>> announcer: this is "nightly business report" with tyler mathisen and sue herera. funded in part by -- >> all it takes is a spark. one idea to take flight, the courage to seek the unknown. to innovate, disrupt. to move us all forward. to explore a different perspective. at nasdaq we connect the world, its ideas, its capital, its businesses. the people that drive global economies. the future isn't tomorrow, it's right now. all it takes is a spark. nasdaq. good evening everyone and welcome to this special edition of "nightly business report." i'm tyler mathisen. sue herera is off tonight.

it is president's day a day we honor the leaders of the united states and today we are one month into the first term of our 45th president donald trump. a lot has happened in the past 30 days. you can say that again, not only in the stock market which has hit repeatedly highs but also all across america. over the past month scott cohen traveled to california, michigan and nevada to report on the issues effecting business and budget and tonight he'll tell us what he found but we begin with the stock market which is hit high after high since inauguration day. dominic chu tells us what's behind the rally and what hiegt happen next. >> reporter: now that president trump and his administration have officially been at the hel much of america for one month investors are taking stock of what we've seen and what we can can expect. our a slue of executive orders, senate confirmation and polly guidance, stocks still remain in record high levels continuing

that staggering run we've seen in the market since election day last year. >> overall we've been really policed to the market's reaction to trump's first 100 days in office. if you go back to pretaking office it has been a very positive reception for trump and we believe that's because the market is coalescing around several things, one of lower taxes, second around regulatory reform, certainly reappalachian and then fourth infrastructure spending. >> reporter: those are all powerful drivers for both the markets and u.s. economy. lower taxes for corporation and individuals could mean more money left over to spend. and government money spent on things like roads and bridges could be the fuel for more economic growth ahead but there are a still a lot of unknowns out there. >> i would say big picture the market needs to get not just earnings growth but lower corporate rates that start to feel like they're going to happen either later this year or next year. if you get focus on trade and immigration, those are the type

of things that can spook the markets, particularly the multi-nationals that depend much more on multi-national agreements all around the world and the framework frankly that the u.s. has built over the last 70 years. >> reporter: some experts continue to look for opportunities in parts of the market that could benefit from future government policy as well as parts of the market views as possibly more immune to that policy as well. >> interest rates are going up. i'd stick like the small and mid-cap stocks and mainly because they're not in the cross hairs of all this conversation about border taxes or any of this issues related to being overseas, so i think that there's still some nice sectors to be in and some sectors to be looking for an opportunity to get in too. >> reporter: now that president trump's cabinet is filling n the biggest focus will turn to how the executive team can execute plans to move america forward and how other political developments around the world shape the market's story going

forward. for "nightly business report" i'm dominic chur. let's turn now to brad mcmillen for more on the markets. he's chief investment officer for commonwealth financial network. in recent days it seems like a lot of people in the media are ringing their hands over perceived turmoil in the trump administration, the trump white house, but the market couldn't seem to careless. why not? >> i think what you're looking at with the market it's not about donald trump, it's not even about the new administration. it's about the fauds. we're seeing earnings growth pick up. it's accelerating, in fact. something we haven't seen in quite a while. we're seeing consumers feel better and business feel better. it's not about the politics, it's about the fundamentals and that means the markets likely to keep going up. >> why are consumers and businesses feeling better? >> there's one big thing that's

happened at the election, i think there was a lot of uncertainty coming in and coming out of the election which actually have clarity and that let people when they stop worrying about politics so much then they looked at the fundamentals of the economy. they saw employment at very high levels, wage growth accelerating. they saw the prospect of deregulation. in other words, the lack of uncertainty after the election and actually what they liked what they saw a lot. >> let's talk about a couple of the fundamentals that you mention and one would be interest rates. that's obviously key in many instances to the asset values of lots of things. we started to see inflation move up. the fed has made it pretty clear that they intend to raise rates three times this year at at least. is that potentially an immedment to stock market values? >> it will be eventually but not right away. because what's happened historically is when the fed is

started to raise rates which is what is happening it means the economy is growing faster, things are getting better. markets tend to look at the initial series of rate rises as ratification of things getting better. you get better performance early in the rate rising cycle. it'll be a while before it starts to slow things down. >> one of the other fundamentals obviously is earnings growth, that's the underlying engine of stock price elevation but right now it seems that stock prices may have even gone farther than earnings would indicate they should go. do you agree with that? in other words, are stocks overvalued? >> stocks are very highly valued, make no mistake about it. stocks are very expensive, but that doesn't mean they have to go down, particularly in the short-term. typically what happens is whatever a valuation level is when confidence improves it goes up. when earnings start to grow faster it goes up. so you can say that earnings --

that valuations are very high but that doesn't mean we're necessarily going to see a pullback. in fact, where we are right now we can expect to see both factors continue to push stocks higher. >> based on voouls and based on fundamentals, give me two sectors that you favor right now and two sectors you would shun right now? >> i think financials is a story that's been told over and over. deregulation but it's still got further to run. financial institutions can make actually more money with higher rates than they can do more businesses as the economy improves. one sector that i like that isn't being priced in is consumer discretionary. no one ever really lost money betting against the american consumers. they're making more money and they're willing and able to spend it. i think that's an undertold story. going forward to sectors i don't like i think health care is an area where the regulatory risk, the political uncertainty is

nailing things down and i think we have to be very, very concerned about some of the technology sectors because there we do have some very high valuations, a lot of good news is priced in. >> thanks very much for your good and clear answers. brad mcmillen with commonwealth financial network. policy will be continued to be one of the drivers for the market for the foreseeable future. john harwood takes a look at where the market stands. tax reform it's obviously something the market is counting on. we don't seem to know very much about what it's going to be. what do investors expect? what should we expect? >> reporter: well, it's a big question mark right now. first of all, president trump has not offered a plan. he ran on one in the campaign. house republicans have a plan with a new top rate of 33%. they top corporate rate of 20%.

however, they have not come to an agreement between the white house and the house of representatives on whether they're going to have that border adjustment tax that allows them to get the rate down. on the senate side they have not said that reducing individual rates is a goal and nobody has made plain whether or not they're going to have a plan that is revenue neutral or one that increases the deficit. many more questions than answers right now. >> let's talk about trade. this is another key area the president wants to do better trade deals. how easy or difficult will that be to achieve? and i'm not talking just about nafta but as you reach out across the gloen, japan, asia, europe and more? >> reporter: i think this will be something easy for president trump if he chooses to pursue them. on nafta he softened his tone blilt when he had this press conference with prime minister trudeux. i will be tweaking nafta. don't know whether he intends to rip it up particularly with

respect to mexico so i think that will be received positively if he moderates his tone. he could go try to strike bilateral deals with some of the -- countries that were part of the transpacific partnership that's been withdrawn but he hasn't indicated which ones he's going do that with. >> let's talk about health care. this is probably the toughest one of all. where do we stand on that? >> reporter: republicans are running into trouble with the idea of a quick replacement repeal of obamacare and a replacement. they know now that if they repeal obamacare with republican president, full republican control of the congress it's real and all of those 20 million people who could lose korcher coverage are going to be in their face protesting. the same time replacing a comprehensive national health system with a new one is incredibly complicated and politically difficult. it may be that republicans decide to punt on that question and focus on things like tax cuts which are still hard but

are easier to reach consensus on than health care. >> thanks very much. so if you're not sure what to expect during the trump administration, you should try planning a estate budget and that's scott cohen is in the state with the biggest budget of all, california. >> reporter: this year state budget process was already going to be tough with the recovery slowing so are tax revenues nationwide. >> california is growing, but less than we expected. >> reporter: and now a along comes donald trump. >> we will repeal and replace obamacare. >> reporter: the biggest question mark, health care. california is one of 31 states that expanded medicaid under the affordable care act. 6 million people gained coverage in this state alone. if that funding goes away california will have to decide what to do with people like ca

ris hill who has a chronic inflammatory disorder. >> i'm terrified. these infusions and any kind of insurance keeps me alive and if i lose my coverage, i feel that i'm threatened to get all of my coverage through a hospital emergency room and that is not how to manage a chronic disease. >> reporter: expansion are not all 50 states have a medicaid program to budget for and health care is just the start according to the national association of state budget officers. >> uncertainty is part and parcel of every transition. i would say this one is a bit different because the scope and the scale of some of the changes being discussed are larger than we've seen in recent years. >> reporter: like federal tax reform which could wreak even more havoc on state revenue forecast and infrastructure, badly needed but who will pay? in california, they're bracing themselves. >> if you look at the wide array

of very drastic initiatives that are being talked about, either by the transition or commentators or by president trump himself, that's quite a challenge. >> reporter: for now in every state capitol about all that can do is plan based on current federal policies with the knowledge they'll have to make adjustments very soon. for "nightly business report" i'm scott cohen in sacramento, california. >> coming up president trump has met with a lot of ceos but what's the white house's relationship with unions like.

whether it's immigration or trade, not much states seemingly have more on the line when it comes to the president's executive order than the state of mib. scott cohen is back this time from detroit where he tells us that decision is coming in sharp focus now. [ michigan. >> reporter: donald trump won michigan by just 11,000 votes. his first days in office are putting that slim support to the test. >> could this have been rolled out better without entrapping green cards? >> obviously -- obviously it could have been done better, but it is what it is. >> there's too many people coming to this country that we know nothing about. >> reporter: more than just a blue collar state, michigan is a

state of immigrants, only california took in more syrian refugees last year so in detroit the new immigration restrictions hit home. >> i came here seven years ago, i got married and moved here and this is my mother. she moved here about one year ago after the war. i applied for her. she has a green card and my father also has a green card. he's actually outside of the u.s. right now. >> reporter: protests and vigils sprang up statewide while business leaders in michigan's increasing high tech economy weighed the impact. michigan was already in the cross hair on the issue of trade. no state has more on the line when it comes to the north american free trade agreement than this one. detroit is the busiest truck crossing between the u.s. and canada but mexico is also a key link in the auto industry supply chain. by the numbers michigan's economy depends on nafta in a way that no other states does and economist worry about upsetting a delicate balance.

>> chaos at the beginning because they might be confused over where the parts are going to come from for cars or cars themselves. >> reporter: the president claims he's already bringing jobs back. >> they're coming back by big numbers, bigger numbers than people have seen. you saw ford is announcing and has announced big plants coming back into michigan and ohio and different places. >> reporter: michigan bet on trump to do just that, now it will learn if that bet pays off. for "nightly business report" i'm scott cohen in detroit. over the past month president trump has met with top ceos across many industries to discuss everything from taxes to jobs to the economy, but what is washington's relationship now with big labor unions. joseph mccarton is professor at georgetown university. joins us now to discuss. professor, welcome. good to have you with us. >> thank you. >> how do you see the trump relationship not just with

unions but with labor more broadly? >> well, it's a complicated relationship, i would say. his relationship with unions, i would say is a troubled one, very little support from union leadership for mr. trump's election. his relationship with a broader american working class is a little bit more complicated. clearly trump got some support, especially from states like michigan which as your report shows he won narrowly in wisconsin and pennsylvania, those key states which helped him win the election. working class votes in those states helped swing that election for him, so he has some support from some workers especially white workers, but his relationship with the union movement is a troubled relationship. >> he sat down with i believe some building trades union leaders not that long ago and one might surmise based on some of the things that he wants to do like build the pipeline, the keystone and the dakota

pipeline, do large infrastructure projects and let alone his history in the real estate business that he might have a good relationship with unions in the building trades at the very least. >> that's possible. and clearly he's reached out to those unions and they did meet with him and there is a community of interest that the president could have with those unions around things like the keystone xl pipeline for example, and other infrastructure projects. so he has gotten some support from some of those building trades unions. the labor movement itself is not completely united on mr. trump and his presidency. larger unions like the public employee union or sciu they look at him very differently from those building trades organizations. >> those you would call i suppose white collar unions or pink collar unions as opposed to manufacturing unions. his thrust to bring jobs back to

the united states, you would think that labor, working people, would like that and unions that could potentially represent those working people would like it too? >> well, there's one thing that unions, workers and the president i think broadly agree on and that is that the trade policies which had been in place for a number of years really need to be reexampled. the labor movement opposed nafta, it was opposed to tpp which mr. trump has now scrapped. so they agreed on those things so there is some area for agreement even while, you know, some very serious disagreements still persist. >> professor, thank you for your time tonight. >> sure. quick quiz folks, who's the largest land owner in the united states? the answer, the united states. in fact, the federal government owns hundreds of millions of acres, mostly in the west and the debate over those lands goes

back decades. now that trump administration is shaking things up when it comes to those public lands. scott cohen back for the last time tonight. this time from the state with the most at stake, nevada. >> reporter: this is the red rock canyon national conservation area, 200,000 breathtaking acres and you own it all. in fact, the american taxpayer the federal government owns nearly 85% of the land naer nevada northern any other state. >> the house will be in order. >> reporter: congress has already begun dismantling obama area restrictions on the use of federal lands with the blessing of the white house. that hits home worried about a delicate balance. >> is leaving the status quo. >> reporter: nevada has long had a love/hate relationship with

its primary landlord. in 2014 tensions over agreesing rights boiled over on the federal ranched lane leased by kline and bundy. the armed standoff lasted for weeks, the criminal trial against bundy and his followers begins this month. out here in the west are about as various yid as the terrain and the interest involved. environmentalists, ranchers, companies. but with the trump administration some see an opening, a way to shake things up once and for all. nevada congressman wants to transfer millions of acres from the feds to the state. >> we think locals are in a better position to make those decisions regarding land use, resource, grow/not grow than with all due respect the federal government 2,500 miles away. >> reporter: opponents worry the state can't afford the upkeep. >> if one single state that's got less than 3 million people in it really foot the bill for? thaz high price to pay to have

our own independence. >> reporter: for their part the president and his nominee for interior secretary say they're against the idea. >> i am absolutely against transfer or sale of public land. >> reporter: but in nevada and throughout the west, their bracing for change. for "nightly business report" i'm scott cohen in red rock canyon, nevada. still ahead through the roof. will the spring selling season push home prices even higher.

here is what to watch this week. retail earnings grab the spotlight with home depot and walmart expected to get things started tomorrow. january housing data will be in focus with existing home sales due wednesday, new home sales numbers come out friday. also on wednesday the minutes from this month's federal reserve meeting will be released. investors will watch for hints about the future interest rate moves and that is is what to watch this week. finally tonight winner is still in full swing but for the real estate market the spring selling season has already begun and with the inspector of a looming rise in interest rates this could be the time about people who have been on the fence about buying a home jufrl in. diana olick takes a look at how the season is shaping up. >> reporter: home builderser doing more of this but not enough of this and builder confidence dropped this month even as the spring housing market approaches.

their biggest concern costly overregulation which they hope president trump's recent executive order will help. >> for every one regulation two are out. >> reporter: but change will take time and in the meantime, potential buyers are facing a very competitive market. >> population doesn't stop growing. families do not stop being created, so there's lots of need for housing and we're starting to see inventory really be at a challenge. >> reporter: buyers are also facing much higher prices this spring compared to a year ago along with higher mortgage rates and very little let up in the tight lending conditions. >> i think credit is too tight in certain areas. we have a brand new type of home buyer today. we have a highly minority home about buyers going to be the majority of home ownership over the next decade. >> reporter: hispanic, african-american and indian buyers will drive at least two third of all new home ownership

over the next decade. they're more likely to finance their homes with family members. >> we need to be careful, i think we need to respect the fact that the structure and function of housing and home ownership is changing and we need to look at those variances. >> reporter: lenders are also looking to the trump administration for big changes and deregulation but they know it won't come quickly. >> it is not a light switch so it's going to take some time, particularly with regulations softening. that is a movement that the entire industry banks and nonbanks are trying to figure out. >> reporter: so while they figure it out, potential buyers will just have to look harder and dig deeper to get home. for "nightly business report" i'm diana olick in washington. and thanks for watching this special edition of "nightly business report." for sue herera, i'm tyler mathisen. have a great evening everybody. we'll see you tomorrow. >> announcer: "nightly business

report" business report has been funded in part by -- >> all it takes is a spark. one idea to take flight, the courage to seek the unknow nn to move us all forward. to explore a different perspective. at nasdaq we connect the world, its ideas, its capital, its businesses. the people that drive global economies. the future isn't tomorrow, it's right now. all it takes is a spark. nasdaq.

>> this is "bbc world news america." funding of this presentation is made possible by the freeman foundation, newman's own foundation, giving all profits from newman's own to charity and pursuing the common good, kovler foundation, pursuing solutions for america's neglected needs, and aruba tourism authority. >> 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