this is nig"nightly busines report" with tyler mathisen and sue herera. >> further increase in the federal funds rate would likely be appropriate this year. >> the fed chair tells investors to get ready for at least one more rat. and the dow rallies to a record. >> the new buffett way. warren buffett wants to buy a utility. ahedge fund is stand ng the way. now, the billionaire investor ma do somethi he usually don't do. >> bottom of the list, yesterday, we revealed america's for business tonight, the worst. those stories and more tonight on "nightly business report" for wednesday, july 12th. >> good evening and welcome.

the world's most recognizable index up te c of the federal reserve said the central bank plans to increase interest rates, but perhaps not as often. janet yellen used the word gradual to describe the pace, a word which she's used before, but today, the lack f the tough talk was enough to send stoc the dow jones industrial average advanced 123 points to 21,532. more on why investors liked what they heard. >> three hours of testimony and down to onee markets were dubbish comment from janet yellen about interest rates. >> because the rate is quite low by historical standards, the federal funds rate would not have to rise the that much further to get to a neutral policy stance. >> that comment had been echoed by the fed governor suggesting more than one key central banker

embrace iing the idea that the rates.raisi and the fed chair added that the next rate hike is contingent on the inflation data heading back dwa towards the fed's 2% target. >> policy is not on a preset course. we're watching this closely to just our policy. if it appears that the inflation undershoot will be b persistent. >> all of that prompted markets to start baking out the b possibility of a third rate hike th down well below 50%. bond yields fell and stocks rallied. yellen also sees global growth helping the u.s. economy this year. she opposes to efforts to audit monetary policy put forward by some republicans in congress and made no comment about whether she'd serve a second term if nominated by president trump. >> your term as fed chair ends in 2018. and there's a long history of presidents renominating fed

chairs. are you open to serving another four years as fed chair. >> what i previously said is that i absolutely intend to serve out my term. i'm very focused on trying to achieve our congressionally mandated objectives and i haven't had to give further thought at this point to this question. >> the fed chair also insisted balance sh r could ben soon, but didn't give a month. many say it could happen as ter possible this month. for "nightly business report," i'm steve liesman. >> a separate report from the federal reserve shows the labor markets are getting tighter. according to the beige book, the job market is strengthening, for both low and higher skilled positionings, particularly in construction and i.t. sectors, but a drop in gasoline prices has kept the lid on inflation.

overall, the central bank reported modest to moderate economic growth or really kind of beige. despite expectations for modest growth, historically, the economy tends to cool after series of hikes which the fed chair alluded to today, but are things different this time around? the chief market analyst at the lindsey group and jeff mcintyre is with brandy wine global investment and both join us to talk b about that. welcome. peter, i'm going to start with you. you don't think it's different this time around. and if the tightening continue, we may very well see a recession. >> so, since world war ii, there's been 13 rate hike cycles and considering how extreme the easing was, it's not going to take much of a rate in change and rise in interest rates that and i b the economy. particularly in the economy, we

saw a 60 base i points i rates more than 60% so we're sensitive to interest rates. >> so, jack, answer peter here. we have certainly been a long time since the last recession. what, basically ten years or there abouts. nine years or so since the last one began. what do you say? >> yeah, i think the way i think b about this. it's not strong. we're in an environment where the growth really isn't inflationary and i just think they'd have to tighten that much. therefore, i think we'd continue to see this noninflationary growth unfold. >> the fed chief steamed to back out this year. when do you agree with that? and two, if they hike a little

bit and take away some accommodation, why couldn't it be long in terms of the expansion but not necessarily all that strong? >> that would be ideal, but the stlinging of the balance sheet is a big part of this because if quantitative easing caused so much euphoria in market, why should i believe it's not a series. and i agree there's no excesses in the economy, but there are with central bank balance sheets and we have a global bond b bubble, so what's going to pop that, it's going to be a removal of accommodation. whether it's raising interest rates or shrinking balance sheets same time, we have ecb that's likely going to be shrinking their balance sheet in september. so in the fall, the two major central banks that are tightening in a sense and i think it's the climb in prices raeter than a us into a recession leading into a decline.

>> i take your point that economic growth is very slow right no any way. it's gradual in what does, but it's not just the u.s. central bank are taking the lubricant out of the system, could this tip us? >> no, and i agree. i make two quick points. i don't think bonds are in a bubble. i think we've got disinflationary pressure that is keep peter in a sense that if the fed is worried more about acid inflati creates a negative impact, but i also think though that the fed is pragmatic enough to know that if that creates that financial angst in the market, then they're going to back away from the quantitative tightening.

>> peter, is it the right time for the fed to raise interest rates? is i mean, if the economy is slowing a little bit, if the -- the elephant in the room. should they wait. >> they should have done earlier and they're being forced to tighten at the rong time from an economic standpoint. these are rear-view mirror type ey see the unemployment rate at 4.4%. and they see they have emergency sides balance sheet and a fed funds rate that's barely above 1% and they're saying oh, my, we're kind of stuck here. because if the labor market b kobts to tight. now, we can get slowerr labor me it's the supply and labor that's splinging, so it's the lack of supply that actually can continue to slow growth, but then cause inflation, wage wise, so tset us back that the fed is kind of stuck in, so not a good

situation. >> on that note, peter, thank you very much. jack, thank you as well. >> $5.5 million to settle claims related to its sale of -- the continues to cooperate with other investigations that could lead to fines. >> a protest by some big internet companies, facebook, google, netflix and others opposed the regulator's decision to reverse a rule that would require internet service providers to treat all content equally. like come cast, chaomcast, dhar the fcc argues that reversing the rule would decrease

regulations and help increase investment in new technology. well, the biggest names in technology and media are out in sun valley, idaho attending allen & company's exclusive conference. and while that lovely mountain retreat doesn't seem on its face like a place where power deals get done, that is what it turns julia boorstin reports. >> in beautiful sun valley, it's a who's who of media, tech and investing. people like warren buffett, sherry redstone, jeffrey caston berg, horse back riding, make deals. >> there's more pressure on the cable players around the world, satelli

satellite. >> the merger speculation, verizon and cbs ceo says they're not buying lion's gate. including one hosted by tom. the ceo is here discussing what p policies. >> the structure, that's the -- but others including diller k criticized trump's policies on

>> but diller agreed we'd see more media deals. we'll see if any come from here, sun valley. still ahead, it is a label no one wants. >> i'm scott cohn, you know america's top state for business is washington, but what's the bottom state? c >> warren buffett is in the middle of battle for a -- berkshire hathaway way is pushing on its -- subpoenas in

the country. but it is battling elliot management encore's largest creditor, who also wants. encore instead struck a deal to sell to berkshire hathaway way. on ber pla for later this month! sometimes, warren buffett lays low. that's 100 billion in cash. biggest shareholder in two of the nation's largest to discuss warren buffett's moves say about the market if anything is thomas russow, manager of russow and gardn gardner. berkshire hathaway way is its biggest holding at 12%. welcome. >> thank you, happy to be here.

you have a big bet on berkshire and you're watching mr. buffett take big stakes and the latest one ta some anticipate, interpret as a defensive space because it's in a eutility business. >> he's been known for years as having the most value bable asset as investor, which do absolutely nothing. he there's a lot to deploy now. a lot of cash -- in the utility business has been good to berkshire over time. the beauty about it is that the if you play an entry multiple, in this case, almost $20 billion in cash to acquire, if you then get is an extremely valuable

able ility to reinvest even mor regulat utility business. at fixed rates of return. so imaginee pai ten times cash earnings at the moment if the deal goes through. subsequently on top of the 20 billion here. he'll be able to tens of billions of dollars over time at high rates return. >> but he is going up against elliot management, which is a tactic he frequently employs. there are those out there who are interpreting that as a n strategy. buffett and berkshire hathaway way. it does not sound to me as though you feel it is a change in strategy. >> i don't. just one of the many cars in warren's deck he gets to play.

and if they're no longer attractive, he has the ability to walk away. by allocating d acting only when the terms are favor bable. for instance, one example came the fruit last week when he exercised the warrants to buy 700 million option, call options on bank of america for 7 billion, $7 a share. he ready made $15 billion. quick thought on why you think he likes the banks. they're high sickle digngle dig. maybe low digit multiples. there's a huge wall of worry over them to what the

regulations about capital requirements will do to future returns, but they're very, very ak tracktively valued, if you believe that the business will resemble anything like it has going forward over time. >> the past is is a glood example. >> mr. russow, 12%. >> msc suffers its worst day in nearly 15 years. sales of the industrial equipment distributor rose, but much of those games came from low products. earnings matched expectation, but the company sees profit for the curren qua coming up short. shares dropped 14% to 74.78. the vending machine businessed back up sales expeck tactatione. profit was also ahead of street target but the shares fell to

42.72. barnes and noble education saw revenue rise while same store sales also edged higher. the company said it expects sales to be flat in fiscal 2018 and sees same store sales fall ng the low to mid-single signature percentage point range. shares were slammed. they lost 11.5% to $8.89. >> you can now use paypal to make puchlss in the apple app store. the two entered into a partnership that lets customers link their account. trz that's better than what the company estimated. secondly, american airlines said it is ending coshare agreements. unsubsidized by governments.

qatar was seeking a 10% stake in american airlines. shares of american rose 4% to 53.80. an experimental cancer drug is is one step closer to winning regulatory approval. a panel vote d in favor of recommending the novat leukemia. the fd is not abl b obligate d o follow the b pabl's recoda shares rose 1.5. the unit said the economy is in troubled state is starting to dproe again. the bad new ss that the growth is moderat years of after -- west virginia finished dead last in cnbc's annual list of the top states for business the mountain state's long climb ahead. >> west virginians have had more

than their share. >> we're going to put miners back to work. >> it is coal country. the last five years, mining employment is down 43%. but barely a flip in the decline that dates back to the is t1940 not enough to lift west virginia from the depths of this year's rankings. 50th place, its worst finish since the study began, but they're growing accustomed to finishing last. >> there's no question we've been 50th forever more. we're better than that. now, like it or not like it, we're dying 50th. >> the 50th ranked economy with anemic growth, depressed housing market and state starved for resources. west virginia has the least educated workforce in the

country. fewer than 12% of adult worker haves a babachelor's degree at time when companies are clamb clambering for skilled r busin friendlyness. the state budget battle in charleston, so fierce that first term governor jim justice went to extremes to describe it earlier this year. >> but what we have is nothing more than than a political bull you know what. >> budget cuts versus targeted tax and -- proposed by the democratic governor. nearly everyone adprgreed until west virginia can transform its resource. of course, u budget battles are not unique to states, washington

took three special sessions of the legislature before they final ly came to a deal. in west virginia, ulti justice sign the budget that the legislature passed, but didn't vie toe it either, so it became law. the other bottom states for business, number 46, maine, number 47, alaska, followed by mississippi and hawaii. in seattle, i'm scott cohn for "nightly business report." >> and to read more about west virginia's rank iing as the wor state for we coming up, watch this. how a luxury watch maker is going all out to wow customers in a slowing market.

amazon's prime day set a record. the third event saw sales climb higher than both black friday and cyber monday combined. the most popular item sold was an amazon product. its smaller sized ex ed echo sm speaker. shares of amazon, sort of does. amazon rose today to close above 1,000 a share. zblmpb did you buy a watch during amazon prime day? most probably did not. in fact, if you look around you, a lot of people don't wear watches anymore. some say there's no need to now that smart phones are u bik wiitous and even wearables like -- are giving traditional watch makers a headache. even the high-end watchmakers

have to go to great lengths to generate attention. >> the luxury watch wars have reached a whole new level. a company is spending millions to rent the space this midtown manhattan for a month for a pop up temple to time called the art of watches. he built a two story rep lica o the swiss headquarters and ih s and most expensive watches in the world going back 400 years. >> now, this display is the latest effort by the industry to stop slowing sales, a demand w consumers are turning to their turns and smart watches to tell the time rather than the old style mechanical watches. >> swiss watch exports totalled $20 billion last year, down for the second year in a row. only the high-end is doing well. watches priced at more than $3,000 saw sales surge in may making it the fastest growing segment while watches priced under $200 fell.

it's top market. >> what we're trying to do is expose people to swiss watch making. and also the brand. but we want to capture that elo 30-year-old next generation client and teach them a little bit about fine swiss watches. >> among the historical items on display here, john f. kennedy's desk clock made and given to him during his famous speech in berlin in 1963. j a watch worth over $300,000. the most complicated watch for decades, the caliber 89, is also here, worth 7.5 million. it has a mechanism to off set leap century, once every 400 years. for young consumers, consider the most prestigious watch brand is introducing a starter watch in stainless steel for only $20,000. the company has been open owned

by the same family for four genera generations. >> when you have shareholder, you have to be quick, make fun fast. my only objective is to make something beautiful. >> no one understands the value of time better than philippe. for "nightly business report," i'm robert frank i >> if you're thinking about leap century, you're thinking long-term. >> long, long-term. >> that does it for us tonight. thanks for join us. >> it's a half hour has gone by. have a great evening, we'll see you. the sea world news ameri.

funding of this presentation is made possible by. the freemen foundation. and coal fuller foundation pursuing solutions for america's neglected me. planning a vacation escape that's 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 islan