act. i think most central banks would want to act an not let a downturn gather steam. >> this comes after the st.
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louis -- bullard saying now seems like an insurance rate cut, but that a 50 basis pnt may be overdone. he said he does see 50 basis points worth of cuts by the end the year in total. he said he hopes fed action will straighten out the yield curve asinwell. i'm d chu. >> the president has been very vocal about his thoughts on interest rates. today, he coureportedlyn aid on ag believed the u.s. dollar is still too strong and feels the situation could be eased if the fed lowered interest rates. alo orecast for lower rates along with growing tensions between iran and the united states saw investors piling intm safe havendities like gold, which today hit a six ear >> speaking of which, when we look at how the various markets have been performing, stocks, ll they're near time highs,
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which suggest long-term growth, but intert rate are near three-year lows, which suggest a slow down and despite readings, gold is now at this secure high. scottations joins us to talk about this. he's president and chiefst innt officer at nation shares. good to see you. thanks for joining us tonight. >> thanks very much, bill. >> what specificedally is gold' ssage? >> i think there are three drivers for gold. notnly now, but generally there are threedrivers. the first one is interest rates. when they're low, the opportunity costs for owning gold which doesn't pay is lower so people are able to buy more gold and we see as you point out, interest rates very low. long-term rates down three quarter of a percentage point over t past six months. the second driver is the dollar, the dollar's fallen quite a b over the past month against the currency. i guess a basket of foreign currencies and if you're buying gold in anoer currency, and it's denominated in a dollar,
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then it's cheaper than it used to be, easier to buy. those things in quantify, there's a third as geo political concern it's tough to quantify and if you're focused on what's going on between iran and the united states and there's plenty of ono politicalrn for people to think is an imptous for buying gold. >> your political concerns are hard to quantify. is it easier to quantify what china's doing. after all the past years, been a net buyer of gold and help supported the price, slowing the decline. is it behind some of these moves higher? >> almost certainly china wants to diversify the their corporate balance sheet if you will and one way tdo that i to sell dollars and buy gold so they're trying to do that. b b of course the undercurrent the trade war with the united stkees. so that sense, but there are so many reasons to buy gold right now.
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there are very few reasons to doubt it. except for maybe the fac that comes so far so fast. >> i know you're not a fan of gold right now. so how much you think it goes? >> i'm actually, i have thought for the past month or two that all of the plap ets were lining and it made sense to buy it as a trade. as a short-term trade. a hedge against some of these concerns. i' not a fan of investing in gold for the long-term because not only does it not pay interest or dividends, you have to pay t store itnd insure it,o it generates a negative return, but in the short-term, b you want to hedge against these concerns, i'n a fan of gold although again, it's come long way in a hurry >> scott nations with nation share. thank you so much for joining us. >> thanks. investors were give b b b more detail on the upcoming meeting between the u.s. and china. and administration officials said today the goal is simply to reopen t that the u.s. will not accept
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any preconditions to remove tariffs. a blockbuster bio tech deal. avi is buying aergan for $63 billion in a move designed to bolster its pipeline before one of its best-selling drnts losing parotection. the stocks moved in opposite directions. allergan shares rose 25% while avi fell16%. meg has more on the late e erger in the pharmaceutica industry >> avi makes the world's top selling drugs. the rheumatoid ar thits treatment which dr$1s more than billion in annual sales, but mira faces competition in 2023 and they needed a way to replace that revenue. enter allergan r, the marek of botox. there wrinklement worth $3.5 billion a year. they also sell drugs for bipolar disorder a women's health. last year l aratisse and cool sculpting. the company raised eyebrows o
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wall street piper jaffray called it anex nsive price for a question bable as. >> seth:. they are paying $63 billion in stock. that doesn't include more than $20le billion in an's debt. >> the premium was a lot to where the stock has been training and the stocks rm underpeed a lot. while $63 billion is a lot, it's less than the 160 billion that pfizer agreed to pay for dlergan in 2015. in al to move allergan to ireland. that deal was scuttled by a change in ta drules. avi'seal for allergan brings it back. wells fargo analyst said it's not the type of deal that excites investors. >> there are two types of pharma deals. we're we hind in scien and we
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need to buy the newest science. those are a lot of tech deals then there's the i have something wrong going wrong in a few yeand i should fill in this hole or try to augment of diversify away from this prb and this kind of falls into that. >> they said the political pressure continues on drug prices were likely to see more of these kind ofombinations. >> ournation's federal debt is on track thit unprecedented lev levels. a new report says the government's debt will rise to 144% of our gross domestic product by 2049. currently stands at 78%. the report also warns that debt levels could reach 219% of gdp if congress doesn't cut spend ng the budget and if theiv iual tax cuts do not sunset in 2026. consumer confidence dropped more than expected, reaching its lowest toint in nearl years. according to the conference board, the decline is due to the
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calation in trade and tariff tensions. the report also notes that while the index remains at a high level, continued uncertainty could result in further volality. in theory, higher leads to an increase in ending, which makes up a economic activity. >> the housing industry has been hoping that lower mortgage rates newlyhelp drive sales of built homes, but that hasn't happened so far. sales fell for a second straight month in may. and that news pressured shares of homebuilder stocks in today's trade and one was especially hit hardic diana o has more. >> at a stunning newly built home in southern kra, buyers were prey scarce. did come out hat for this luxury offering were worried about affordability. >> it's nicat the interest are going down. i just like to be in a betpor tion going debt free. >> sales of newly built homes
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drop ped in may, down nearly 4% compare wd a year ago. most expected sales to bounce on the big dp in mortgage rates. >> we got some tail wind from the mortgage rate decline, but it was a sluggish start to this year's spring selling season so we were just clawing back o breaeven. which is effectively what le nar reported. >> the average on the 30-year fixed mortgage fell to well below 4% in may when those sales contracts were signed. the median price f a newly built home fell close to 3%. likely because fewer luxury homes like this one are selling. what is selling is on the lower end. precisely whyna the on's largest builder by revenue saw unexpegtedly bright earnings in the second quarter a it starts to build more entry level homes and offers more incentives. >> we clearly saw traffic and continued to strengthen in the second quarters a combination of lower interest rates together with at least slower price appreciation and in some s, instan slightly lower
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prices. posively impacted affordability. >> but the stock dropped sharply during the conferenc call after its president said tariffs and the labor shortage were increasing their cost. at while builders may want and need to put up cheaper homes given the current housing shortage, doing so given the higher ct hurtsheir bottom line. i'm diana oleic in washington. >>to timake a k lolook at today's upgrades andgr does. tiffany's and luke capital. the analyst cited global growth concerns as well as the ongoing tariff dispute which could cause wealthy customers to delay that stock fell a fraction to $91.24. shopi fy w downgraded to neutral. hae analyst cited the stock's valuation and saidit's new network of fulfillment centers is not expected to generate profit until 2023. price target, $305.
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shares fell tay almost to 284.04. ub grub was upgraded to buy from annui from utl. it was an early test with mcdonald's, price target is $91. the stock grows 5% to 75.90. mcdonald's and others were initiated wit an outperform rating. they cite the company's digital push and modernization effort. the price target there $230. mcdonald's rose a fraction to 205.71. coming up. made in >> with the threat of tariffs on more chinese goods, vietnam wants to become the next map fak manufacturing power house. that's tonight on "nightly business report."
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fedex topped profit mats, but warned its results will be hurt by the trade war. they cite weakness in trade. fedex gets about third of revenue from outside the united states. arometeren viewed as a bro r global economic health. shares were volatile, frank holland has more on fedex's results.ex >> fas had a string of negative headlines recently, but still managed to post a bet on profits that were in line with esanmates. the cosaid it expects profits to decline next year however due to trade global weakness and also the decision not to a newer
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customer. they didn't name it, but it appears to be amazon. the key take awa is that they re focusing on its ground service where it says it expects margins to increase. it also expects brick march aens to increase. chi china, about 2% of revenue and a major hub in asia. that remai a question mark after its followed suit against the commerce department and the restrictions prased on the shipper is part ofishe u.s. blacon some companies are uninstitutional. for "nightly business report," i'm frank holland. and late last ght, fedex sued the department of commerce say ing that it should not be required to enforce federal bans like the one targeting china'sa and that policing the contents of millions of packages is virtually impossible. you might recall fed rently mishandled two deliveries for huawei which then prompted beijing to launch an investigation into fedex. zblncht fedex is part of the koader sector, which is component of the market. lately, it hasn't been perform.
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ing that w we have a closer look from the new york stock exchange. >> stocks may be within striking distance of historic hhs, but on group left out of this rally has been transportatocks and that could be a little bit of an issue for the market. shipping and freight names for for example, they' had a rough time. truckers like rider, logistics like fedex in double digitsow the transports are still in correction territory overall, down about 12% from their 52-week highs. a bit alarming because many investors use transports as an important braromther of the hef the u.s. economy and even the global economy. is any weakness in the sector could spell more trouble ahead and make it hard to stock a sustained momentum. that's the key premise behind dow theory but fedex in particular has already cut its full year guidance twice since des citing macro conditions and weaker
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obal trade growth trends. that's very important because they'r broarometer of global health which is a notable divergence between ground based transportation and the rlines. they've been doing great quarter so names like jet blue, alaska ' air, delta, t off b about 10% in the second quarter. airlines have been gainingack pricing power. been able to reduce capacity and that's a key issue that's been s plaguing the iy for the past several years. for "nightly business report", i'm bob pisani. micron reported better thane expected revnd says it sees early signs of improving dend. micron ine of those companies caught in the mid of the u.s. does arade wars since i lot of business with that country. josh liptoonjoins usht from san francisco. what was the one key take away from that? >> heading into the earnings report, the stock has really taken it on the chin.
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it was down more than 20%rom its intraday highs in early april and a big reasont there, was huawei or specifically the t fallout from tmp administration's for the decision to blacklist the giantt an important customer. makes about 13% of revenue. when executives on the call said though was listen, they reviewed that ban. shipping some subset of their current products to huawei. i checked in with rbc, they said listen, this waso a lead investors at least didn't go completely to zero. also more broadly, executives said they were seeing early signs of demand improvement and inyou can see that stock m sharply higher in the afterhours, bill. >> josh lipton in san franciscoh ks, josh. well there might be a fox guarding the hen house. and that's where we begin tonight's market focus with bloomberg saying the justice department is looking into
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claims of potential price fixing of poultry at tyson and pilgrim's pride. pilgrim's pride told cnbc i strongly denies those alleges. they the stocks were down b about more than 1% today.> erkshire hathaway way's ceo warren buffett says despite report, there he been no conflicts with 3g capital, which iss berkshirwnership partner, kraft hines. he report said there were tensions, the result of the chronkronfo underpance and accounting problems. they were both up a fraction in today's trade. zblncht bauch health said it will help paybt down learing its mandatory payment for the first quaeyer of 2020. also launched a new treatment for plaque. 24.33.ares rose to today, aeroenvironment reported profit below wall street expectations.
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the company cited a decrease in product sales and weaker growth parn margins. the stock fell sharply in afterhours trading initiall it finishe eed the regular sess off just a fraction. well a made in china label is seemingly everywhere these days, but with threat of more tariffs on chinese goods, somemultinational companies are considering moving their manufacturing opethtions out of at country and into places like vietnam. carl reports for us tonight from hanoi. >> this story of this nike pullover t or the adidck suit you might have bought for your kids or grand kid at walmart or costco. j's being sold here today at a factory in vietnt north of hanoi. workers earning $280 a month stitch, package and ship the product to the u.s. and companies are leaving china. >> with president trump
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thatening more tariffs against chinese goods, american brands are asking what else can we make in vietnam? the u.s. is importing 40% more from vietnam than this time last year. h imports from china, down 13%. wen's company maybes clothes for columbia sportswear and abercrombie & >> what c can do, they can now do the same at cheaper price, we can do is the right thing to do for the industry. for the consumer. >> it affects your pocketbook. retailers like target, best buy and others would likely charge you more to make up for a proposed 25% tariff on china. shifting to vietnam could be one solution. if factories like this one can find enough new workers. gested vietnam's c highways, rail lines and ports can handle the extra traffic. issues the chinese have been ironing out for 20 years. >> we expect all that to take
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time before vietnam can be ready to, old demands,ufhat >> of course these are jobs that let the u.s. decades ago and that many wish would come back. it's not unthinkable. but a lot wil depend on how the u.s. and china narrow their differences. an how countries like vietnam step up to get goods you want ton shelves near you. for night "nightly business rep hanoi. coming up, will the second half be a healthy one for health care stocks?
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the government realed a crackdown on robocalls. the ftc says they blocked more than a billion calls in coordination with the justice department as well as with state and local lorcement agencies. together, they took more than 90 actions against thoseng tou bogus services. according to the ftc, consumers get tens of illegal robocalls ef year. and still some got through to me. the health care sector was the best performing group last year, but that wasn't the case in the first half 2019 and now investors want to know if the sector is ready to rebound. pressure will continue to loom large for the health care sectoh he trump administration now picking up trhosparency on ital prices. in the next few months, analysts say watch for the administration to finalize its drug pricepr
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blint policies, including a ban on pharmacy benefit rebates for medicare drug plans and potentially some medicare drug prices to international rates. the policy proposed in the last year just drug makers raised list prices! if you assume the drug companies are going to raise list prices again b, the beginning of july of this year, then e can assume dministration is going to do what it did the last two times, which is issue additional regulations immediately there after. >> outrage over high drugris hit pharmaceutical stocks hard during the last presidential elecon cycle in 2015. this time around, health insurers have been hhard, following senator sanders campaign launch in february and again in april after the senator reintroduced his medicare for all bill which is endorse d by presidential hopeful, kamala harris, cory bookrs and ot research say stocks found their footing after joe biden entered
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the race. front-runners not endorsing single payer health care. >> if you were to see one of the candidates like bnie who believes in a medicare for all and really greting your grass roots on drug pricing, at thist po think you would see negative impact on health care stocks going forward. major insurers have all forecast stronger earnings which helpeded stabilize their stocks, but it may be tougher for them to move higher. a anid regulatory and political pressu they'll face this election cycle. i'm bertha coombs. and finally, space-x's rocket blasted int orbit this morning. it carried 24 satellites for the defense department. elon musk called this the most difficult launch ever. space-x reuses its rockets including the two side boosters an after this launch, those tden boosters l upright and in tact, but the rocket's center
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booster missed and landed in the sea. the it was completed just a few hours after it began and tcnsidered a success. spectacular to too. >> and so remark bable how far we've come since they first landed a man on the moon. zblncht well before we go, let's take final look at the day on wall reet. 2 dow fell 179 points to 26,548 and s&p 500 slid 27. that's "nightly business report" for tonight. ank you for watching. >> have a great evening. see you tomorrow.
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woman: this "bbc world news america." is made possible by... the freeman foundation; by judy and peter blum-kovler foundation, pursuing sol for america's neglected needs; and by contributions to this pbs station from viewers like you. ank you. hi laura:is "bbc world news
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america." reporting from washington, i am laura trevelyan.