this is "nightly business report" with sue herera and bill griffith. ♪ >> surprise appeal. the government isk going b after at&t's acquisition of time warner, putting the $86 billion deal back in the crosshairs. odd gettogether. chipmaker broadcom goes after a software company and many are wondering why. >> great expectations. banks get ready to report earnings, but will the result end the slump in that sector? those stories and much more tonight. >> oh, yeah. >> on "nightly business report" for this veryusy thursday, july the 12th. >> geepood evening, everyone. buckle up, a lot of news tonight. a blockbuster appeal follows a blockbuster deal. the justice department is going back after at&t's acquisition of

time warner appealing a judge's ruling last month that allowed the merger to proceed. the $86 billion deal was closed a short time later, but it could w face anotheround of legal from seedings. shares of at&t came underni pressureally lower in after-hours trading and jia boorstin is covering it for us from sun valley tonigse. good t you, jia. basically, did anybody see this coming? no, sue. nobody saw this coming and it was particularly shocking because it's been a month since judge leon gave his pretty sweeping decision in favor of this deal and favor of this type of deal, really eliminating a kind of question about whether it would be appealedy especia because not eliminating a question about when it would be appeal, but the real surprise sue is because the justice department decided not s tok an emergency stay who in the past month these two companies have moved forward with their combination and this appeal

mes a month later and it's definitely a surprise. dthey haven't revea what grounds they are basing the appeal on, but what doest&t say? have they responded yet? >> at&t is rponding and the court's decision could have been more thorough and afact-bas well reasoned and the losing party in litigation always has the right to appeal and we're rprised that the doj has chosen to do so under these circumstances and we're ready to .cfend the court's decision in the circuit court of appeals and bill, you're right. we don't have any particular details on the ground of appeal and we would assume it's some fat of the original ground of the suit to block the case which is antitrust grounds a judge leon did rule that the grounds put forward by the doj in their old int didn't really this circumstance. >> in the meantime, there have been other deal aivity in the media business since this was

soproven. of it was predicated on the at&t time warner deal, and i think of comcast bid for parts y fox. what happens now, think? >> well, that's exactly right. comcast made its bid for those foxme enterta assets that disney had already bid for as so as we heard the ruling on this deal and the judge's decision on thisim at&t warner deal, and they felt confident moving forward with their bid for fox's assets because the judge's decision was so definitive and comprehensive. they felt that this indicated that comcast would have no problem gaining regulatoryov ap. it's worth noting that disney has already gained regulatory approval for its bid for fox. so we'll see if this pacts comcast's decision about whether or not to go back and get b anothe. >> a lot of balls in the air, certainly. julia boorstin, thanks for covering it for us live from sun valley. >> the justice department is apparently not going to

challenge cvs' acquisition of etna. the drug storage chain said it would buy the insurer for a9 billion i deal that is designed to reshape the health care business.ep today'st sent shares of both etnand cvs higher. meg terrell takes a look at what the combined company might look like. >> cvs and etnaou aed their planned $69 billion merger in december, but a q bigstion for the closing has been antitrust coearance. the two any's businesses don't significantly overlap and it owns a drug benefit manager while etna is a health insurer, they do have some areas of direct competition sfically in the sale of drug plans to medicare beneficiaries and the beneficiary would capture more of whatnd consumers s on health care. cbs ceo larry merlot has alytics combined with the customers and says more locatis will off new health

services. cvs has minute clinic walk-in, and one concern around the deal, though is whether it could limit patient's options for where to fill the prescriptions or getca . the shares rose on potential regulatory approval. etna shares aren't tradinged vat $202 a share. for "nightly business report," i'm meg terrell. in the uk, fox got approval to buyky, the green light removes the last hurdle for fox as it competes with comcastor the british broadcaster. the approval came after a long, rery review. last night we reported that fox sweetened its offerky for with comcast following just hours later with a highe offer. now the other big deal news of theay was broadcom's nearly $19 billion acquisition of software compa ca technologies and this takeover was not expected at allecause it takes the chip manufacturer in an

entirely new direction and that may be why shares of broadcom fell nearly 14% today as investors struggled to understand theionale behind this purchase. meanwhile, ca shares soare by 18%. aditi roy has more now on this rather headscratching get together. the deal baffled many wall street analysts. reaction was swift as analysts questioned why a semiconductor company is buying a software firm. >> this has been their playbook for the last ven, eight years, but you know, that's not what i think instors want, if you go just to put things in context if you go down about a year ago, broadcom tried to buy toshiba's memory business, very typical and they went after qualcomm very aggressively and so much so they redomiciled to the u.s. to make that deal happen. that didn't go through and nowi they're b a software company, and i just think it's -- what you're sing today

is the straw that broke the camel's back. >> scratchinghi my head and we are left a bit perplexed and expect investors will be, as well. this deal runs completely against the investment narrative thaten manag has been articulating since their a toechatempt to buy qualcomm. it was obstructed by the trump administration which citec national sity concerns since broadcom was headquartered in singapore. broadcom moved its head quarters to san jose, california. despite the move to the s., some analysts say the deal could ill face regulatory scrutiny. despite those potential hurdles, analysts at jefferies are bullish on theon, arguing that while the deal is a stretch from broadcom's corebusiness, pointing out that it is still consistent with the chipmaker's stragy of acquiring out of favor market leaders with high-cost structures.

analysts at suntrust also pointed out that only two of broadcom's last five acquisitions were semiconductor ies and one worked with enterprise storage. for nightly business report, i'm aditi roy, san francisco. >> nasdaq closed on a record as tech stocks rallied and the broader market bounced back fro sterday's losses. the dow jones industrial averagd nced 224 points. the nasdaq was up 107 and amazon facebook closed at all-time highs and the s&p 500 gained 24. to the economy now where we learned today that consumer rices rose at their fastest pace in six years in the 12 months ended in june, the consumer-price index increased by 2.9%, the biggest annual gain we've seen since early 2012. month over month, the index edged up by .1% as gas prices mincreaseserated and apparel prices fell and for the second straight month the annual

inflation rate offset hourly nftes. >> withtion on the rise we wanted to spend a few minutes on what you should do to inflation-proof your inflation kirtfolio. we've been t about it for a couple of days now and we tackled it last night and chris cordero is the chief investment officer at regent atlantic. good to have you back. >> thanks for having me. >> it's been a while since we had to talk about inflationing proofing the portfolio. >> it is back and certainly the inflationgust increas naturally and also the threats of a trade war hav -- it will just increase prices and if we get less g and if we have to rely just on u.s. manufacturing, inflation is a real concern going forward. >> we asked what kind of stocks you would look for to inflationproof your portfolio. a couple of them seemed defensiveere in the energy sector and the banking sector, for example. >> in e energy sector, kinder

morgan which is a pipeline compt'y, so t -- we'll still need to heat our homes and we'll still nee power plans and so that's a great, defensive stock. bank of america financial, i think, if inflation increases, the fed will need t keep increasing interest rates and the fed has two mandates and inflation andmployment and if inflation starts getting more out of control and we'll see the fed increasing rates more and profits fromn into the bank and that we think, is a good play. >> before we go to the stocks to avoid the last one on the list is google and it's basically tariff proof. >> exactly. google is selling advertisements and information and so you can't place tarif on that and also the other part of it, too, is google doesn't do a lot of business in china so it's a good way to stay away from chin as well. >> the stocks to avoid. >> now you have nvidia a tesla, which i think is interesting, but amazon.

why amazon? >> what i'm looking for is i'm looking in all three stocks, stocks selling at very rich valuations. >> okay. >> and have a lot of exposure to china. that's where i see the biggest risk inflation heats up because of a trade war and any time you have a little bit of disappointing news in an all-star stock, you will likely see a very big decline. >> great to have you here. >> great to to be here. >> time to take a look at today's upgrad andowngrades and we begin with netflix which was downgraded to neutral from buy at ubs. the analyst there cited the stock's valuation citing a 35% run-up since third-quarter earnings were released and the price target now $425, that stock fell 1% to 413.50. amazon's price target to $2,000 a share. the analyst says that amazon has nge most robust and durable

growth right now a the group of so-called fang stocks and those include facebook, amazon, facebook and google. the f cm alsoes amazon's size and scale of investment. 2% to ck rose another $1796.62. sony was named the best idea long at heji. the analyst says the stock is set for arn ound after more than a decade of losses and the firm sees the shares rising 35 to 55%. the stock rose to 52.21. >> still ahead, why the tray silence tos deafening. ♪ ♪ >> >> admittedly, it was relatively quiet on the tradeew front and

developments out of washington or beijing, but it may be the silence t tt's sendinghe biggest message right now. eunice jung has that story. sflo the prospects of a good resolution to the trade war does not look good. the two sides aren't talking to each other and that china has ar't reached out. at a regular press briefing the ministry said the premise ofio negoti is mutual trust. there's no communication on re-startingnegotiations. when asked about china's next step, the spokesperson wouldn't say. other than that, beijing is in the right to fight what it believes would be an unjust move by the united states. eamerican companies h have been concerned that china will chooseh to pun them bogging them down in paperwork or encouraging consumer boycotts as they have in the past to penalize other countries. china has been cautious andhe can take on a different tactic, perhaps because its own economic strength is s dependent on

america. instead, china appears to be offering a better market access to the u.s.' economic rival. st this week, china approved a $10 billion facility for german chemical company vasf, their who wholly owned plant in cna. china wants to keep foreign investment coming in or risk losing factories or jobs. in fact, at the briefing the ministry he ministry held up tesla's announcement in shanghai as an achievement, it said, an example of china's openness to u.s. investment. the ministry added that china was sorry american companieske e and ford could be hurt by the u.s. tariffs and said that these companies should take up any complaints to the trump administration. for "nightly business report," i'm eunice eun in beijing. >> the president reaffirmed u.s. support for nato.

shortly after forcing an emergency session, nato allies made unprecedented commitments to increased spending. >> yesterday i let them know that i was extremely unha with what was happening and they have substantially upped their commitment. >> other leaders have reportedly denied that nato mbers had made any significant, new coedit ams suspe beyond what they agreed to in 2014. nonetheless, shares of northrop grumman and l >> the president then made his way to england today where he attended a formal dinner with uk prime minister theresaay and various u.s. businesseaders. steve sedgwick is in london for us tonight. u.s. president donald trump has gun his first official visit to the united kingdom sin he became president. very interesting series of events over n thet couple of days including a dinner with

dignitaries thursday evening at the birthplace, of course, of winston churchill, a man who created the relationship phrase between the uk and indeed the united states. onderiday the pre will be having key bilaterals with the uk prime minister thereay. theresa may, of course, under a huge amount of pressure over brexit and the resignationhis week of boris johnson, her foreign secretary said she'd be for a win and trade deals potentially and indeed on defense agreements, as well. thereafter the president will be visiting windsor castle to speak and have tea with her mangesty queen lid beth the second. >> the visit, of coue, a very controversial decisions of protesters throughout his visit in london and around the united kingdom including a very large march of over 50,000 people, we are told, taking pla on friday in central london.

for "nightly business report" this is steve sedgwick in lond. >> higher fares helped delta get past expectations. that's where we begin in tonight's focus. it flew more passeers this arter and that helped offset a big rise in fuel costs, but the aiine did say it will have to lower its yearly profit forecast andeliminate s travel routes and hike prices even more to combat its growing fuel bill. overall, however, delta said that its long term outlook pretty much remains unchanged. >> we had a reall solid quarter. in fact, it was very strong. $12 billion in revenue and it's the highest revenue in the second quarter and in the month of june we had six of the busiest days in delta's history. while fuel prices are up and it's causing some short-term pressure on earnings, t long-term outlook is very strong and more people than ever are flyingtaelta. >> d shares rose more than

1% to 50.73. l brands said sales disappointed last month at its victoria's secret business. fewer customer visits caused it to cut prices to the merchandise and that led to weaker margins. shares fell to 12% to $34.32. a follow up on the story we told you aboutast night. papa john's founder has resigned as chairman after heit ad to using a racial slur on a conference call back in. m last night we referred to him as ceo, but he stepped down from that pition in december. shares of papa john's finished up 11% to 53.67. walmart i reportedly weighing on whether or not to keep its current credit cardr. part that would be sink ronny financial or to go with new contender capital one. bloomberg says whoever it is, the retailer wants its partner to help it expand into the nt spaceay shares of walmart, capital one

and sink ronny financial were all lowern this news. sink ronny was down the most today. and the ncc is reportedly launching a broader investigation into whether as faceboqu aely users that it could be used such as lycambridge aca without consent. the government wanting to understand how much facebook knew about cambridge's handling of the data. is up to 206.92. >> a st. louis jury has paid $500,000 in damages to more than 20 women who sued j & j alleging the talc based products contained asbestos and caused ovarian cancer. j & j has faced multiple trials that its talc products caused cancer and this was the largest award. several awards have been erased on appeal anj & j doe continue to deny the allegations. shares rose 1% today to $127.76.

and late today share of mcdonald's fell on the report of the illinois department ofit health thas investigating illness to eating mcdonald's salads. the iowa department of health has also opened a similarst ination. you can see the stock drop here on late today. shares rose a fraction though during the regular session to 159.12. earnings season gets under way in ernearnest when a handfuf banks relea qrterly results and while expectations are high, that's not necessarily the case with the financial sector and leslie picker>>xplains. what could it take to restore investor confidence in banks again? that's the key question ahead of report from j.p. morgan, wells fargo and citigroup all outow tomo morning. the sector has declined about 15% since reaching its year to date peak at th end of january. analysts say the bar is low to

impress the market. goldman sachs wrote in a note this week that earnings simply have to be, quote, good enough meaning they really just need to post numbers that are in line with wall street's estimates. they show the president and c of kbw says he's optimisti about what the earnings growth reveals. >> think the market will generally like what they see and they'll see good revenue growth and goo expense control and they'll see improving the interest margin and i think the fundamentalsn the will be intact. >> and the bullish case centers around the federal reserve and itse potential to h rates twice moreha year higher interest rates are helpful for bank because they're able to earn mor on the deposits they roll. they're waiting for the impact of tax reformck to t down to businesses which will then seek more loans from the banks. to be sure, there is some concern that banng ear have peaked and that the tarde

could cause economic growth to decelerate and that caused bank stocks to underperform by 4% this year. amid the decline banks have a high likelihood of a positive surprise. for "nightly business report, i'm leslie picker. >>av karenaugh joins us to talk about the second-quarter earnings expectations. she's senior market strategist withen moya inves management. thanks for joining us tonight. >> thank you for having me. >> certainlyti expecs are high pretty much across the board for all of the s&p sectors, but nowhere they stronger than in energy. very strong. >> absolutely. >>he right. >> remember, energy, the earnings really get when oil prices went down and they've recored nicely and energy will be the biggest gainer in terms of growth in the secon quarter and technology is also on that list with a gn, significant double-digit gain as is materis.

>> right. technology has been there throughout all of the uncertainty over the last couple continuers and it wi to be a good earner, and materials also, remember, we saw prices spike and so some of the material companies, as well, but overall we're expecting good earnings across the board. ch some of the laggards and utilities and telecom, they're stillositive earnings. >> we can show that the lighters are all gainers and real estate is on that list, as well. so i guess this is indicative of a strong economy rig now. is sth >> despite the trade concerns and there are a lot of concerns out there, the macro economic environment is still very strong and all of those concerns about trade hen't really filtered down to actual earnings yet so q2 will be a very strong quarter. >> we talked earlier and leslie picker's report reflected the fact that some of the and the street is a little bit worried that they won't come in as strong as expected, b you seem to disagree with that.

you think they'll do all right? >> i think the expectations about 18% year-over-year growth inhe financials and that's pretty darn good. so i think they'll probably exceed expectations and i don't think there's anything wrong with 20% growtan in the fal sector, so investors are a little biteary of financials because yields are so long, but they'll do fine. >> karen cavanaugh with mo m investmentagement. thanks for joining us tonight. >> thank you. still ahead, why the last frontier finds itself in last place when it comes to business. ♪ ♪ as we reported earhier week, cnbc ranked texas as the

number one state for business this year,ue in part to the benefits of rising oil pres, but for another big oil state, the situation is very different. scott cohn has that part of the tonightr us >> alaska, the last frontier is the last place state in 2018. oil is th state's lifeblood and the price of oil has increased, but not enough to meaningfully boost production on the north slope in a sta that depends on oil for 85% of its revenue. >> the result, alaska had to do something this year that it has never done before. it dippe into its oil well, the so-called alaska permanent fund to head off the $2.5 billion budget deficit, a controversise move bect reduces the oil dividend that alaskans receive eachier. governor bill walker says it puts the state on a more sustainable path, but damage is already done. unemployment is the highest in

the nation. workers are fleeing. business capital is steering heclear and for t first time since 2009, alaska is america's bottom state for business. >> for "nightly business report," i'm scott cohn. he aays does such a great job. >> oil is very much a part of their economy right now, but it's all about a job growth if you're not getting that, they're at the bottom there. that will do it tonight for us. i'm sue herera. thanks so much for joining us. >> i'm bill griffit have a great evening. we'll see you tomorrow. ♪ ♪ is

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