tv Nightly Business Report PBS September 11, 2019 5:00pm-5:31pm PDT
♪ this is nightly busins report with sue herera and bill griffith. >> the great rotation, the dow closes back above 27,000, as investors take note of some majo changes happening inside the market. medical milestone, the fca gets ready to review the first >> giving back. peanut aermgs. walllltreet remembers and honors the lives of those lost 18 years ag today. those stories andht more ton on "nightly business report" for wednesday, september 11th. good evening, everyone. and welcome. well, don't n look. but the dow is on a w strategic. the blue chip index posted gains for six straight sessions. and it's now less than 1% from the all-time high.
the grind t higheray was quiet but strong. here are the closing numbers. th dow jones industrial average rose 227 points. to 27137. the nasdaq was up 85 and the s&p 500 added 21. but there is a lot more tohe market than the numbers suggest. a close look under the hood showsig changes taking place and money is starting to flow intoectors that investors have been avoiding for a while. bob pisani at the new york stock exchange. >> a lot of talk about a great rotation taking place. but what exactly are we rotating out of andinto? there is confusion about different ways to slis and dies the mechanic. let's try to sort out some of the differences. first, cyclical verses defensive stock. since bond yield bottomed last weeks. checkically sense i have like banks, transportation stocks, energy, retail have all outperformed. these are call cyclicals because they tend to better when the global economy is imoving. nef lagged most of the year on
concerns that global growth slows. at the same time defensive stocks strong most of the year have begun underperforming. that means consumer staples, real estate, utilities all down 1% t to past week. then growth versus value. companies that a growing earnings understandably, the typically technology stocks. lue stocks typically considered cheap and underperformed the market. energy ks.udes banks, retailers, and those sectors have done better on in recent rally in the last week. there is another phrase, momentum stocks. they're stocks that have been seeing strong price increass. these store usually strong when the market is going up but they'll typally drop more when there is a sell i don't have. this happened in the last few days. consumer naks mike meerk and kimberly clark. momentum names strong all year selling o. y is there the reversal, the rotation going on? there is optimism over trade
talks fling the rotation. trade has been the primary driver of the stock market all year. for "nightly business report" bob sani at theew york stock exchange. >> joining us to talk me about the market rotation. ken kayman, psident of the arcadians asset management thank you. >> thank you very much. >> you see this as a safety play by the investors. >> the value sector of the market underperformed the last five years a the growth seetarier is twice the return cumulatively than the value sector and led by mostly momentum stocks andang a tech stocks. >> right. >> a lot of people are worried that the market might be getting topee saying do i have to ride the roller coast down in t t hot spots when there are great bargains in what we call value. >> whicho goes the volatility. we have seen the extreme volatility at cer iin points the market, much linked to headlines on trade. you were saying the value stocks more predictable. >> well tel sawtooth of the pattern is tighter in the
non-go-go stocks if you will. i think thahas the really important thing that the viewerr have tolly focus in on, which is that if you are saving for retirement and is your nest egg you don't wanto ride the yay boo of eve tweet. getting back to the strong balance sheets and fundamentals rather than a great growth stod maybe a ridiculous pe feels safer when theee market to bounce along at the top. but i wou like to throw in in theht environment row is that every time that the market gets a new news like appleam yesterday out with the new iphone andnd everyone was a euno big news. and the ips sew highly anticipated have been flat to down. >> right. >> it's the feel the growthy thing is changing. >> here we are, 27,000 on the s&p.again back to 3,000 for t we are close to all-time highs. are you getting nervous about this marke >> not really.
i think that, you know, the old phrase don't fight thefe it really does look like they are cutting at least t coda point i don't thi more than that is warranted. i thinha it's okay for investors here i won be surprise first degree we get new highs i lieve between here and the end of the year wll that doesn't mean we won't get a surprise in the dip. but i think things a favorable for equities. >> are there areas you find more vatocks for investors. >> i always like the idea of buying what's not in bn in favor. it's almost easier to saylm the whole val chain right now whether the health care, financials, i think it's important to kind of make sure you broaden out the portfolio. i'd leave you with the idea if you've been chasing momentum and ring on the fact that everyt morning you felt good and didn't know w now is the time delve deep near the portfolio to understand it, own things tt haven't been for the go stocks. >> words of wisdom k from from of asset manement. thanks for joining us. >> thank you. turn the market rotation into
opportity focusing on some value stocks. want to consider investing in. latest read on inflation. a measure of prices thattises pay for goods ands servi unexpectedly rose in august. e producer price index gained.1% last month. the expect aches for no changan a separate report showed slightly in july, suggesting inventory investment could remain a drag on short-term economic growth. in washington, the trump administration is readying a ban on flafed e-cigarettes. the secretary of health and the fda is going to outline a plan within the coming weeks and the president agrees that something has to be done. >> vaping has become a big business as i understand it, like a giant business and a very short period of time. but we can't allow people to get sick. and we can't have our youth be soffted.
>> shares of altria owning 35% of juulun initially lost g after the announcement. did finish the session higher today. >> oilel prices today on a report that president trump discussed easing sanctions on iran. the idea was talked about as a way to secure a meeting with iran's president later this month. the report comes one day after thexit of national security adviser john bolton who argued to pus iranian oil exports to zero. the price of domestic crude fell on the possibility that easing l sanctions migd to t more oil on the market. speaking of oil, some sad news tonight out of the oil t-boone pickens died at the age of 91. field.a legend in the but as brian sullivan reports he >> i think the reason why i re. don't view ayself as workaholic is because i love to work. >>? the media he was known appears. >> t. boorn pickens the
corporate takoverraider from am reconcile of texas. >> tec friends he was boone. but to everyone master of reinvention both personallily born in oklahoma in 1928 thomas boone pickens was a businessman from tstart. >> when was 12 got my first nepaper job. i was a paper boy i always had momoy after in my pocket. and it was a good feelinin oklahomauated fro state university with a degree in geology and went t work for phillips petroleum but the corporate life was not for him. before long he started his own company. mesa petleum with just $2,500. pickens spent years in t desert personally drilling for oil and buying up land, collecting valuable asset he took mesa public in 1964 and quickly realized what the power of sto can do. turning from geology to corporat finance picke became one of the first so-called corporate raiders. he unsuccessfully launched take
overbids for gulf oil, phillips petroleum and uni cal. creating a playbook followedwe many others over the next few decaews. take a small stake in a company, pressure it to sell itself and become very ric in the process. >> i would be foolish to sit here and tell you we lost any deal where we made $500 million. >> despite the reputation as a stock holding swash buckler. he was an early advocate for varld rigs. insisting executives be compensated with stock. >> now, remember the stockholder owns the company and the management is the temployee. t line of thinking informed a new generation of shareholder active in 1997 at the age of 68, pickens started his investment fireman firm bp capital one of the first energy focused hedge funds a nearly total flop at gas in 2000 proved pressient and set off a runo a billion-dollar fortune np in
july 2008 he self-fund add $1 million campaign and making energy independence in america. we a haven't done thing to lower dependency on forei oil. >> though it never reached the scale he wanted he has been instrumental in creating natural gas powered companies a a uncle company called clean energy vefocles. him hilanthropy was as important as profit. he donated 500 million to his alma mater with the football team plays in boone pickens stadium but his greatest love was the 65,000 acre ranch in the texas pan handles he bought and moved his childhood home from oklahoma onto the ranch and started to drill a new oil well there in 2018. >> i always say i'll retire in a box. that's the way i'll go out, fee first. lasting memorial perhaps, to a full life lived. ♪
♪ ♪ oracle coceo mark hurd is taking a leave of absence due to heth relat reasons. oracle chairman larry ellison an safra katz will cover hurd's responsibility during his leave. the company mad the announcement when it releaseun earnings late today, a day earlier than expected. oracle earne 63 cents a share just about in line with estimates. revenue of $9.2 billion was slightly below expectations. the stockxp fell in initial aft hours trading. there are knew developments tonighte settlement negotiations with oxycontin
maker purdue pharma. the arizona attorney general says that nearly half of all 2000 local governments have reached tentative settlement with the company over its role in the opioid epidemic. according to reports purdue will pay up to $12 billion and the sackler family that owns purdue will give up control of the company. this is essentially the same offer the sackler familyad to all parties involved in the litigation but many state attorneys general remain oppose ds to the deal. a court trial is still set for next month in ohio. a new jersey jury found johnson aen johnson liable for $37 million in a trial related to its talc powder. in the trial, four people alled that jflten j product caused cancer. johnson & johnson says it plans to appeal and the products are safe. an experimental therapy for peanut allergy a took small step forward ahead of the fda panel meeting later this we can.
called amune and sharps soared on the news today. >> it's mckenzieingly common and mon be life threatening. it aircrafts 2.5% of u.s. children. right now there is in fda approved treatment to help. justxtreme vigilens. but this woke a panel of administration will meet to discuss what could be the first approved therapy for peanut allergy made by drug company amune therapeutic is comes in administratored in increasingas doses over time building up a tolerance. y briefing too many times were released. the analyst says they showed a validation of efficacy of the treatment. >> primarily this is a discussion around ise safety side of things. >> because the treatmentec isan protein, the side effects erclude ac reacacon. >> anyone with a history of allergies i think these areab
understa side effects of the treatment and i think ultimately are well worth the reward that you get for going through the tatment protocol. >> studies show t treatment enabled 67% of patients to tolerate at least two peanuts after a year. that compares wit just 4% who didn't get the treatment. all started by not being able to lerate even a third of a nut. the fda panel will vote fridayr wheto recommend approval. b the regulators scheduled to make the decisio the end of january. the next equip is the price and how many patients wl use the treatment. the cost may be around $10,000 a year. more than the three to said can be charged for treaents now done by some doctors that aim to accomplish a similar thing. increasingolerance through exposure overime. but it's ls costly than shots. the main difference from what's offered in the doctor's office, an a approved standardized treatment. >> this is a very standardized
production methodology to ensure the consistency fromot to lot. you get the reasonable certainty what you are get somethingin some that's been rigorously tested. >> he estimates the drug could draw more than a billion dollars annual sales. for "nightly business report" meg tyrrell. charles schwab cut 3% of the jobs. that's where we begin m theket focus. the brokerage firm said it will shed around 60 oh jobs as it looks to cut expenses in the face of falling interest rates. bogey ceo says his company is aim for the 737 max to return to the air by early fourth quarter. but he acknowledged regulators in other countries may not all agreelln that time line. >> i think a phased, ungrounding of the airplane amongst regulaorrs aund the is a possibility. i know the f.a.a. is working very hard to build that collaborative network amongst the regulators and bring everyone along together.
>> sres rose more than 3.5% to 382.94. starbucks clarified there will the be an s.e.c. inquiry into the accounting practices. earlier in the week it wa reported the coffee chain was under investigation by authorities. but starbucks says it has exchanged letters with the s.e.c. on how the company applied quote new revenue recognition accounting standas. the stock rose a fraction to $9 0.98. >> after months of anti-trust ve igations, the f.t.c. now approved u.s. fades acquisitions of fe foodusinesses from the services group of america for merely $2 billion. u.s. foods will have to sell three distribution centers for regulatory clearance. u.s. food shares up 1% today to 41.09. general look electric is looking to raise up to $3 billion by selling holdings in oil field services companyer b heus. will endus one a minority stake
in baker heus heus plan to use the proceeds to pay down debt. ge shares ros to 9.36 while baker heus shares fell more than 7% t>22.29. bit arlier in our program we discussed the rotation that's happening in the market. and some areas like value stocks are starting to do a bit better. so the question is is now the time to invest in that group if so where sh should you put the money? joining sus mark travis. presidenten a portfolio manager at intrepid capital funds he h idea for us. nice to see you again. >> glad to be here thank you for having me. >> their stock pick is hains you make the point we all needd ear it's a reliable brand. >> i like to say i like to invest in things that people need and use, shoes we'll talk about, undedeear, electricity, you know, i think that as far as the valueo choice me, if you look at theta morning style boxver the last 50 years.
performing style on absolute basis in that time period. i've been in space the last 20. the last five it's been difficult. i think what's interesti is michael bury's comments famous from the movie let big shortut compensate a small cap value last week and now there seems to be a sea change afoot where momentum shares have lost some sponsorship and moneyeems to be falling to things like hains brands. ch right. >> was a brand all the kids know, we no from our youthi ch brands, you learn rapidly it's gone from a billion dollars in sal volume in 2017 to probably a billion eight this year. they are losing the target business but that's built into the price. >> aght. >> they're growing at mid-single digits. got close to 4% kifd which in th dividend where the central bankers hav thumb on the scales
of interest rates that's a high perspective. from my >> okay. >> i think the shares are worth in the low to mid-20s from where they are today. >> quickly on the next two if we can, mark, visit ray energy hasn't been public along long but it's had good ride so far. >> what's interesting about olde, bill, it's spun out of txu brumtsy. and you know, they're an independent power producer. 67% of the costs are natural gas. u il august it had been pretty school are cool in texas but it's one of the few businesses you see buying back debt. deleve.ing their dividend and gi they are generating $2 billion in free cash flow on a $10 billion market cap. >> all right. >> i want to get. >> free cash flow generator. the last pick, growing rapidly. >> i think the greenrg family has done a great job. i'm a little leary of o share classes but good stewards of
capital they con tolough the b class of share? hetchers. worldwide growt been phenomenal. there is concerns of you know the tariff interactions and pruks in china. they relocated that to vietnam. and they've done a good job in, you know, getting athletes like tony romo and davido ortiz kind of snsor that. >> that's been intere aing. >> soin a good free cash flow generate he is shares in the mid-30s.ly prob close to $50 a share. >> thank you so much. marktravis. >> you're welcome. >> with intrepid capital found. >> thanks for hing me. elsewhereew california mark a landmark bill rierpg conact workers to be labeled employees. while it may soundot likeng more than labor law. it strikes at the heart of the busit ss monthly model of companies like euchre and lyft and the gig ecomy. dedra bosa in san francisco tonight. >> everything could soon change for uber and lyftdrivers. >> i think it will be great for
those do itting fl-time and supporting families. >> the way it's set up it's fine. for m that wouldn'tork because i'm doing tesla that's my main job and just doing this on the side. ways because i don't think it of was -- when they were writing it they didn't consider the independent contractors. >> california's landmark bill could reshape the gig economy and require ride sharing company to treat driverss employees with benefits and minum wages versus freelance contctors. >> what it does primarily is it makes it clear that there will be many more protections for drivers going forward in one shape, form or and that will cost the companies. >> for uber and lyft it hasas t potential to cost hundreds of millions of dollars. for investors, a longer path to profitability when ride sharing is already bleeding money. for riders, increased fares, there are, however, som questions over whether this bill
willorctually go into effect uber and lyft. it's also uncertain wheth classified as employees, which could take away flexibility and ity to pursue other endeavors. >> for me it wouldn't work. ian wouldn't to be employee because i'm just doing it for a few hours. >> my take is whatever we are doing right nows best for us. >> i'm fine the way t.ngs a but i can definitely empathize with you know the peopleju ling real life stuff whilehi doing this. >> it wouldn't change anything honestly. they don't care about at the lowest rsning of t platform. >> butne thing is certain, lawmakers are l ng to reshape the gig economy and california may just be the beginning. "nightly business report," dedra bosa, san francisco. and late today, uber issued a statementaying it will not comply with that new california law, arguing that drivers a not core to its business. >> coming up, wall street