>> announcer: this is "nightly business report" with tyler mathisen and sue we continue to expect that the economy will expand at a moderate pace over the next few years. >> with the economy on solid footing, the federal reserve raises interest rates, sending the dow to another record close. the clock is ticking. health insurers will soon have to submit rate requests for next year. but there is a lot of uncertainty and patients are left waiting and wondering. ct scans aren't just for hospitals. you may find them at airports as well. that's tonight on "nightly business report" for wednesday, june 14th. good evening, everyone, and welcome. i'm sue herera. tyler mathisen is off tonight.

the federal reserve did something today that will affect your money. it raised interest rates for just the fourth time since the end of 2015. the decision by the central bank signals confidence in the economy. a healthy economy is believed to be able to withstand an increase in borrowing costs. the hike came amid retail sales recording their biggest drop in 16 months, suggesting consumers remain cautious. and consumer prices fell unexpectedly last month. it's data on prices and inflation that the federal reserve is watching closely. kate rogers has more. >> reporter: the federal reserve raising rates for the second time this year because the economy looks stronger. the fed hiking the target range for the federal funds rate by a quarter point to between 1 and 1.25%. fed chair janet yellen citing strength in the economy and the labor market. >> a gradual reduction in the amount of pollack addition

reflects the progress the economy has made and is expected to make toward maximum employment and price stability objectives assigned to us by law. >> reporter: the fed's forecast suggests it pay hike one more time this year for a total of three increases. the rate hikes could mean higher monthly payments for credit card users and adjustable rate mortgages. the fed was looking at inflation of 2% this year but now believes inflation will be a little less than that. the fed also announcing a detailed plan to wind down its balance sheet this year, selling off some of the assets the central bank bought to stabilize the economy during the financial crisis. right now the fed is sitting on $4 trillion. >> we currently expect to begin implementing a balance sheet normalization program this year. consistent with the principles and plans we released in 2014, this program would gradually decrease our reinvestments and

initiate a gradual and largely predictable decline in our securities holdings. >> reporter: chair yellen also addressed questions about her own future with the federal reserve has reports have surfaced that the trump administration is looking for a potential successor. >> what i've said about my own situation is i fully intend to serve out my term as chair, which ends in early february. i have not had conversations with the president about future plans. >> reporter: for "nightly business report," i'm kate rogers. the market reaction to the fed was choppy and somewhat muted. that response is something that many would have considered unusual years ago. but a lot has changed since the fed last embarked on a cycle of interest rate hikes. today the dow jones industrial average rose 46 points to 20,374. the nasdaq lost 25. s&p 500 was off two. as for oil, prices settled at a seven-month low on concerns that

the global glut isn't going anywhere. and it was crude and today's two-week economic reports, in addition to the fed, that investors were focused on. bob pisani has that part of the story. >> reporter: ecpi fell 1.4% with year over year gains down 1.9%. gas prices fell 6%. not surprisingly, that drop in gasoline prices weighed on may retail sales, falling 0.3%, below expectations that sales would be flat. there may not be cause for alarm just yet. broader retail trends are still very much intact. so, for example, home improvement is continuing to do well. e-commerce is continuing to do well. and gaining at the expense of department stores. consumer electronic sales are notoriously volatile, so that might explain that. april retail sales were revised upwards. markets also turned lower on the weekly inventory report which

saw a smaller than expected drawdown in crude inventories. oil sank below $45, the lowest level since november. the good news, after two town days on friday and monday, the tech selloff has abated, basically gone away. with that, i think the odds of a broader market correction for the moment appear to have abated as well. here's the bad news. the choppy economic data and the stubborn refusal of inflation to rise towards the fed's target is making the fed's job a little more difficult. but keep this in mind. cheap oil has been a huge factor in the inflation and retail sales equation. but lower oil is good for the consumer. so we shouldn't be rooting for higher oil just to satisfy some inflation targets the federal reserve has. for "nightly business report," i'm bob pisani at the new york stock exchange. christina hooper is here with us now for more on the fed, the economy, and the stock market. she's the global strategist at invesco. welcome, christina, good to see you. >> great to see you. >> we'll start with the fed and

work our way through the economy. this is pretty much, as i recall, what you were forecasting, correct? >> that's correct. we expected a rate hike. we also expected that we would get more information on balance sheet normalization, which is really the 800-pound gorilla. >> that's what the fed has on its balance sheet that it's trying to put back into the market, right? >> sure. we saw this historic increase in the fed's balance sheet through what was called qe-1, qe-2, and qe-3. there was always this question mark about how exactly will the fed get back to normal. we're starting to get some pretty significant details on that plan. >> had an abowhat about the eco? as i mentioned in my introduction to bob pisani's piece, the fed watches inflation closely, and the economy and economic stats very closely. we got two reports today that were certainly less than what the street was hoping for. >> certainly. i think what we need to do is take a step back, though, and look at trends. now, with inflation we've had a

few months now of lower inflation. but there are some reasons for it, including one of the drivers of lower inflation was lower wireless cellphone costs. and some of that actually has to do with calculations. so it isn't necessarily a reflection on demand or diminished demand. so i wouldn't take it to be as significantly negative. our view is that we're going to see relatively tepid inflation this year. >> what about the stock market? dow at a record high. are you still bullish on stocks? year the global strategist. if you had to choose where to allocate cash, where would that be? >> i would make sure we had a significant allocation outside the united states. i think what we've seen is this really significant rally since november. america woke up on november 9th and realized, wow, after years of incredible roadblocks in

washington, so little getting done, now we have an executive and legislating branches that are of the same party, so much is going to get accomplished. there was a lot of optimism. i think that was largely driving stocks up, certainly earnings improvement was part of the picture, but the bigger component was that optimism. and then of course reality sets in. the legislative agenda doesn't seem to be coming to fruition, at least not -- >> as quickly. >> as quickly and with as much depth and breadth as expected. >> if you had a significant allocation outside the united states, where would that be? >> european stocks and emerging market stocks. there's a lot of potential in both, for different reasons. certainly emerging markets and european stocks both look attractive valuation-rise relative to the u.s. beyond that, we see significant growth in the emerging market space in a number of the countries. i wouldn't say collectively every country is deserving of

investment dollars. but there are some very significant tunes in the emerging market space. and the same is true for europe, where we could see some macro catalysts. i think the european union looks to be in better shape than it did just a few months ago. >> on that note, christina hooper, thank you very much, good to see you. christina is with invesco, the global market strategist there. bluecross blueshield will offer affordable care act plans throughout the state of michigan next year. the good news is some areas will have at least one option. the bad news is the insurer is requesting a significant rate increase and said those rates could go even higher, potentially rising about 30% if the trump administration does not fund the cost sharing payments. separately, aetna is leaving the door open to staying in nevada's obamacare exchange. but emphasizes that no final decision has been mailed. last month the insurer said it did not plan on participating in that program at all next year.

the deadline to file the proposed 2018 rates for individual insurance policies is coming up next week. and as congress wriestles with long term consequences, patients are worried about next year. bertha coombs has more. >> reporter: for this woman, getting insured under obamacare was a godsend. she finally got treated for lupus and auto immune disease that nearly ended her ability to teach flamenco. >> the affordable care act saved my life. >> reporter: this year she and her husband face a financial setback. but she's able to afford coverage thanks to a premium tax credit and a cost sharing reduction subsidy which cuts her out of pocket costs. >> my specialist, who i do have to see once a month, my rheumatologist, before it was a $75 co-pay, and i'm now paying

$16 when i see her. it's a huge difference, a lifesaving difference. if i didn't have access to health care right now, i wouldn't be able to do the things i do. >> reporter: but the fate of those cost sharing subsidies is up in the air, with just one week until the deadline for insurers to submit rate requests for 2018 plans, the trump administration has not said whether it will continue to make those payments. this republican strategist says there needs to be clarity. >> the certainty lacking is not helping shore up the exchanges. >> reporter: the uncertainty has pushed some insurers to pull out of the exchanges for 2018, but with the clock ticking, there's some movement. in iowa, which could be left with no insurers next year, officials are asking the administration for a waiver and funding to prop up their exchange. and one of the large national exchange insurers, centene, now

says it will expand from six to nine states next year. >> so that we have these last-minute exits that we have to worry about, there's also potential for a last-minute expansion of these insurers that are already in the marketplace. >> reporter: a senior official at cms, the centers for medicare and medicaid, says they continue to work with states to try to provide greater flexibility on the exchanges. mercedes hopes that means funding the subsidy that keeps her on her feet. >> i don't want to go on disability. i want to be able to keep working. >> reporter: bertha coombs, "nightly business report." there was a message of unity today in washington following a horrific attack in northern virginia. a gunman opened fire on a group of congressional republicans during a morning baseball practice. congressman steve scalise, the gop's third ranking house member, was injured as were four others before the shooter was killed by police. the alleged shooter has been

identified as a 66-year-old man from illinois who is reported to have volunteered for bernie sanders' presidential campaign. >> i am sickened by this despicable act. and let me be as clear as i can be. violence of any kind is unacceptable in our society. and i condemn this action in the strongest possible terms. >> we are united. we are united in our shock. we are united in our anguish. an attack on one of us is an attack on all of us. >> the president today also said that we are strongest when we are unified. still ahead, gone missing. why another business leader in china is nowhere to be found.

remember the large chinese insurance company that purchased the waldorf-astoria in new york? the chairman of that company has mysteriously disappeared. eunice yoon reports tonight from beijing. >> reporter: the big question in the financial markets here today was where is wu xiaohui. a chinese insurance giant issued a statement saying the chairman was no longer able to perform his duties for personal reasons. the company said the management team was going to take over his responsibilities and that the day-to-day running of the company would be normal. but what wasn't so normal was that the statement came after local media recorded that the chairman was taken away by

authorities last friday and that he hasn't been heard from since. those stories have disappeared from the internet. but the news is raising questions about whether the company may be forced to sell off assets to meet obligations. it's seen as an aggressive investors overseen. the chairman is most well-known for being politically well-connected. that's why the news sent a tremor throughout the insurance industry today. stocks of chinese insurers dropped. and one industry insider told me that the government is trying to clean up the industry. companies such as anbang have been offering insurance, but they are alternative investments rather than traditional insurance which offers long term protection for life and health. anbang was heavily involved in

these types of products, which some analysts believe is why anbang was able to raise so much money so fast. we still don't know weather anbang's status has anything to do with this backdrop. but we do know the government has been frowning upon this practice. i'm eunice yoon in beijing for "nightly business report." caterpillar raised its quarterly dividend more than 1% to 78 cents a share. the yield on that stock now sits at just under 3%. shares of the dow component fell nearly 1% to $104.71. the health insurer anthem reaffirmed its prior forecast for the year, saying it still expects adjusted earnings to top $11.60 a share. that is short of analysts' expectations. still, anthem's shares rose almost 1% to $188.77. the activist investor and hedge fund elliott management is

urging a mining company to shake up its board of directors. elliott says the new appointee should review and upgrade the board following years of poor management decisions. shares of bhp were off more than 1.5% to $30.11. and seaworld shareholders have reportedly voted not to reelect the company's chairman due to concerns over bonus payments that some company executives received. that's according to a reuters report. the report added an official vote count hasn't been completed yet. seaworld shares jumped more than 6% to $17.07. the world's millionaires now own a very large percentage of global wealth. and according to a new report, that share is growing. robert frank has more. >> reporter: the world is getting wealthier. but more and more of that wealth is going to millionaires. millionaire households now own a record 45% of all the personal

wealth in the world. that's according to a new report from boston consulting group. and all the millionaires own $75 trillion of the world's wealth. and it will just grow. by 2021, millionaires will own 51% of the world's wealth. technological change and rewards highly skilled workers and growth creation in india and china are driving the growing concentration of wealth. the rich will get richer, of course. but a lot of the wealth growth in the coming years will be newly created wealth. the number of millionaires will also grow. there are now nearly 18 million millionaire householdsment in worlhousehold in the world. nor wealth in china will nearly double. for "nightly business report," i'm ro a new jpmorgan report says

stock trading by machines is dominating wall street. the study found that only 10% of stocks trading is regular stock picking. so what does that mean for you and the shrinking wall street pie? jimmy lee is ceo of the wealth consulting group and he joins us now to talk about that, good to see you as always, jimmy, welcome back. >> thanks, sue, how are you? >> i'm good, thank you. what does this mean for the average investor, and do you buy into the thesis that it is a shrinking wall street pie? >> i don't at all. for the average investor, it's important to understand that indexing strategy has been around a long time. with the explosion of etfs, that's why this has gotten much bigger. but i don't think fundamental analysis is dead. i don't think it will ever go away. in fact i'll take a contrarian view for active investors. if there's less people doing research for fundamental gems, to find gems out there, it will give opportunities for analysts to pick companies that investors will miss. >> for the average investor, is

it smarter to index if you have a larger percentage of the big guys buying the -- some of the individual stocks? does it skew it for the individual investor? it seems like you don't think it does. >> you know, we offer both strategies, both passive and active. but we think that investors really, especially average investors, should have both. you know, passive investment strategies work really well in bull markets. active strategies tend to work better in down markets because it can go to cash. instead of trying to guess which cycle we're in, we think average investors should own both. >> what do you think is behind the fact that fewer companies have been going public, and we have a lot of -- had a lot of m&a activity as well? how big a part of that is what they're calling the shrinking wall street pie? >> well, i think m&a activity has a lot to do with it. we've also had over the last decade a lot of companies listing overseas, that has a lot to do with it as well. companies are taking longer or

deciding to d-list or stay prior to stay private. i also think deregulation factors into why there are less publicly traded companies before. >> do you see opportunity whether through indexing or stock picking? what are you watching? >> we're watching a lot of different factors. obviously today we had interest rate move up, as expected. and the market really didn't react, right? so we were not surprised by that. but we're looking at the continued growth in the u.s. economy. but also worldwide, we're having a recovery in europe. and we think we still have more room to run on the upside, sue. >> all right. on that note, jimmy lee with the wealth consulting group. thanks so much for joining us tonight. and as we continue, coming up, the future of airport security. >> it is a new 3d look inside your carry-on bags that could change ow quickly you get through airport security. i'm phil lebeau. that story coming up on the "nightly b

here's a look at what to watch for tomorrow. the philadelphia federal reserve will release its business outlook survey. we'll see if the labor market is still strengthening with weekly jobless claims. and a fresh read on homebuilder sent sentiment. that's what to watch for on thursday. a new lawsuit contends that wells fargo made unwarranted changes in loans even as it was trying to recover from its fake accounts scandal. according to "the new york

times," the changes typically lowered monthly loan payments but the bank changed the term of the loan in some cases by decades, there be increasing the amount that borrowing ultimately owed the bank. airline passenger complaints rose 70% in april. that report from the department of transportation comes after a series of high profile incidents, including the forcible removal of a passenger from a united airlines flight. the department received more than 1900 complaints that month. american airlines nixes its plan to lessen leg room on some of its planes. the company had said it would not reduce the distance between some economy seats to make room for higher priced seats near the front. the airline had wanted to reduce 30 inches of space to 29 inches, but reversed course after a wave of pushback. the transportation security administration is testing new technology that could dramatically improve the process of screening carry-on bags.

it involves a ct scan. phil lebeau shows us the new view of security that could change what happens when we go to t >> reporter: imagine going through airport screening without unpacking your bags or being stopped by tsa agents double-checking what's in your carry-o carry-ons. oue of boston, this machine, built by analogic, could give tsa agents a clearer 3d view of your bag. >> it's designed to allow passengers to leave their liquids in their bags and their laptops, all electronics stay in the bag, and just drop and go. >> reporter: analogic machines produce a three-dimensional image that will detect weapons but also potentially explosive that could be hidden in electronics. something the current two-dimensional x-ray machines may not always catch. it's one reason the u.s. and

great britain currently ban passengers on certainly flights from the middle east from carrying laptop computers on board. but electronic bans could fade away thanks to new screening machines designed to pick up what tsa agents might miss. >> most of them have all targeting. what that means is it's taking a lot of the human factor out of the equation. in other words, it's doing the targeting and identifying the threat immediately for the screener. so the onus is not as much on the screener. >> reporter: with the number of people flying in the u.s. every year steadily climbing to an all-time high of just under 800 million passengers, the tsa is in a tough spot. forced to handle a growing number of travelers while keeping the lines moving as quick as possible. >> there's no more room for an airport to put security screening equipment. we need faster, more efficient equipment. this is what this does. >> reporter: a view inside our bags that could make traveling safer, and with far fewer security line headaches.

phil lebeau, "nightly business report," peabody, massachusetts. and before we go, here's a look at how markets closed following the fed's interest rate hike. the dow jones industrial average rose 46 points to 21 why 3,3721. that's a record. i'm sue herera. thanks for joining us. have a greet evening.

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