. this is "nightly business report" with tyler mathisen and sue herera. not waivering. north korea fires a missile over japan. the fourth largest city in the u.s. is under water and, yes, stocks continue to move higher. why? debt fight. one month to go until the debt ceiling needs to be raised, but the fight to avoid a national default is likely to be a bitter one. safe havens. with all the political uncertainties swirling here and abroad, is now the time to flock to the security blanket investments. all of that and more for "nightly business report" for tuesday, august 29th. good evening, everyone. welcome. tyler mathisen is off this week. it was quite a reversal on wall street today. stocks sold off early on

following the report we told you about last night, that north korea fired a missile that traveled over japan racheting up the already high tensions surrounding the korean peninsula. couple that with the historic flooding in houston and the surrounding areas and you would bet that would be a recipe for a selloff in stocks, but that's a bet you would have lost because by the end of the day stocks did a nearly 200 point about face. the dow rose just about 57 points to 21,865. the nasdaq rose 18 and the s&p 500 added 2. gold did react to the missile launch settling at nearly a one-year high. we'll look more at whether this is the right time to get into the so-called safe haven invest 78 investme later in our discussion. the missile traveled over japanese air space causing a frightening situation for residents and strong rhetoric

from the government. we have more from nagoya, japan. >> reporter: well, like so many japanese here, we were woken up at 6:00 a.m. local time with the latest launch coming from north korea triggering a nationwide alert. broadcasters breaking into programming warning of a missile passing through. some residents in the areas of northern japan reported getting text messages on their phone urging them to take cover while others said sirens went off in their community calling on residents to look for a safe place here. this is a missile that traveled well over 1500 miles, passed over the northern island of hokkaido and landed in the pacific ocean. prime minister shinzo abe condemning this in the strongest terms saying he would make every possible effort to protect the lives of the japanese. he did speak with president trump over in the u.s. this is a conversation that

reportedly lasted roughly 40 minutes. the prime minister saying the president reiterated he's 100% with japan and committed to japan's defense. the timing certainly no coincidence coming amid the joint u.s./south korean military exercises. the south koreans have been conducting their own exercises over the last few weeks. this was tracked shortly after launch roughly 15 minutes until it landed in the pacific which has raised questions why in fact japan didn't give the green light with the missile defense systems to shoot down this latest missile. there are three of those in u.s. air bases here in japan, so the commander of japan's air self-defense force simply saying they didn't give the green light because they didn't think the japanese territory was threatened. we should mention the japanese are certainly used to these provocations from north korea with well over a dozen missile launches so far this year. more than half of those have

landed in japan's exclusive economic zone. there is a sense that this test may have crossed the line in part because this was the first time a ballistic missile that was designed to carry a nuclear pay load passed over japanese territory. the implications of a failed launch certainly could have been significant considering that the debris could have fallen on japanese territory. for "nightly business report." with every missile launch or verbal jab from north korea, more attention gets put on the rogue nation's close ties with its biggest trading partner and biggest ally, china. seema mody takes a look at that relationship. >> reporter: this brie linking the city from china to north korea is a life line carrying 2/3 of the trade. chinese government data shows trades between the two nations increased 37% during the first three months of the year. china provides north korea with most of its food and energy.

supplies accounts for 90% of north korea's total trade volume. that, according to the council on foreign relations. they have urged china to stop all trade with north korea which continues to conduct missile tests. >> i think china can do a lot more, yes. i think china will do a lot more. >> reporter: the hope is by cutting off north korea's economy leader kim jong-un will have less resources to develop nuclear missiles, yet china refuses to give up relations with north korea. why? analysts say beijing is worried that discontinuing all trade with north korea could lead to the fall of the north korean regime and a stronger, more dominant asian competitor to china. >> not unlike the reuniting the east germany and west germany and that would present an enormous economic behemoth on the border of china. china does not want to wind up

with a democratic capitalistic society sitting on their border. >> reporter: no material change is expected in the near term where leadership changes are expected. they wrote that while chinese leaders have no love for kim jong-un or his weapons, it dislikes the prospects of north korea's collapse. while north korea has conducted several missile tests, the one that occurred this morning crossed over japan's northern tip. the first time since 2009 seen as the fiercest launch yet. i'm seema mody in new york. why is the market not reacting to the north korean missile launch or even the devastation of the historic flooding in and around houston texas? jack avalon joins us to share husband thoughts. always good to have you, jack. welcome back to the program. >> nice speaking with you, sue. >> you know, it is curious to see the resilience that this

market seems to be exhibiting in the face of the north korean provocations and also the flooding. what do you attribute that to? >> well, i think the main concern among investors this morning going into the market is, as you mentioned, that the market set the market at the open was down over 100 points in the dow and i think it was that investors worried what the -- trump's reaction would be. the fact is because he didn't take the bait, he more or less said, we'll see, and focused instead on houston and the devastation there i think relieved a lot of investors that this wasn't going to rachet up to something that, you know, would run out of control. so i think from that perspective things started to cool down, investors tended to look beyond north korea. i think that probably, you know,

got kim jong-un particularly frustrated that he's not seeing the market react to his latest move. >> so i talked to one trader today, and he said this has become the market that you can't afford to sell because it does seem to be so resilient. what in your mind might it take for this market to retrench a bit? >> i think it's going to be something economic. the fact is we are in a global synchronized recovery where now most of the growth is coming from over seas because a lot of the early still mu -- stimulus early growth came from home. the fact is it is a global, synchronized recovery and one that as long as inflation stays low, has some legs. so i think that's wherein vestors are focused. they are certainly enjoying some

decent earnings at the same time, and i think that's everyone's priority right now. >> all right. we'll be watching for inflation. jack, thank you so much. >> thank you, sue. and now to texas where harvey has become a record storm. one location south of houston has now gotten more than 49 inches of rain making it the heaviest rainfall total ever in the u.s. from a storm. a levy also south of houston was breached by flood waters with authorities tweeting get out now. that levy has since been fortified. thousands have been rescued and dozens of off shore rigs have been evacuated. sadly the death toll has risen. a police officer drowned in his car as he was heading on duty on sunday. president trump visited corpus christi where he met with texas governor greg abbott. harvey is now headed towards louisiana, 12 years after hurricane katrina.

and a similar situation developed in galveston, texas, where rain pounded that area and rescue efforts ramped up. brian sullivan is there. >> reporter: rain continued to fall on tuesday in southeastern texas. some cases like here in galveston, much more rain in an area that did not need anymore rain. in fact, hurricane, now tropical storm harvey, has not only broken every single record for the region or for the state, but it is official. hurricane harvey, now tropical storm, has laid down more rain than any single storm in united states history. it will ultimately deliver more than 50 inches of rain in a single storm. and with this rain has come flooding and the need for rescues. in fact, citizens, good samaritans called the houston navy or the cajun navy if they came over from louisiana have gone out of their way with their

boats, jet skis and rafts to rescue people. listen to one good samaritan rescue one lady out with cancer. >> i banged on the door. no one answered. someone said to come in. i pushed in and that door there was water up to my knees basically. so i walked in there. she was sitting down on the couch and she can't move. i picked her up on my back and i got her out to the boat. >> reporter: and that gentleman certainly not the only one. in fact, people came from all over including 10 miles south. the chief of life guards and team of swimmers took their jet skis up there. they went house to house. >> at the end of the day we were up to 160 jet ski rescues. i think they said over 20 pets on top of that. yeah, there was a bunch of them. all in dickinson, four jet ski teams up there the last few days. they werg house to house. >> reporter: with all the rain on tuesday the flood waters may rise before they fall. what's rising is the estimated

economic cost of this. some estimates peg it as high as $50 billion when all is said and done. it may knock a few tenths off the entire american gross domestic product in the fourth quarter. that will be down the road. the focus is local, saving lives and making sure that the death toll does not go up. for "nightly business report," i'm brian sullivan in galvestog, texas. as you may already now, houston had a home problem before. that problem has gotten a whole lot bigger. diana olick has more. >> reporter: the focus in houston is getting residents out of their flood stricken homes and transferring them somewhere to safety, but soon that somewhere will become a much bigger problem as thousands of homes may be uninhabitable for weeks or months. >> housing is going to be very frustrating in texas. >> reporter: home builder lenar

has a big footprint in the houston area. the bulk of their community are not in the hardest hit parts, but ceo stewart miller said the billinger problem will be in the coming weeks with lack of labor to build and rebuild. housing stock, like the rest of the country, is tight, especially for affordable homes. there are however 47,000 vacant apartments in houston as construction there has been aggressive lately, but the majority of those are very pricey. camden property trust, one of the nation's largest apartment landlords, is based in houston and they say all their properties are operational so they may be able to assist. airbnb is waiving fees and eliciting support from renters. >> if we can't put you back in your home because it's destroyed or the flood waters are there or they're going to be there for a while. we want to get you out of the long term sheltering. rent 'em if you've got 'em is what we want to say.

>> reporter: they're moving into the areas to dry out and restore homes, but that can only happen once the waterrecedes. there's a big cost of recovery whether there's 2 feet in the water or 8 feet of water. so cost is really unknown at this point. >> reporter: fema may end up bringing in manufactured homes and trailers, but director long said that would only be a last resort and he added no one should expect to see those on or around their properties any time soon. for "nightly business report," i'm diana olick in washington. another image that we have seen over and over in the houston area, cars and trucks that are completely flooded. for thousands of people, including some auto dealers, harvey is taking a very costly toll. phil lebeau has more on how quickly the people in texas will be able to get back on the road. >> reporter: they're a testament to how quickly harvey swamps

houston. flooded cars, suv and pickups are spread throughout the city. the water is so high in so many areas it's estimated up to a half million vehicles could be totaled. that includes some that were under water at dealerships. right now most auto dealers in the houston area are likely to be closed for much of this week. when they reopen business is likely to be slow as people struggle to put their lives back together, file insurance claims and get around to buying a car or truck. once that happens, sales will be up. >> scrap t vehicles. i expect a significant snap back in houston, which is both a tribute to the spirit and resillens si of the american people there and that's the american way. >> with used car prices at a record high, they're likely they'll move higher. the supply in the houston area

will be higher than normal, at least initially. >> repor what ha with all of the cars and trucks? they will be scrapped. as with hurricanes katrina and sandy, there are some that will be fixed, retitled and sold often in states around the country where the buyers have no idea that the vehicle they were buying was once under water in houston. phil lebeau, "nightly business report," chicago. coming up, bonds, gold. with all the global turmoil, is now the time to get into safe havens? s&p says the u.s. would keep

its double a plus credit rating if the government does not default on the national debt even if it doesn't raise the debt ceiling, right away at least. last week barclays said not raising the debt ceiling could push the economy into a recession if the situation dragged on. the deadline is one month from today, but as ylan mui tells us you, that likely won't happen without a fight. >> reporter: conservative republicans in congress are starting to lay out their demands in cooperation for raising the borrowing limits. representative mark walker is head of the powerful republican study committee and he told cnbc that an increase in america's debt limit should be paired with reforms of medicaid. he believes tightening the work requirements to enroll in medicaid could save $200 billion over the next decade. >> we're just wanting something concrete as we go back to the people that we serve and say, yes, we raised the debt ceiling, but here's the good part of it, if you will. here's the things that you asked us to do as far as putting

together some long-term reforms. >> reporter: republicans don't want to approve more borrowing without corresponding spending cuts. that's very different from what the white house has been saying. treasury secretary steve mnuchin has said instead for a clean bill with no strings attached. any bill will need support from both republicans and democrats on capitol hill. senate minority leader chuck schumer has warned that gop efforts to push through a big tax cut that increases the deficit, that would make it tough for democrats to help them out on the debt ceiling. lawmakers have just one month to resolve this fight. the treasury department says the united states will hit the debt ceiling on september 29th. after that the federal government won't be able to pay its bills. for "nightly business report," i'm ylan mui in washington. strong demand for smart phones helps results at best buy. that's where we begin tonight's market focus. the electronic retailer listed

its full retail guide after topping street expectations. same store sales blew past analyst estimates with a more than 5% gain but the ceo warned that the mid single digit rise would not be expected to continue. shares fell nearly 12% to 5502. finish line slashed its profit outlook for the full year after reporting preliminary results that reported sales declines. the company citing a competitive and promotional environment said it expects those sales to erode even further. as a result of that, finish line has opted a shareholder rights plan also known as a poison pill to prevent a takeover event. finish line tumbled to $8.50. the watch maker movado said a challenging environment caused sales to fall. even so, results beat street expectations and profits were sharply ahead. shares soared more than 19% to $28.50. earlier this month we told you

that defense contractor united technologies was said to be interested in buying rockwell collins. well, today "the wall street journal" reported that utx is closing in on a deal to buy its rival for $20 billion. such a merger would create one of the largest aircraft equipment makers. shares of united technologies topped nearly 3% on the news to $118.70. that rise contributed to the dow's positive finish today. shares of rockwelcome lins rose 2% to $130.74. after the bell warren buffet's berkshire hathaway acquired 700 million common shares of that bank. shares of bank of america initially rose in after hours trading but they e the regular day down fractionally to $23.58. with all the geopolitical uncertainty here and around the globe, investors took a bit of a flight to quality today seeking

safe havens in investments like bonds and gold. as we told you earlier, gold prizes rose to the highest prices of the year at the $1300 an ounce mark. ten year treasury fell to 2.1%. is now the time to flock into bonds and gold? john pedrides joins us. nice to see you generalagain, j. welcome back. >> thanks for having me on. >> the movement to gold was certainly impressive into today's trading session. do you think it has staying power? should the average investor move into the gold market at this point in time? >> i think it was such an interesting reaction of stocks in general. prior to the market opening stocks were down half of 1%. we actually finished positive of the day which shows there's a lot of pent up demand for stocks. we're now entering the 102nd month of a bull market without a bear market. so i think that thers still a pent-up demand for stock. in terms of gold, we had been owning gold for our clients

portfolios because we are humble enough to know that we don't know what the future holds. we think that gold provides a good hedge for the black swaun event. >> we also saw investors moving into u.s. treasuries. you have argued that now is time to unload some of your bond positions. is that treasuries or are you talking corporates? what part of the market are you talking about? >> definitely treasuries. the higher end quality of the bond market. we would rotate out of or row dues the position and use that, proceeds to buy stocks here today which are on the cheap. and i think that the bond market, the high quality -- six months ago the market was very fearful of rising interest rates. how far and how fast would the fed go to raise rates. that was throw bonds off. at that point the ten year was at 2.6%. bonds have rallied with the ten year at 2.1% on yield. the perception has pushed from

fear of interest rate risk to wanting safety and capital preservation. what happens if the hawks come back and they come to raising rates? bonds will sell off very aggressively. >> if you do not have a position in the gold market, i want to go back to that. how would the average investor best invest in the gold market? what's the average investor's strategy? >> so we like the gold miners, and we own a basket of gold miners. one stock is the asa gold fund, the closed end fund that owns a basket of miners. that's how we play it. >> john, thank you very much. with point view wealth management. >> thanks. coming up, why retailers are hoping to get a bump from the back to school seaso

finally tonight, we told you earlier about the strong sales at best buy, but the retail sector as a whole has been having a very tough go of it. the national retail federation said we're expected to spend nearly $84 billion on the back to school season. the second highest amount ever. and as dom chu tells us, that just might be what the doctor ordered for the ailing group. >> reporter: it's that time of year again. back to school season is upon us, and that means a renewed interest in buying things and a renewed focus on retail-related companies. this time around the recent press has been tilted towards the negative side of things for many of america's best known retailers. stocks in the industry are on pace for their worst monthly performance as a group since january of 2014. if you look at the spooider retailer trader fund, it's down. it tracks small, mid, large cap

retail stocks. it has 100 stocks in it. of those, nearly 30 have fallen by 10% or more month to date. among the worst performing stocks, shares of sporting goods, athletic apparel. you've got foot locker, dick's sporting goods and the finish line. now a big part of the story developed this week as the finish line cut its profit outlook for the year. bigger discounts and a heavier promotional environment have been pressuring a lot of retailers in this and other parts of the industry, but it's not all bad news. some app retailers like american eagle outfitters, urban outfitters and guess have posted positive returns this month. many retailers are highly dependent, of course, on the second half of the year in sales and now it's about whether or not those lagers can help turn things around as we head out of the back to school season and into the holiday shoppg season. for "nightly business report,"

i'm dominic chu at the new york stock exchange. and on that note, that is "nightly business report" for tonight. i'm sue herera. thanks so much for joining us. have a great evening, everybody, and we will see you right back here tom

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