half of their losses from the recent sell-off. questions remain about the health of this bull >> bouncing debt. the white house proposes a near 4.5 trillion budget that calls for more spending and widens the deficit. >> the big fix. can $200 billion be turned into $1.5 trillion to improve the country's infrastructure. the storiesnd more on "nightly business report" for monh.y february 1 >> good evening, everyone, and welcome. wstocks soared to start tk staging a powerful comeback following the worst we for equities in two years. tthe rallyay was broad with 11 of the 12 sectors in the s&p

higher on the day a it came even as treasury yields move back towards four-year thghs. dow jones industrial average advanced 410 points to 24,601 capping its strongest two-day surgeince mid-2015. the nasdaq added 107 and the&p was up 36. of gains follow a heavy bout selling that dominated wall street over the past two weeks and there's still a lot of questions about the health of the wall stre bull. from antoli picks it up there. >> one of the sharpest market drops in years has stirred up a new debate on wall street. this is sply a needed pullback for stocks or a sign that the bull market mhtnd before its ninth birthday next month? and falling more than 10% since last's low point, the major indexes suffered the fastest decline in 80 years. whilejarring, the swiftness of the move actually supports the idea that this is likely a

painful correction rather than the start of a more prolonged bear market that wou send stocks down 20% or more. typically, a bear market doesn't begin so suddenly from a point of broad strength but developing over the course of mons as the market slows down and is supported by fewer and fewer stocks an sees a buildup in vo volatili volatility. the fact that economic signals outside of stocks have remained subdued is another hint a bear market has not begun. leading economic indicators and credit conditions have held up well since equities peaked in la january. this makes the market weakness look more like a quick adjustment inn expensive high momentum stock market to somewhat higher interest rates and rising inflation expectations. how long such an adjustment might take and where it might take stock prices is hard toll te. some traders took heart in last week's strong rebound which had some features of a prettyteood shor base for stocks. still, corrections tend to play out over a longer period than

just a few weeks. sioften they retheir lows to check whether long-termil investors step in to buy at prices. the key indexes slid back to levels since thanksgiving and are nearly flat for 2018. taken together the weight of the evidence suggests for now that this b il market not broken but jus. be for "nightly business report," i'm mike santoli. >> joining us to talk more about what might be in store for this market is michael farr, ceo and founder of farr, millon and washin good to see you, michael. >> thank you, sue. nice to see you. >> let's start with where mike left is the bull market broken or just bent in your opinion? >> well, it's certainly bent for 't haved i don't -- i d a sense that it's broken, though this has the stuff that could get us there. certainly, the volatility that we've seen, righ the algorithms that have had these really sharp swings, but i think

what we're seeing is this really change of menu for stocks. we have been feasting onin lorest rates for years. now the fed is changing rates and we're now finding our nourishment from capitol hill, from tax cuts and from a whole lot more spending. so it makes sense that this change of diet would be rough for stocks. it could get, i think, a little bit rougher still. this volatility today, up side volatility, 400 points, nobod minds up side volatility. it's down side volatility a breaking that 200-day moving average on friday would mean that we could probably go back have redit and still ink in our future. >> how does jerome powell, the new fed chief, thread this needle? >> he's got a very tough job, tyler. jay powell's a very thoughtful guy. i think he has to stick to his guns. think he can't flinch. previously over the last number of years when stocks would go, dohe fed, some fed governor

would step up and say, oh, well, the fed will be there or we're going to ease rates or do something. d has reversed their position. he needs to stand firm here. i expect a rate hike at the next meeting. if we have three rate hikes this year or four rate hikes, that takes mortgages over 5%. i think we really have a lot that we need to focus on herticularly on interest rate side of the picture. >> are you doing some buying in here on tse wild market days where we're down dramatically, michl? >> not a lot, no. we tend to get --'rs far as concerned, you know, the time to really get your house in order is before the hurricane hits. we had most everything we wanted in place where we wanted it. i have a shopping list, and i certainly have a couple of names i'd like to pick up on a little more weakness. think we're going to have time. >> so whatex are the numbers, economic numbers that you're going to have your eye on tell you which way this tide

turns? >> well, i think, you know, the biggest is going to be what the fed does. if they continue to hike rates. i think, you know, we were talking, tyler, you a i, with ron insana. he said pretty much we've seen bthe market pullk every time that ten-year treasury has gotten to 290. that's another big bellwethot. you'veo be watching cnbc and the "nightly business data." for the cpi is the consumer seeing any inflation? are we going to see that creep in? that comes out wednesday. >> you know,ch l, it's not very often that we have rising rates but also increasing stimulus in a bigio fa how does that typically play out or is there aal typ playout for that scenario? >> i'm not sure. yeah, sue, i don't know that we have this playbook exactly. interest rates going up and then throwing more gasoline kind of on the fire from the fiscal side of the house in tax cuts and spending programs.

so it's going to be tough, i o think, keep inflation in a bottle. i know that apl lot of p aren't looking for it, but i really can't see with this much de a how we getund inflation. i think we have to start seeing it. the real key for me is that we do begin to see earnings go up and some continued wage so the average american worker has some more money in their pockets to spend. american workers, middle veass, t seen wage inflation much since 1997. it's important we hav a healthy consumer if the gdp is two-thirds based on that consumer. >> michael farr, thank you so much, michael. >> farr, miller and washington. in washington, the trump administration proposed a $4.4 trillion budget for fiscal year 2019. the spending blueprint wou widen the federal deficit, would not balance the budget over the next decade. we have more on the white house's fiscal priority. >> the white house calling for big spending cuts down the road

as part of the budget proposal released today. the plan woulde red deficits by roughly $3 trillion over the nextus decade and over half of that money, 1.8 trillion comes from changes to en tlement programs, medica and medicaid, social security disability insurance and food stamps. the rest comes from cutting funds for discretionary programs by 2% aear across the board, effectively rolling back thate mass spending deal that congress just passed after it expires at the endf 2019. >> at the same time the budget reduces the deficit b over $3 trillion. this not only funds the president's priorities but puts the country on a path to f restorincal discipline. >> the president's budget is not a binding document but a vision statement of the administration's priorities. there's $18 billion over two years to build the border wall, $17 billion to fight the opioid epidemic and even a paid parental leave program. the white house says itses poliill juice economic growth to about 3% over the next

decade and that the ten-year treasury yield will top out at 3.7%. already democrats are slamming proposal. bernie sanders, the ranking member of the senate budget committee called it, quote, morally bankrupt and aransfer of wealth from the middle class to the 1%. meanwhile, fiscal hawks are worried that this doesn't go far enough. the d sicit wouldll be $363 billion in 2028. an that means even with big spending cuts and a rosy growth forecast, tlls budget s doesn't balance. for "nightly business report," reporting from washington. the white house is also turning its attention to today the president outlined a proposal to fick the nation's nd bridges, roads rails. that targets $1.5 trillion in investment much of that coming from the private sector and cash-strapped state and local governments. we have the details. >> with tax reform and a

bipartisan budget deal behind him, president trump moved on monday to hisext priority, infrastructure. >> to me this is a very, very sexy subject.ed the doesn't find it sexy. i find it sexy because i was always ail r. i always knew how to build on me, on budget. the president discussing the plan with 24 governors and mayors on monday at the white >> the states will have to do it themselves if we don't do it. but i would likep to h the states out, and we're doing that with a very big . investme >> the proposal calls for federal contributions. already it faces diverging views in congress on how to pay for it. democrats think thet governm should shoulder more of the an. >> it calls for state localities to put up more than half of the money. they'd haveha toe local taxpayers new tolls or raise taxes and other fees to pay for the new infrastructure. >> republicans, wary of

increasing the deficit further, want less. >> i'm about 200 billion or less. >> i actually think b-- but i actually think this will be coming from the private sector. a reform that can ensure investors that costs will go down. >> environmental groups worry streamlining the permittinges pr means steamrolling environmental regulations. ansiness groups support the bill. according to one estimate, private equity firms are sitting on $70 billion in unspent funds just for infrastructure. but one key stakeholders on the fence. president trump questions whether the private sector is a productive hirtner. complaint is all you do is end up in court. fort, "nightly business rep reporting from washington. meanwhile, infrastructure etfs rose after the president unveiled his plan, though the gains did the broader market

because of questions about that program's financing. opec says demand for oil will grow faster than expected this year, but it also sees supplies surging driven by an increase in u.s. production. american drillers beg pumping more than 10 million barrels i november. that's more than saudi arabia which is opec's top producer. the price o crude sits below $60 a barrel and is off more than 7% over the past week, but gas, prichey're higher, up 7 cents on average to $2.65 for a gallon of regular gas. time to take a look at esnight's upgr and downgrades. cisco's rating raised to buy from nutrans at net. the firm expects cisco to report prior than expected profit this year. it reports quarterly results on wednesday. analysts there raised the price target to $36 from . cisco rose 2.7% to $40.60. general electric saw its

price target cut at jpmorgan to $14 a share. the firm cites challenges to nd's businesses continued underperformance. the analyst reiterated his underweight rating onhe stock which he's had since 2016. shares of ge fell nrly 1% to .8 it was upgraded to buy at stevele. it expects that company to report solid quarterly results later this week. the price target raised to $91 a share. the stockne g 1.5%. lumber liquidators saw its rating cut to nutra to outperform at wedbush. the price target was cut by 30% to $28 a share. share of lumber liquidators fell to 24.49. coming upew proposals to lower drug prices, but will they work?

♪ the drugmaker purdue pharma will stop marketing its prescription painkiller to doctors. the painkiller oxycontin is at the center ofhe opioid crisis. the company is cutting its sales staff in half, leaving about 200 reprentatives in the u.s. who will no longer visit doctors to discuss and pitch opioid products. the decision to stop marketing the drug comes amid a number of lawsuits that blame the company for contributing to the opioid epidemic. the president has many times about sky-high drug prices, and in his budget proposal released today he mentioned specifics on how to get those cuts down.

>> the pricef prescription drugs was a popular campaign issue. >> if you get prescriptions for medicines that really help you,o it doesn't you any good if you can't afford to fill them. >> stand up to the greed of the pharmaceutical industry. >> they're getting away with murder. pharma. >> a president trump has embraced it since he was electea ng in his state of the union address that drug prices would be a top issue for his administration this year. for now trump's plans he been short on detls, but in his 2019 budget request some specifics mainly involvinghe changes to way medicare and medicaid, the government insurance programs, pay for drugs. the plan seeks to encourage use of less expensive generic medicine including eliminating out of pocket expenses for generic drugs for medicare ar beneficiies. for doctors to use higher-priced

drugs under medicare part b which covers medicine issued in the doctor's office. that's something trump seemed to endorse on the campaign trail but which his new health secretary hasn'tsupported. that would align azar, a former executt eli lilly more with republicans on the issue. healthcare investors fear negotiations impose priceco rols knocking stock prices of pharmaceutical companies. because that's notncluded in trump's plan and because many of these proposals would need to go through congress to take effect. analysts say it is unlikely to have a major impact o drug companies or on the rises prices on dhgs. unless b houses of congress take action, it will remain a campaign promise. so will washington be able to do something about the high cost of prescription drugs? hereo talk about that is

director of therapeutics and senior biotech analysts. welcome, good to have you here. you heard meg terrell's report, i presume, thatnded on rather down note of sort of frustration at whether washington will be able to come to any agreement on ways to lower drug prices.le are you as as she sounded? or are you more optimistic? >> it depends on one's perspective. investors will b quite released about what's come out of washington. ne've had three major documents come out the last three days or so. the budget last friday for 2018. we had a council of economicse ad report that came out also on friday with similar recommendation, then we had the budget proposal for 2019 that came out today. there's some consistent themes coming through which the drug industry's going to be fairly relieved about. there's a real recognition of the value of elnovation.

asas the burden of that on consumers is and discussions on some ways to t relievet burden but not anything that's terribly concrete in the future that would allow investors in drug stocks, which is why we're probably seeing a little bit of relief there today. t >> do younk that the ultimate solution comes from the government through legislation, through changing laws or does it come from the private sector? i'm thinking of that unique group of bezos, gates and buffett who announced a couple weeks ago they're going to get together and use technology to try and lower prices. which one do you think will w out, private sector versus government? >> certainly the policy of this admistration is very much t favor the private sector initiative and it's probably 18 months since we've heard serious discussion of federal government regulation of drug prices. the truth is we're seeing eeange. we'reg manufacturers take small price increases, we'

seeing more product launches that ku dercut the existing products in the category. those are encouraging signs and that's coming through the private sector. and the fda is acting as an agent and working to bring prices down. the market is applies a fair ount of discipline to drug manufacturers. if that trend continues what'ly prob 1% to 2% rate of growth could become flat to negative in the next couple of years. >> are these companiesoing this because they fear government regulation or they fear that the government will greenlight the ability of medicare to negotiate prices? >> there's a certain amount of not wanting torovoke the tiger in the actions of the industry, but with such a large and fragmented industry, there are always going to be individual companies that break ranks and takesi exc price increases. and they tend to attract all the attention. but for the really huge products, 10, 15, $20 billion

products, those price increases are slowing because of competition. they're not slowing because of fear about regulation. >> jeffrey, thank you very much for your analysis. >> thank you for having me. general dynamics beefs up its i.t. business in a nearly $7 billion deal. that's where wetoegin ght's market focus. the defense contractor said it was buying governmentontractor cfra for just under $7 billion as it looks to grow its information technology business. general dynamics said that deal will allow it toor provide cost effective services to the various government agencies it serves. shares of general dynamics were off 1% to 209.53. csra soared to $40.39. broadcom has lined up $100 billion in debt financing to pay for its hostile takeover bid for qualcomm. that ups the pressure on t board.

broadcom's ceo calls his offer for qualcomm compelling. >> qualcomm shareholders better today than they were four years ago? answer, no. they're 11% lower. they're 500% richer. we are very good at creating, building sustainable businesses and employment and innovation on busisses we acquire. >> shares is of qualcomm rose, broadcom was up nearly4%, 244.40. apparently peoe were eating up those value meals and new menu ems at burger king. restaurant brands reported higher sales. the company reported better than expected earnings and more than doubled its quarterly dividend 45 cents a share. the shares rose 6% to 59.95.

it got a little more expensive to visit disney theme parks. ompany will raise ticket prices for its parks in florida and california ding peak times. a family of four with two children can now expect to pay just under $530 for a single day of activities. now, disney said t price hikes are meant to spread out the number of visitors it seesug thut the year and not have them concentrated at the peak. disney r sharese 30 cents to, 103.39. ulta is the subject of a class-acon lawsuit. alleging it sold used cosmetics and alongsid never-opened merchandise. ulta has responded saying the health and safety of its customers is top iority. it plans to vigorously defend itself against the allegations. and the railroad operator csx raised its quarterly dividend 10% 22 cents a share. the company also lifted its

share buy-back program to 5 billion. shares finished up 4%. > comingup, how a 5% mortgage rate market.il the housing ♪ ♪ amazon is repordly laying off hundreds as first reported by the seattle times, the cuts are focused o its seattle headquarters and are meant to reduce layers of managemt there. the layoffs will allow resources to be shifted to fast grong businesses. amazon says this is all part of its annual planning process.

one of the world's biggest advertisers is threatening to pull its money from onle platforms. unilever is calling on companies like facebook and google to do more to combat the spread of hate and divisive content. the company says it will only invest in responsible platforms that are committed to creating a positive impact on society. unilever, which owns brands like dove and lipton as well as ben & jerry's has an annual marketing budget of about $9.5 billion. the housing market may be in for another surprise perspective. homeowners are already dealing with a low number of homes er sale. now mortgage rates are rising. some say it can reach 5% in the not too distant future. diana olick has more. >> mortgage rates are at the highest level and poised to move eyeven higher. oosely follow the yield on the ten-year treasury which is up again today. the timing couldn't be worse. the spring market really jt

started early this year because of strong competition for a record low supply of homes for saleat the average on the popular 30-year fixed is now right around 4.5%, still low historically, but buyers over the past six yea have gotten more used to rates in the 3% range. mortge rates have not been at 5% since 2011. a 5% rate would cause more than a quarter of home buyers to slow their plans. just 6% said they would drop their plans to buy altogether. about one-fifth of consumers said 5% rates wou cause them to move with more urgency to purchase a home feang rates would rise even further. another fifth said they'd nsider more affordable areas or just buy a smaller home. raers have been volatile so they could drop again. the trajectoryor the year is higher. i'm diana olick in washington. to read more about what a 5%

mortgage rate could do to the housing market, head to nbr.com. before we go, here's a look the rally that's starting this week out on wall street. cethe dow adv 410, to 24601, capping its strongest two-day surge since mid-2015. the nasdaq added 107. s&p 500 was up 36. that does it for us i'm sue herera. thanks for joining us. >> thanks for me as well. i'm tily mae tyler mathisen. you back here tomorrow night.

>> this is "bbc world news america." fu ing 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 crystal blue caribbean sea. nonstop flights are available from most major airports.