this is "nightly business report" with tyler mathisen and the great unwind. the federal reserve plans to remove the economy's extraordinary support which has been in place since the great recession. but what happens when the training wheels come off? ringing up sales. why some say consumers will spend more than $1 trillion this holiday season. dealing with disaster. how houston's newest landlords are helping renters displaced by harvey. those stories and more tonight on "nightly business report" for good evening, everyone, and welcome. i'm sue herera. tyler mathisen is off tonight. it may be an october to remember. the federal reserve said next month it will begin to reverse its historic stimulus which was

put in pla help prop up the economy during the great recession. its plan is to begin rolling off its $4.5 trillion damage sheet, which consists mostly of treasuries and mortgage-backed securities. officials also hint one more interest rate rise this year is likely. as a result, bond yields rose and stocks why volatile. the dow jones industrial average advanced 22 points to an all-time high. the nasdaq was off five. s&p 500 rose one, also a record. hampton pearson has more on the new era the fed will begin ushering in. >> reporter: as expected, janet yellen and her fellow monetary policymakers left interest rates unchanged and announced the beginning of a plan to start trimming the more than $4 trillion worth of bonds and mortgage-backed securities purchased by the feds to combat the financial crisis and the recession. >> our balance sheet will

decline gradually and predictab for october through december, the decline in our securities holdings will be capped at $6 billion per month for treasuries and $4 billion per month for agencies. >> reporter: the fed chair said there is a strong consensus among monetary policymakers for another interest rate hike this year, even though inflation is below the fed's 2% target and hurricane damage in texas and florida will have short term negative impacts on the economy. >> so if there are small changes in the outlook that require re-c re-c re in monetary policy, we'll set the federal funds rate. >> reporter: marketwatchers are concerned about the impact of trimming the balance sheet and the likelihood of more rate hikes. >> i think they have to be very careful because it's a highly

levered u.s. economy, highly levered globe economy. it will move substantially if the fed overstates its case. >> reporter: the fed chair sidestepped questions about how fiscal policy, especially tax cuts and a possible increase in the deficit, might impact future monetary policy. for "nightly business report," i'm hampton pearson in washington. let's turn now to jack avlon, the chief investment officer at bmo private bank. good to see you, jack. >> thanks, sue, nice to see you. >> was what the fed did today expected and appropriate? >> it was exactly as expected. by design. the fed is trying to reduce the size of its balance sheet. and given the last time translating aloud about doing that, back in 2013, under chairman bernanke, we had, remember, the temper tantrum where everyone got very concerned. >> oh, yes. >> and this time around the fed wants to fully articulate its

plan, map out its intention of reducing that balance sheet, and they said they were going to probably start reducing in october, and sure enough, this afternoon they announced that indeed they're going to start reducing their reinvestment program in october. >> so what does this mean to the average investor? it sounds like you're saying we won't see the type of volatility in the market that we saw the last time around when the market was a little bit unsure of what the fed's intentions were. >> yeah, i think part of it is, sue, while the federal reserve is trying to at least reduce its reinvestment program, so it isn't even talking about selling holdings that it has, all it's doing is just reducing the amount of reinvestment it has from the coupon payments and maturities that are coming due. and so we also, though, have still active buying going on in many central banks throughout the world. so i think that while the fed is

trying to pull back a little bit, we still have other central banks worldwide racheting up their buying. >> i guess the good news is that the fed deems the economy healthy enough to be able to really kind of rejigger their balance sheet. >> yeah, i think that's it. and i think that, you know, they believe that reducing the size of the balance sheet or reducing these reinvestments may be the same type of program as raising interest rates. so we'll have to see if they actually go with a double barrel approach or if they may take a wait and see on raising rates while they see the effect of the balance sheet reduction. >> all right. jack, we'll leave it there. thank you so much. >> thank you. as we reported, the dow and the s&p 500 are at record levels. but if you're worried about valuations, the world's most recognizable investor says, don't be. according to reuters, warren buffett, the chairman of berkshire hathaway, late

yesterday said the dow will be over 1 million in 100 years. he also said that being short america has been a loser's game. and investors may be taking mr. buffett's advice to heart, after being one of the most dislikable markets, a handful of surveys show a shift. according to the latest gallup poll, optimism is at its highest level in 17 years. investors took a sharp bullish turn last week. according to the american association of individual investors and the most upbeat group of all were retirees. john manly is here to talk about more about the investor optimism. he's the chief equity strategist at wells fargo funds management. good to see you, john, welcome back. >> thank you, great to be back. >> do these numbers and the sentiment surprise you, or not? >> a little bit. i mean, i think people still have a tremendous fear, slightly below the surface, there's a lot of nervousness that permeates this market. i still think the u.s. economy

is getting better and people don't really believe it. >> what's it going to take, do you think, for them to believe it? >> more of the same. i think we just need time to go by. i mean, time passes, time heals all wounds. i think that -- i didn't say that originally, but it's a good quote. i think what happens is after a period of time, the terrible past fades into the past. and people do what they do in america, which is spend money. >> exactly. the sentiment, it was somewhat surprising to me, primarily because we have valuations that some say are pretty much fully valued, the stocks are pretty much fully valued. would you agree with that or not? >> i think they're actually highly valued. they're sort of the low end of high, they're 18 times forward earnings expectations, by my numbers. the average is 16 times. it's not so much that it will cause the market to come down by itself. if anything bad happens, it's a little bit sharper decline than we would have had otherwise.

it's not a killer about i a any. >> the other thing is the lack of exuberance. maybe it is different this time. every time i say that, i think, oh, no. but maybe it is. there aren't too many other places to put your money to work other than the stock market at this point. so perhaps it is a little bit different and we haven't seen that sign of, you know, exuberance or investors being overly bullish. >> i think it's the same as it's been. it's the same as it's been, where? when during the marketplace? i don't think we're near the top, like 1987, or the top like 1929. we're lifting off. this will probably end badly. but it could take years before we get there. bull markets by definition end badly or they wouldn't be the end of bull markets. but they go on for a lot longer than people think, because there are still people who hold out, who are waiting for that final decline. and it takes a lot longer and it takes a lot more evidence than

we have for it to happen. >> on that note, john, always good to talk with you, thanks for joining us. john manley with wells fargo funds management. senate republicans reached a tentative budget deal to set up a broad outline for an overhaul of the tax system. it came down to two senators with different views. senator toomey had been looking for tax cuts to reduce reverence by $2 trillion over a decade. senator corker had been arguing fo smaller number. according to reports, that number could be about $1.5 trilli in revenue reducing tax cuts. and today, goldman sachs said the tentative budget deal raises the odds of tax reform. and the senate is pressing ahead with a vote on its health care bill. an aide for senate majority leader mitch mcconnell said he intends to bring it to the senate floor next week. as we told you yesterday, the legislation would repeal central elements of the affordable care act. republicans must vote on the bill by the end of next week or

lose access to special budget rules that prevent democrats from fill i bustering. you might think holiday spending won't be all that good, but sales could top $1 trillion. good to see you, burt. >> good to team up again, sue. >> $1 trillion recall they say that round numbers don't matter, but this is a very big round number. >> this is a big, important record breaking number, sue. >> do you agree that we could see that kind of sales? >> definitely agree. and we're going from the worst of times, as charles dickens might have described it, to the best of times for retailers. you and john manley said stocks are fully valued, retail stocks are undervalued. this retail pushes back the $1 trillion number. a lot of good buys because there

are great deals for shoppers for the holiday and going into the new year. >> talk to me about how the sales composition will look. we report almost every day on either -- yesterday it was toys "r" us going into bankruptcy, store closings, reshufflings and things like that. is it the online component that is going to drive retail sales? >> online is going to drive it because of price discovery. but the omni channel retailers with the best combination of bricks and clicks, walmart is getting to be quite good, bloomingdales.com is getting quite good. we're seeing that worldwide. you're going to have a meeting where amazon's tremendous compounded animnual sales increases of 25%, those will start to decline to 15%. the omni channel retailers will go from negative 4 to plus 3, they'll start to pick up 500 basis points per retailer

forever years. >> the mix seems to be different in terms of merchandise this year. in the past, the consumer wasn't, or didn't seem to be, anyway, enthused with the clothing options. you say that's changed, the athleisure area is still hot, and improving. >> athleisure is still hot. and cornell university, where i'm on the board of fashion and fiber innovation, tremendous innovation, talked to kevin plank last week, under armour has tremendous innovation. for sourcing, we're seeing a lot of retailers come back that you wouldn't normally think of. jcpenney, walmart, others in basic fashion, they're beating target. and in london, we're seeing harvey nichols really set innovation trends worldwide in terms of fashion. low end to high end, getting quite good. >> it's going to be an interesting holiday season. thank you, burt. >> thank you, sue. still ahead, houston renters

in hou. >> reporter: we'll show you how landlords dealt with the hurricane disaster, coming up o a house panel is reportedly looking into some questionable equifax trades. according to cnbc, the house financial services committee is trying to gather more information on some options activity in the stock nearly three weeks before the company disclosed a massive data breach. the trading is considered

unusual given the spike in volume. it appears as if the size of that trade could have generated millions in profit. toshiba has decided to sell its memory chip business. the japanese conglomerate's most valuable asset. it's selling to private equity firm bain. that includes apple and dell technologies. for apple, it could ensure a competitive supply chain and lessen its depends on samsung. toshiba chose bain over two rival groups including western digital and taiwan's foxconn. boeing is firing on all cylinders. it's the best perfect dow stock this year, up more than 60%. the company is increasing production at its commercial unit. but its next leg of growth may be driven by its defense business. morgan brennan explains from national harbor, maryland.

>> reporter: leanne corette has been ceo of boeing's defense business for 18 months. >> it's transformative time, fast paced. as we identify opportunities that will make us better, that's what's most important. >> reporter: while most people have flown in a boeing plane, the company actually makes a third of its money selling military equipment to countries around the globe. it's been relocating headquarters to washington, d.c. and investing for growth. both organically but also on the heels of the northrop grumman deal through acquisitions. >> we have a very focused strategy on our growth. that includes looking organically on where we're going to invest. we also are continuing to look at other ways to increase our top line through mergers and acquisitions. we have a continued pipeline we're assisting.

>> reporter: so yod abe a buyer if the right opportunity came along? >> yes. >> reporter: are you talking to anyone? >> we'll stay away from that. >> reporter: defense is poised to reap the rewards of increased government spending, both domestically and abroad. a business experiencing a dramatic reversal is fighter jets. as boeing's legacy lines find new life under president trump. >> we're honored and thrilled that not only the navy but others have seen, you know, the benefits of the f-18 and continue to see a strong demand for it. we have a continued international pull on our f-15s. >> reporter: boeing is also competing for several high stakes contracts, including the $85 billion replacement system for the ground based leg of the nuclear triad and the $16 billion tx trainer program for which boeing built a brand-new plane. but corette says future opportunities lie in the great beyond. for new multimillion dollar satellites and exploration which includes a mission to send

american astronauts to space starting next year. missile defense is also a priority, especially since boeing is a prime contractor for the antimissile system that's in place to protect the continental u.s. from an icbm attack. >> heaven forbid north korea were to test thesystem, would it keep us safe? >> yes. >> how do you know? >> i have the honor and privilege of leading an amazing team of men and women who -- and i like to say it this way, 400 protecting 400 million. but i also had the opportunity to actually be there for the test at the end of may, when, as you saw through public disclosures,e hit a bullet with a bullet. >> reporter: for "nightly business report," i'm morgan brennan in national harbor, maryland. changing consumer tastes hurt results at general mills. that's where we begin tonight's market focus. the food giant reported a drop in sales for the ninth straight

quarter as consumers continued to shy away from purchasing cereals and yogurt. profits also suffered. but the company says it's optimistic that performance will begin to improve later this year, thanks to marketing and product ingredient changes. general mills' shares were off almost 6% to 52.17. microsoft says it's hiking its quarterly dividend by 8% to 42 cents a share. the yield now sits above 2%. shares of the software giant fell fractionally to $74.94. best ink, a startup from china went public on the new york stock exchange today. the company priced 45 million shares at $10 apiece. that was at the low end of the expected range. the ceo said this is just the start and there's plenty of opportun >> we just started. i mean, we're still in the marketplace that probably has a smaller market share. and then market for only 20 to

30% every year annually. by providing benefits to our customers with technology services, what we can do is continue to grab market share and also create more need and demand for our customers. >> best ink's shares jumped 5%, ending the day at $10.52. alnylum pharmaceuticals said it will present full trial results of a medication intended to treat a nerve disorder. shares skyrocketed 51%. ionas pharmaceuticals which makes a competing drug saw its shares fall. blackberry says it is partnering with car supplier delphi automotive on an operating system for delphi's

autonomous driving technicologyo improve safety and performance in self-driving vehicles. shares of blackberry finished higher. >> sales of previously owned homes fell in august to the lowest level in a year. despite strong demand, the drop reflects a shortage of properties on the market. and hurricane harvey also resulted in a 25% decline in houston home purchases. according to the national association of realtors, existing home sales fell 1.7% from the previous month. the median price of homes sold last month reached more than $253,000. that's up more than 5.5% from the year before. more than double the growth in an americans' income. hurricane harvey displaced both homeowners and renters and put america's biggest and newest landlords to their first real test of how to deal with disaster. diana olick is in houston

>> reporter: they are testing for water and at the same time testing the strength of a brand-new asset class of single family rental homes. when you started this company, did you think about a disaster like this hitting thousands of your homes? >> well, you have to prepare for everything. you can't imagine what a storm like this, this is unique. >> reporter: and it's your first test. >> it's our first test. >> reporter: they own 2800 homes in the houston area, one of the new breed of rental companies that bought tens of thousands of foreclosed homes during the housing crash and turned them into lucrative rentals. in preparing and responding to the hurricane, apparently bigger was better. >> we were able to use the scale of our platform, professionally managed across the country, and utilize our resources internally and externally to put together vendors, put together a task force, we communicated, used our technology, and we prepared. >> reporter: for renters

displaced by had you ever, starwood says they'll let people out of their leases and refund security deposits. the hope, though, is once those renovations are done, those renters will move back in. american homes for rent, which was about 3200 houston homes, is doing the same. like starwood, it had to assess damage, find and relocate renters, and begin extensive repairs. >> our response time was significantly faster than the individual landlords or the mom and pops, because we have the communications centers. so we were in communication with these tenants before. immediately the day after, they knew exactly what our plans were. >> reporter: shonda lewis is one of those tenants. she was immediately moved to another company property. >> they were very organized, very professional. i received one call after the next. i couldn't hardly keep up with the names. they called me, they checked on

us, they e-mailed us, made sure we was okay, if we need anything. even after h. >> reporter: starwood's young says the aggregate cost of harvey to the company was about $10 million. much of that, though, covered by insurance. as for what they could do better next time, just do it all faster. for "nightly business report," i'm diana olick in houston. coming up, america's billionaires give back. but who is giving the largest share of their wealth to

albertson's is buying the meal kit service plated, a rival to blue apron that offers meal kits through the mail. with albertson's purchase, plated will now be available in albertson's grocery stores nationwide. the price paid not disclosed. the deal helped shares of blue apron. albertson's and plated are privately held. there are reports that amazon is ramping up conversations with a group of pharmaceutical benefit managers or pbms, who are a critical part of the drug supply chain. according to axios, those talks could indicate that amazon is making an effort to it into various contract arrangements, potentially disrupting the industry. that sent shares of cvs and walgreens lower on the day. america the charitable. there are a number of billionaires in this country. of these, who was the most philanthropic? robert frank has the list of names.

>> reporter: among the top ten billionaires in america, warren buffet is the most charitable. an analysis of giving as a ratio of total wealth since 2000, warren buffett topping the list, giving away more than $46 billion since 2000. that works out to more than 70% of his $66 billion fortune. bill gates is still the richest man in the world with a fortune of more than $80 billion. but he ranks second for giving, with 22% of his wealth going to charity since 2000. he and melinda gates of course have given way more than twice that since they created their foundation in 1994. michael bloomberg ranking third with 10% of his fortune. that does not include all of his giving before the year 2000. the google guys, larry page and bryn, have given away 4% of their wealth.

david koch has given away $2 billion. jeff bezos, on his way to becoming the richest american, is last on the top ten when it comes to film an thrlo philanth. he's given away less than 1% of his fortune. he took to twitter this summer to ask the public for their advice for his strategy for giving. i'm robert frank. that is "nightly business report" for tonight. i'm sue herera. thanks for joining us. have a great evening. we'l.

>> this is "bbc world news america." funding of this presentation is made possible by the freeman foundation, and kovler foundation, pursuing solutions for america's neglected needs. >> 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