> this is "nightly business report" with a sue herer bill griffeth. >> the economy isoing very well. most people who want to find jobs are finding them and unemployment and inflation are low. >> and with at, the fed raises interest rates and policy makers signal more to come. what thishe means for economy, the stock market and your money. employee perks. health care costs are rising but passing those costs on to workers is the last thing companies want to do. >> carving up california. a billionaire venture capitalist dream just took another step forward. those stori and much more tonight on "nightly business report" for this wednday, june 13th. >> good evening, and welcome. the fe interest rates for the second

time this year and isimg for another before the year is out. somewhat mor aggressive stance than it previously signaled and e central bank in the economy and the fed chairman describing the economy as beinge robust, wlso acknowledging that inflation is inching higher. steve liesman is covering the report from was >> a new range of 1.75 to 2% and esignals further r hikes ahead amid what chafed chairman said. >> household surveys nd businesses, confidence is high. if you ask the workers about the job market, they'll say it's a really good environment to find joey. su businesses, and say the workers are scarce and alov we have a really good economy on

our hands here. what we're doing is we areo trying conduct a policy in a way with the expansion and keep the labor market strong and inflation right at, sorry, not above, but right at 2%. >> the fed believes the economy is strong enough d w to withwit withstand additional rate hike as soon as this year. the fed took over in february. >>chair, i hope to foster a onversation about what the fed is doing to support a strong and resilient economy and when practical steps in doing is to have a press conference like this after every one schedule meetings. we're going to do that beginning in january. that will give us more opportunities to explain our actions and to answer your questions. >> taking a s wait and approach on how much fiscal poli boosts the ecomy.

said it would provide significant demand but uncertain if it would change supply of labor or investment. that could boost productivity and the economy over the long-term. business leaders indicated the fed officials concern about trade policy and some suggest it could be holding back investments. showing us to be a chairman and answer our bquestions, to do so in fewer words than his predecessors. and one sign of that, the fed's policy statement now down to just a single page for the fst time in quite a while. for "nightly business report," i'm steve liesman in washington. >> by the way, the latest report on wholesale prices supports the idea that inflation isirming the producer price index this morning which measures the prices businesses receive for their goods and services rose by 0.5% in may from a month earlier in part because ofen highegy costs. that was more than expected, by the way. on an annual basis, index up

3.1%. biggest increase we've seen in more than six years. this repor follows the strong consumer inflation data that we told you about yesterday. let's talk morbout the fed's policy decision and what it means for your investment strategy. we are joined by albion financial chief investment officer jason ware to talk about rising rat and inflation. nice to have you here. >> thanks for having me. i >>hink almost everybody expected the move today by the fed. the june increase. but what's your opinion about the fact that the market should now be prepared for a total of four rate hikes? >> i think despite theonsensus discussion today about this being a bit of a surprise to markets, the mket has done pretty good job over the last few months of trying to price in four rate hikes. if you look at some of the volatili we've had this year in the equity market, one could, i think, make a pretty strong argument that part of the volatility has been a function of just that. the market grappling with this

notion of, is the fed doing three or four hikes this year? i think t g marketng into this meeting priced an equal probability of four vsus three getting more clarity now with the four between now and the end of the year. the markets took it in stride, i would argue, today. >> where do you stand on inflation right now? i mean, clearly, these latest reports we've been getting on wholesale prices and retail prices show inflation is creeping ever higher. are we going to be paying much more dowhe road and do you think the fed behind the curb on that? >> i think the fed has a pretty good gauge on where ighlation is now. if you look at core inflation, , he fed's preferred measure under 2%. cpi is around 2% to your point about producer price inflation, that's been running ahead of consume prices for some time now for a couple of s. and we haven't seen that feed

into consumer prices in a way that one might expect. there's a couple of reasons for that, but the way we look at ppi is today's number was, like you said, best consensus was h b on a headliis, meaning energy had part of, a pretty big component to that beat but we look at core pp it's not suggesting any kind of a tear on inflation. a good the fed h handle on where things are and really, the components that make up inflation, that is, rising wages and looking at the global output gap, that is, where global output versus where it could be, potential output, thingsi things looking pretty balanced right now. it's fair for now. >> one of ths thihe chair mentioned and also that steve mentioned in his report is the uncertainty surrounding trade and possible tariffs and what the impact might be on our economic growth and our economic progression. how does the fed factor that in?

because there's so much rhetoric coming out of washington. it's hard to know exactly where we sit. >> yeah, it is. p and mr.ell mentioned that today. quote unquote, they want to stay in their lane on some of these issues. i don't think anyone really knows how the potential for a trade war could impact the key metr to now which is inflation. if we saw an escalating trade war, t idea that rising consumer prices from that, i think, is somethingt t we could expect in financial markets that would begin to price into inflation expectations. right now, long run inflation expectations are made unchanged at the fed as far as they're concerned and that informs their decisions on how they want to impact monetary policy over the short run. so i don't think they're taking a big stance on what they think trade could do, but it's something market participants an economists are watching very closely. >> indeed, jason, thank you s >> thank you.

>> jason ware with albion financial. a little bit latere hogram, we'll talk to sharon epperson aboutow those rising rate will impact your budget. meanwhile, late today, a big story. comcast made ail65on all cash offer for some of the sets of 21st century fox. lhat bid nearly 20% higher than all stock propo for the same fox assets that disney me last december. question now is, will to top comcast's offer in this brewing battle that occurs astr itional media companies are trying to better compete with the likes of a netflix. comcast proposal to take over time waer. imagine media and telecom stocks rose for more merger activity in the sector and wasn't enough to lift the broader market under

pressurefter the feder reserve rates interest rates. so when all said and done, the dow jones fell 119 points. 25,201. the nasdaq which set a newigh was down 8 and the s&p 500 dropd 11. >> oil prices turned higher today as supplies fell more than expected. a government report pointed to a bigger than expectedecline in domestic crude supplies. it was, in fact, the largest one week decline since march but oil praie were capped after a separate report fnem the ey information administration showed an increase in crude production. we had conflicting reports there todayut domestic crude rose to at moreek high settling than $66 a barrel. the white house trying to ock congress from derailing its deal with china's zte. e agreement allows china's second largest telecom company to rume doi business with american suppliers. but it is evident that the mpany is still reeling from

the temporary ban on the supply of crucial parts. eunice yoon is i beijing. >> reporter: zte shares fel 40% in hong kong wiping $3 billion off the coany's market caps. investors punished the stock,d worrbout the hefty penalties they'll have to pay as part of the deal toet the u.s. government to lift a ban that blocked it fromn buying ameri components. zte was being penalized for u violatin. law but the trump administration worked out a deal to keep the company in business. one analyst told me the fines are huge for zte. the current and previous finad up to $2.3 billion, the rsequivalent of three yea of profits. investors are also worried about survive.f the company will senior management needs to be overhauled within 30 ds and the deal might fall apart altogether because congress is

trying to block the rangement. commerce secretary wilbur ross attempting to sell the deal t skeptical lawmakers but fund managers here are not feeling optimistic about the zte prospects especiallh the trade relationship with the u.s. forbu "nightly siness report," i'm eunice yoon in beijing. >> some of the upgrades and atwngrades. we begin with , their rate was cut to sell with nathanson, a day after that deal that required time warner to be approved. the at&t dead load postmerger. $28. the stock dropped 6% to $32.22. square shares dograded to neutral with buckingham research and cited t stock valuation after an 80% gain since the bef nninge year. price target, $65. that fell 1% to 62.5. >> hershey shares downgrade to

underperform from neutral at credit sleek. the shift with online purchasing reduced the number of impulse ys of hershey products. price target $80. shares of hershey fell to 91.22. netflix pri target raised to $490 by goldman sachs making it the highest t pricedget on the street. the analyst said netflix content offerings rult in better than suspected subscriber growth. maintains the rating and gained 4% to $379.93. why the tight labor market may cput a cap on your health care cost. germany fined volmowagen

than a billion dollars over that diesel emission rigging scandal. it is one of the b fines, by the way, ever imposed on a company in germany. volkswagen will not appeal t fine a hopes this penalty will help the automaker move past the scandal. large employers for years managed rising health care costs by shifting the burden to their workers. but employers now say that is no longer an option. they're rethinking employee benefits and you can thank the tight labor market. bertha coombs has the details. >> reporter: atlsytic health em looking to lower its health costs by joining with other new jersey hospitals on a new pla for their combined 50,000 workers. >> how do you drive out unnecessary utilization while maintaining very high qu we've got a lot of experiences with that. so what we're tryinge to do h is take those best practices and ply them to our own workforce.

>> reporter: they hope to put the savings towards wages.ni >> the oppor for savings here allows us to really put more in our employee's pockets and continue to be a very effective employer in that regard.he >> reporter:ight labor market is making a lot of large ems rethink the health plans for next year according to researchers at aspwc. >> wed, what are you doing in terms of strategy for the future and last year,th a lot o were going to go full replacement, high deductible plan and really backedoff. >> reporter: large employers expect health care costs to increase another 6% i 2019. many plan to focus on tighter medical network and drug plans to hold down expenses, but most aren't planning to raise deductibles or cos sharing. >> we think that's because they're worried about the labor market being so tight, so kind of staying exactly whe are.y they're not shifting costs to employees. they're kind of absorbing it. >> reporter: like the health

venture with berkshire hathaway d j.p. morgan, they' hoping to leverage data and digital tools to make usingin health rance easier for their workers. >> this gives us an opportunity to really prove to ourselves and then prove to th local employe markets that we can kind of develop something that's different. >> reporte amazon berk shi hath re hathaway and j.p. morgan plan to finalize this june so they can roll it out for 2019. open enrollment. new jersey. >> smallan cos. the industry, a professor at northwestern kellogg school of management. cut to the chase here. as sue mentioned earlier, companies for years are shifting thbu en, the financial burden to its employees. but with this tight labor s

market, d that mean the burden is going back to the companies and we pay a little bit lessr more steady premiums because of the tight labor markets? >> i think so. it's good to take a step back and think about what health insurance from your employer actually isll it's r just a form of mpensation so when the labor market isn't particularly tight, they can shift that to employe but when they're competing for workers, they've got to think about it like the cash salary they give you. they're not as able to sort ofr the employee to pay more. bear more of the cost for themselves. >> how do they do what is the bottom line impact? because health care costs, it's a significant bottom line ite for a lot of companies and especially small companies. how do they account for that? how much does the public market work into that? >> so i mean, you want to think about this in the same way they think about giving a raise to an employee inig a labor market. what we're discussing is the nature of te compensation t we're going to give to employees

aen the labor market is tight or toract them. i can give you some cash. i can also give you a more generous health insurance package.ll yoind some mixture of that to be attractive and work for me as opposed to one of my all we look at here.lt the real diffi in some ways is when health insurance costs go up rlly fast and they've got to figure out sort of how do i lower the value of that package as opposed to cutting your pay. people don't like that pay cut. >> will the health insurance costs continue to rise that much if it becomes more competitive market? if i'm an employer and i need to y my employees better health care coverage provided, i maymeo ere else if i can get a better deal. >> i think employers are alw looking for what's the bestne ct t calculation from their health insurance, so if i think that my employees are willing to package, sser valuable

i'll do that and then depending on the nature of the labor market, have to give money in cash or let them go to one of my mpetitors. this is all about a competition for employees.e biggest misconception we have with health insurance from our employer is they're giving us health insurance. they pay you compensation with the value you have for t and now with health insurance benefits. >> who is this going to squeeze the most? obviously, the employee is going to benefit fm it to a certain extent but is it the mid sized coany or the small company? who do you think is going to get pinched? >> i think it's going to be the person with the least t abili negotiate health insurance premium and probably smaller firms and it's s going to bet of start-ups and entrepreneurs and things like that. one thing we'veed learom the past four years is that

americans really like their employer provided health insurance. it's a quite popular program and that's why we haven't people go to the obamacare marketplaces. the result of that is large employers have a really big ebenefit. becahey get the best deal on health insurance and they can offer that to employees at the best >> craig girth, thank you for joining us tonight. >> thank you. >>o read more about health care and labor markets, read more at nbr.com. caterpillar said would hike dividend by 8% to 86 cents a share. with the increase, the yield on the stock more than 2% but investors didn't share the news. they sent the shares down nearly 2% to 154.71. earlier this week, we told you the bostond scientific approac by striker, its rival, about a potential merger. today, striker said it was in

fact, not eaged in any talks with boston scientific regarding a deal. rose to 166.60. meanwhile, shares of boston scientific fell6% to 31.73. madrigal pharmaceuticals considering selling itself after takeover interest from drug makers looking at its . treatmen bloomberg reports that madly l is working on potential sale and shares of the company climbed10 to finish at $313.24 and then after the bell, tailored brands reported higher sales and profits but the stocks still fell. tseph a. bank said new customers began shop at locations and helped the same store sales edge higr but maintained the outlook for the full year and it seems like investors wanted more shares were down sharply in initial after-hours trading.

finished the regular session at about 3% at 33.45. will california, t world's fifth largest economy be split into three? th a's the questionot of people are asking and a question they'll have to answer come november. now that plan has earne a spot on the ballot. the man behind the campaign is the venture s capitalistd dividing the state would lead to better infrastructure and better education. robert asked californians if they're ready to split up the state. >> this is going to be on the ballot in november. >> wow, that's stid. splitting the state three ways, some wonder why. >> if it's not broken, why fix snit. >> ioo it big? >> hard given the resources we have. >> voters answer the qstion in november. should there be a northern california with san francisco and sacramento, a southern california, stretch g from fresno to san diego and then the state of california fromnt ey to l.a.? >> i don't like the idea.

>> i kind of lik . >> this is the california three facebook page and the man behind e movement. a silicon valley venture getting t and some are behind his idea. >> yes. i live in the central valley. >> martin from bakersfield. >> we've got to have a voice somewhere. people in the rural area have the same voice per capita as urban area and you realize it would be really to the great detriment. >> plenty of time to navigate this new map. >> i see how that could make sense but i personally don't like that at all. and also, 53 statesn d sound good as 50. >> if the voters do say yes in november, congress would need to approve it and in case you're wondering, the las time a state was divided was in 1863 when west virginia split from virginia. coming up, why your budget likely feels the impact of the terest rate hike.

the number of americans applying for n mortgages fell. a 1.5% decline from the previous week. applications are down 15% from a year ago and mortgage refinancing demand was also wer. so we begin our program by telling you about the federal reserve's decision to raise interest rates today and we look atp tonight with a what higher rates could mean for your budget and to do that, we are joined by our personal finance correspondence, sharon epperson. so where do we see the first line impact on our budget here? >> when you look at what you're paying in the interest on various products, let's start with credit cards. you're going to see a significant imalct. st the same amount of impact

we're seeing in terms of the fundse've seen in the fed rate. look at what's happened to credit cards. look at what happened to auto loans. auto loans not as great an increase because we aren't seeing that tied to the short-term that funds rate and then of course, the bill that you really need to pay yourself to your month for savings, that's not really at all. >> why does it always work that way? what shoul people do right now because if the fed may have twot more interest hikes in their pocket, what should they do now? >> we look adthe average c right now near 17% at a record and it's going to continue to go up, so you need to know what your credit card rate is. many borrowers have no idea and important to know that rate to know how you're going to budayt to down that rate as well and see if you can get a lower rate whether it's your credit rd or maybe some other adjustable rate on the adestable rate mortg or home equity line of credit and lock in a lower rate and focn

that variable rate debt because that is the debt that's going to continue to rise. you always want to try to get a fixed rate loan if you c but if you talk about variable rates, that's what you need to pay down first. we laughed abo the savings rate number. it's not going up all that much but seriously, what can savers do to try to maximize their returns here? >> once you've paid down this debt and starting to pay down your debt, you want to put that money towards savings because you need that emergency fund and you can't get more money. you need to shop around. theverage bank savings rate hasn't increased that much but online banks offer much highe a ra you may get a rate there of close to 2%, short-term cds, just one year. tying up your money in a certificate of deposit and 2.5% to give you a better deal too but somemes, the don't always last that long and make sure whatever rate you get on the savings is really going to last you as long as you need to. always.on epperson, as thank you. >> my pleasure. >> see you later. >> before wenogo,er look

today on wall street. dow fell 119 points. theasdaq was down 8 and s&p 500 dropped 11. and that isnightly business report" for tonight. i'm sue herera. thank you for joining us. >> i'm bill grrefeth. have a evening. .

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