this is "nightly business report." with tyler mathisen and sue herera. >> calm is cracked. the market has one of its worst weeks of the year as the war on words between the u.s. and north korea escalates again. j.c. penny was a dominant force in retail sees shares tumble as shoppers stay away from its stores. >> pinot and pond, why there may be some seeds of discontent growing in northern california's wine making region. those stories and more pr friday, august 11th. >> good evening and welcome. after a remarkable string of regard highs, investors turned cautious this week and the result was the tesecond worst wk

of the year st the calm that had swallowed the rising market like a warm blanket all year long finally cracked. the rupture came as the war of words between the united statea. beginning on tuesday and continuing through tod. soggy earnings reports from major retailers didn't help either. the result was a down week, the worst in months with all of the major indexes off 1% or more. but what was almost as surprise as the turn was that the weekly losses weren't even part becaus turned up today. the dow jones industrial average rose to 21,858. nasdaq added 39 and s&p 500 was up three. the president today did not back down against north korea saying the leader of that country will quote regret it fast if he acts against guam or any american ally. >> this man will not get away with what he's doing, believe me.

and if he utters one threat in the form of overthreat, which he has been uttering for years and his family has been uttering for years or if he does anything with respect to guam or any place else that's an american territory or an american ally, he will truly regret it. >> china, the world's second largest economy has repeatedly warned both washington and pyongyang not to do anything. today, it reiterated the idea and we have more from beijing. >> the chinese state media fired a warning shot at pyongyang and washington over their ongoing war of words. in an editorial, the global times, the communist par said i kore launches missiles that threaten u.s. soil firretaliate neutral. if the u.s. and sok carry out

strikes and try to overthrow the regime and change the political pattern of the korean peninsula, china will prevent them from doing so. this is a significant change from the messaging out of the chinese government and state press which has been b calling for dialogue in attempting to get both sides to tone down their rhetoric, but this commentary and it's thot official, in the case of the chinese, are warning kim jong-un that if he does something rash that lead to a conflict, he's on his own and the chy need won't st in as they did in 1950s war to save north korea. at the same time, the chinese are warning president trump that if the u.s. were to start a war, nor korea, but also with thchina. risks involve n escalating a war of words. >> north korea appears to be a poor country. and it is. and yet, it has managed to develop every more sophisticated

weapons and generate nuclear power. those are costly things to do. so, michelle caruso-cabrera followed the money trail to find out where north korea gets its cash. >> the short answer, they sell commodities to china. that's very well-known and less well-k and weapons, mostly to african countries. they also export north koreans f weird, they lave labor in design and export huge brass statues, we know this because of this. this is an annual report from the u.n. panel of experts. investigators who work for the u.n. have put out a report every year on their progress toward nuclear weapons and whether or not countries in the u.n. are enforcing the sanctions imposed. the sale of coal and mineral, widely known. arms sales. just one of many examples in this report they discovered assault rifles, aut antitank missiles and mines to

the congo for use by the the police. guard and spe this is a photo of 30,000 roblgt propelled grenades which were seized. they're tough to see. they're underneath the tarp there underneath the dirt. they do this through front company, for example, th glow com. short for global communications that makes military equipment that's in this photo. that company advertises on the internet. moving on to labbe erior, this thaton built a new military headquarters for namibia using north korean b la labor and they built eno s stat one in senegal. u.n. sanctions were imposed on north korean sat chstatues in 2016. back to you. >> we have been talking a lot recently about how a rise in geo political tensions could affect

the tok market, but what about the economy? steve liesman did some digging. >> suddenly, economists ahave more than the next fed rate hike to analyze. orthers include the risk of a government shutout in september and chance meaningful tax reform may not happen this year. all the other risks seem to pale by comparison. carl weinberg sees huge downside potential from the north korean situation. trad even with conventional weapon, it could threaten the global economy. the global financial system is vulnerab of trade. jpmorgan calculates the level of political anxiety with an index and finds it elevated now. other note bable piques, the desert storm war in the early 1990s, the 9/11 terrorist attack and the r arab spring. they say they've looked back on other times when the index has

spiked and finds these rules of risk. first, the it's the rule, not the exception. second though, it has delivered four of the past six recessions, mostly through an oil price fight, but third, there's a short-term market reaction, but there's often a big retracement within a few weeks or mont goldman sa points out that for decade, investors have been rewarded for betting that a flare up in the north korean problem would go away. the question is whether the real situation with the advanced nuclear program and rhetoric from both sides have changed the situation enough so that this time, the market should be less complace compla, more concerned. i'm steve liesman. >> in flags has been soft for five month, raising questions about whether prices will rise enough to hit federal reserve's target level. labor department reports that consumer prices rose just .1 pest last month, less than the forecast. the cost of cell phones conti e

continued to decline as did used cars and hotel rooms. some federal reserve officials called these transitory, but the ongoing softness is is pushing against the idea that sf-year low will help acceleration accelerate at it wants. >> and the head of the mipts fed says t report on consumer prices is yet another reason for the ce bank not to raise interest rates in the feonear future. neel kashkari wants to see clear evidence that inflation will rebound before deciding where to go. he has been the lone dissenter against the two interest rate hikes this year. still ahead, are under the radar stocks your best bet for the long-term? we have a list of names.

anthem will put out of virginia's individual obamacare market. citing uncertainty from the federal government including the president's indecision on whether to continue paying the sub sidies which make premiums afforde consumers. anthem already announced it would exit marketplaces in wisconsin, indiana and ohio. they have until the end of september to decide whether it will leave more exchanges. appears on edge because of the situation with north korea, one group is getting a lift. defense company shares. morgan brennan shines a spotlight on the sector. >> it was a week shaped by a war of words between north korea and the u.s. >> they will be met with fire and fury like the world has never seen. >> and while the broader market sold off amid the riser risk,

defense stocks hit new highs. the sector has been outperforming the s&p 500 all year with shares i.t., aerospace up by almost 20%, but you'd be hard pressed to find an analyst who doesn't believe this sector could go higher. richard saffron cautioned it's risky to bet against defense at a time like this. a time when global spending is ratcheting up and the geo political threat and not just because of events this week. it runs in 20-year cycles and an upturn has begun. tied to equipment upgrades. he says the aerospace sfri stri is is depending on orders and equipment deliveries. more defense spending implies more orders and that could lead to gains if stocks. couple that backlog with dividend yields and defense stocks are defensive. safe haven investments like utilities or gold that investors

flock to when volatility increases and the broader market sells off. the very scenario that unfolded this week. i'm morgan brennan. >> shares of j.c. penny hit an all time low. they lost more thmoney than fea revive sales just don't seem to be sticking. the company reported a decline this a key sales metric, making it the latest department store chain to announce dismal results. the stock took a beating and fell 16%. courtney reagan has more. >> they aren't inspiring any more hope this week. going out of business sales at nearly 130 store, plus higher levels of shoplifting and damaged merchandise led to a bigger than expected loss for the retailer, even with sales in nearly all categories improving. on the flip side, the

liquidation sales are helping them clear merchandise going into the most important part of the year. >> they do go into the second half of the year with a much cleaner slate. they continue to get a nice contribution from alliances. the ceo mentioned on the call they've started august strong in terms of their back to school selling season and so still a hurdl remain. up. but we would say it was a bit of a cleaner report. >> j.c. penny still thinks it can hit its previous forecas for th year, but analysts and investors aren't sure. the online sales are growing, but with 85% of sales still done in stores, traffic remains a key issue. like it does for other stores. shoppers are going elsewhere. leaving the group in a tough spot. >> you have to focus on that value. and you have the off pricer,

t.j. max, burlington and ross stores. they have to match the values at the off pricers and they have to figuree factor, the rate amazon has them by the throat. >> that has many wondering whether this is as good as it gets for department stores. i'm court ney reagan. zblncht the golf com bogeys its quarterly results, maybe double bogeys. that's where we begin tonight's market focus. they reported a worse than expected drop in sales as fewer people bought titleist golf balls and clubs. they also see weakness ahead slas its revenue outlook for the year and that pressured sales. they carted a snow man down 8 p.5. i've had a few of those. yoga works had a rough start on its first day of trading after delaying in july, the chain debuted on the nasdaq today pricing at $5.50 and shares went downward facing dog

falling to 4.85. tellus said higher spending on effor to attract and retain customers are getting into prof quarter and its result missed expectations. tellus said it saw an increase this the average monthly wireless bill as customers streamed more online content. never the less, shares fell a fraction to 35.58. zblnc zblncht. > lawyers of plaintiffs suing general motors allege the automaker must pay $1 million in stock as part of a settle. but they say they didn't have any knowledge of the settlement between the plaintiffs and trusts set up for creditors of the old gm, which is what was left behind when the government bailed out the company gm shares today were up a tick to 34.93. nvidia reported earnings and

revenue that beat expectations, but shares analysts were disappointed by the company's data center and autonomous driving businesses. shares were off 5% to 155.96. intuitive surgical, which makes robotive medical equipment, says it is planning a three for one stock split. if approved, investors would receive two additional shares of what they own. shares rose to 942.25. time for our weekly market monitor, who's finding opportunity in some maul cap names he says you want to own long-term. this is his first time on the program. matt fin. matt, welcome, don't be ners. s nervous. going to begin by taking something that cures pain. your first pick is is a liquor company. tell us which one and what they do. >> hi, tyler and sue. this is a really great company. mgpe ingredients is a low cost

wholesaler of liquor to brandy companies, so as you know, brown liquor sales have been b increasing i dec and that benefits them because the profits from brown liquor are higher than white liquor, so you get decent sales growth, better profit growth or the next serl years. >> drinking more rise and bourbons that whose brands i would know or sell them as private label? >> they wholesale to diagio, who makes the bullet rye brand and hundreds of other brands. they supply the wholesale liquor and one of the other nice things about their business is they sell 1-year-old brown liquor for one price if they age it four years, they sell it for two and a half times that price, so they are putting liquor into inventory, which helps their

margins as they sell the old ehrlich cory over time. >> and if you have too much of thate coffee, which is where cop corporation comes in, right? >> yeah, cot corporation is a solid business. they are one of the largest xaeps delivering coffee and water to homes and businesses in north america and the united kingdom. what management has done is they sold the decline in private label beverage and bottling business so what you're left with is decent top line, better operating profit growth and lots of free cash flow. >> kirby corporation is your third choice. what do they do and where do you see the price going in. >> kirby is a cyclical company. they are are one of the largest companies that transport refined prublgts and chemicals on barges in the mississippi r mexico. their sales were 2.5 billion in 2014. now, they're 1.8 billion. the stock's been cut in half. we think the business is going to tighten up over the next

several years and you can get o its prior high. >> now, what about the time e indl in how long would you investor hold thesetheses? >> well, i think mgp is a longer term hold. they've the cot corporation, if it got ahead of itself in the mid-20s, we may like to cut that back and then in the case of kirby corporation, i think that's a name that you hang on for the upcoming cycle, which could be three to five easy, wa snit. >> it was great. >> thanktime coming up, is there a budding battle emerging in california's wine industry?

here's a look at what to watch for week. tuesday, home depot is out with earnings. on wednesday, the minutes from the last federal reserve policy meeting will be released. thursday, walmart reportings earnings and investors will be b looking to see if its investments are paying off and tha what to watch next week. islamic state may have used ebay to channel money to an operative in the u.s. the man y receid the pams was an american citizen who was arresteded last ye accord tog a recently unsealeded fbi affidavit, the american citizen allegedly sold computer printers on ebay as a front to receive payments through paypag canceled a meeting to discuss

diversity issues after individual employees were singled out online. questions submitted prior to the meeting had been published online along with the employee's names and several workers expressed views for their personal safety. as we reported this week, google fireded an engineer who posted a length in memo suggesting women are less cape ba wo in high-tech jobs. the ceo has come under fire for his hand and today, david brooks with "the new york times" called for his resignation. in california's wine country, a battle is brewing between wine and weed. the state's legalization of marijuana is prompt iing some entrepreneurs to set gras grow northern part of the state. we have the story from redwood valley, california. >> on a warm summer evening in

sonoma, kcalifornia, the grapes are ri the food is abundant. >> is it good? and open up that jar. >> this isn't your avrnl farm to table dinner in wine country. it's a chance topo >> all right. thank you. mind if i finish? >> it's hosted by marijuana entrepreneurs. hoping to show long time wine makers like dennis that wine and weed go together in business as well. >> i'm curious, are you thinking about ever infusing a wine? >> a sixth generation wine maker says at the least hooerks interested. >> i think i'd be foolish if i didn't look at those opportunities. >> as california prepares to hand out licenses to marijuana businesses on january 1st, many are eyeing northern california's wine making region as a pot of

dwold. some experts say one acre of cannabis can be worth at least $1 million while an acre of wine grapes in sonoma county only brings in just under $200 tourks. a lot.h do you ex >> michael is tapping into the budding market. he's a marijuana entrepreneur who bought this 80 acre property in california. that used to belong to spencer, one of california's biggest wine make makers. >> the opportunity is massive if we get it right. >> its company will have a research division and wellness retreat here. they'll also process the marijuana that local farmers gr them sca up. >> we have to grow and let them do all the sticky work. >> serl is one of those farmers. >> we're in a rare mediterranean climate. they go well to growing cannabis. >> but among the bud growing in

these fields seeds of discontent, with long time winemakers worried that they'll poach their cust mes. >> they're a little nervous about the cannabis industry coming into sonoma and how it's going to impact the tourism dollars for the tasting rooms around here. >> then there is the skeptics. like sonoma county supervisor linda hopkins, who says marijuana may not be as lucrative because prices will go down as simply increases and regulations will be testify. >> cannabis is going to be the most highly regulated agricultur in california. period. >> and whim some are nervous, others are still hopeful that weed and wine will pair well. >> i think that there's a opportunity for both industries to fi in this communityn launche fall. the region also hosted its first ever wine and weed symposium to

better educate winemakers on the cannabis industry. it was a sold out event. >> that's going to be fascinating to watch. >> yes, have a car service ready to take you back. >> all right. on that note, that does it for us tonight. i'm sue herera. thanks for watching. this is the time of year your public television station seeks your support. >> we thank you for your support. have great weekend, everybody. see you monday.

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