♪ ♪ this is "nightly business report" with sue herera and bill griffith. state of the economy, the fed speak, but focusurnso the economy's three vital organs, job, housing and the consumer. shifting gears. why auto salesap the brakes to start the summer. new option. short-term health plans could soon play a much larger try.insurance ind those stories and much more tonight on "nightly business report" for wednesday, august 1st. good evening, everyone, and welcome. the economy wasront and center today and we learned a lot about its threepillars, employment, housing and the consumer so let's begin with jobs. companies added a lot more workers to their ranks than expected in july.

according to the payroll processor, adp, 2019 jobs were t added, that's most in five months and it comes despite a shrinking pool of qualified workers. that report sent the yield on the ten-yearreasury bacp to 3%. >> now to housing which saw demand droprly 10% in june compared with a year ago. a new report fromea onlineor redfin called it the biggest decline in more than two years. not only hethat, but number of people requesting home tours also fell and it sms that red-hot prices, rising mortgage rates and a lackti of ls at the entry level are all still taking a toll on potential buyers. >> and the third pillar of the economy is the consumer. the recent gdp report showed a surge in spending in the second quarter and that's significant because consumer spending makes up about two-thirds of economic activity. so putting it all tog preliminary estimates from the atlanta fed today showed that the economy c bld be growing

as much as 5% here in t third quarter. let's dig deeper into these threela p with the economy where chief u.s. economist. good to see you. >> nice to be here. >> let's start with jobs. that's a ercoone of the economy and it has been very, very tight. how mu better does the job market get, do you think? >>well, o thing is that after such a lackluster jobs market, it's greatha to see it's healthy again. we're expecting some nice readings friday. we're thinking it will probably be on the low side given the readings from adp, but overall, the jobs numbers were holding up rather well and we think it will last through yher and we expect to see the unemployment rate dropy 3.6% by 20, a nice reading. >> let's turn to the consumer. we just really highlighted how important they are to the economy. what's your best guess as to whether that c continue at the rate that it has been growing?

>> i should add that whil the jobs numbers are holding rather well and peopleng are getore job, we're also expecting to see higher wages and we're looking to see wages pick up to probably around 3% year over year by year end and climb higher, further than tha so with the consumer having more money -- first, there's more a jo also more money in their paychecks that means they can spend a bit more, so we are expecting to see consumers spent nicely for this year and they're also helped by the package and that means they can spend moris inially this year around two and a half and a pretty nice reading f this year and still slow in 2019 and it will still be t above trend growth rate for consumer spending of 2%. >> a good g,readindeed. >> if there is a weak link among the three i guess it would be housing and a l of people look to the bottleneck that occur, not enough inventory out the, t you also look at another factor and weather you think, is playing a big role out here, as

well, don't you? >> there are a few other factors that are probably nice it's one up. we do think weather probably explains some of that drop most recently largely because the fourth quarter we saw a big rebuild, keith, don't forget that we have a massive amount of hurricanes and also fires which crushed a lot of homes and of course, you need tohe rebuild and that explains the big boost and the unwind there after. of course, there are other factors involved an not just weather and that can explain some of it, but not all. beth ann vino, thank you for joining us again tonight. >> of course, no one pays more o the economy than the federal reserve. today policymakers painted a rosy picture e of thenomy and kept interest rates at their current levels, but as steve liesman reports they also suggested that a rate hike at the next meeting is likely. >>er the federal r kept interest rates unchanged in itss july-a meeting and further

rate hike ahead as it upgraded the economic outlook from solid to strong. the fed funds rate was left in the rage of 75% to 2% and the fed gave a hint that further rate hikes were on the way at its meeting in september saying furtherreradual ies for the federal funds rate will be consistent with onsustained, ic expansion of economic activity. that's fed speak for more rate hikes are coming and indeed, the market traded that way september, and probabilities for a rate hike at that meeting and 88% and december, 62% and june 19th, 61% probability. after the meeting,dereg mcb wrote all sides still point to a september rate hike and continue payi down variable rate debt which is is credit cards and home equy lines and rate debt into fixed rate to insulate yourself from further rate hikes because there will be more. the fed said in a statement that the labor market has continued to strengthen, job gains were strong in the recent month and the unemployment rate have

stayed low and household and business spending both said to have grown strongly. inflation is seen remaining near its 2% inflation target and the risk to the oughook r balanced and also interesting what was not said in t statement and no mention if the strong growth levels can continue or the possible economic effects o tariffs are any response to the president's criticism of the policays. that come later this month when fed chairman jay powell speaks in jackson hole. for "nightly business report," i'm steve li sman. >> while the economy overall may be strong, sales of new cars last month were weaker than expected. the numbersea rd today for july came in below the pace that we've been seeing all year and as phil lebeau reports now, buyers continue to steer clear of cars and >> it is too soon to call slower july auto sales the start of a summer swoon for autemakers. all, the overall pace of business remains relatively strong, but aside from fiat chrysler beating expectations

with a 5.9% increase, ford, toyota, and many other automakers saw sales fall last month. so what's goi on? one factor may be fewer special deals in the second half of the month dealers come off big promotions for the fourth of july, but another factor could be the slows, but gradual rise in interest rates for auto loans. that mayave some buyers pausing before signing up to a monthly payment. still, change like autonation are not worried about slowing down. >> the consumer is stillery much in the marketplace for new vehicles. i don't think that's really the issue, and of course, you have this massive shift towards truck which is is now approaching 70% of the business. so this year will be high 16 million, if not touching 17n milln a unit volume. >> even with slightly s iwer sale july, this year's annual auto sales may hit 17

million vehicles for a fourth straight year. the question is whether jul is just a blip. the start of a summer swoon. >> right now, analysts, automakers and dealers all expect sales to remain robust fothe remainder o this year, but if business drops again in august or september, well, then we could be saying that auto sales are truly shifting into a lower gear. phil lebeau, nightly business report, chicago. >> separately, ferrari's new boss said today that the profit goal set out by his predecessor, the late sergio margioni were aspirational. the automaker isin prese a five-year plan to investors and analysts in september. it's sent the stock down 11% in today's trade. the one thing many experts agree could hurt growth is trade policy. today the trump administration i said it is cring increasing the level of tariffs on $200 billion worth of chinese goods fro 10% to 25%.

beijing has threatened to taliate with its own measures. >> to wall street now, tech shares rose thanks to those strong earnings that we saw from apple that we tol you about yesterday, but broader market gains wereapped on those renewed trade concerns. the dow when all was said and done fell by 81 points to 25,323, and the nasdaq rose by 35 and the s&p was down two. now that we're most of the way througharngs season, investors want to know what the market will focus on next. mark santoli takes a look. >> record corporate profits have built a cushion under stock and is it due for a rest as it enters august. ohe broad s&p 500 index is worth its way a 5% gain for t year and it's 2% of its january record high and that has come in fits andn starts with impressive 20% pace of corporate stockss growth pushing higher while earnings over a trade war and higher interest

rates and the risk of an eventual recession exert some downwardressure. and it's left stocks attractively valued and the s&p now trade at 16 times expected earnings for the coming year. that's right in line with the five-year average and down dramatically from the peak in january of more than 18 times. the earnings surge helped by the tax cuts passed in december and also reflecting a global economy has not yet generated broad-based moment a momentum in stock prices and those nagging concerns about a trade war that can slow the world conomy and disrupt the corporate supply chain is one possible reason and another restrain on stock prices has been a general concern over the first half of 2018 might represent the peak for economic momentum and corporate profit growth. the u.s. economy's expansion is already the second longest on record and the commodity and labor cover thes are risinraand the fedel reserve is poised to raise rates for the eighth time in three years. add to this the facug thatt and september are historically two of the weakest mon

stocks especially in midterm election years and perhaps it makes sense that they might pause or pull back a bithis month. seasonal factors could drive large market moves on their own and the forecast for corporate profit his continued to move higher in recent weeks which should be reflective in stocks and the market has managed to absorb plenty of political noi and trade frictions while keeping the upturn trends intact. even if august brings a late wall storm warning to street, it's too soon to say the short for theg full market itself. for the nightly business report i'm mike santoli. >> it is time to look at some of the upgrades and downgrades. electronic arts were upgraded to buy from hold at argus research. the analyst cites major pullback ahead of major game releases in the second half of the year. the price target is $155. the shares fell about 1% to

127.48. serepta was upgraded to equal weight from morgan stanley. the analystec cites thet sell-off and the prospects for the gene therapy program. the price target is $163. th stock rose more than 3% to12 27. >> papa john's was upgraded to buy from hold to jefferies. e analyst there believes that the board may evaluate strategic alternatives for the compayo and what that mean, given the recent departure of its founder, the price target $58 and that stock rose a fraction to $42. today. first solar was added to the focus list at j.p. morgan. the analyst says this is an attractive entry point for the best in-crass company as he put it. the price target $79. the shares ros 2% today to $53.38. still ahead, lowerd priealth care coverage, but does it come at a cost? ♪ ♪

♪ ♪ ♪ >> investors were watchingsh es of apple today to see whether they would hit the $1il on mark in market valuation. it didn't happen, so here's where the three biggest publicly traded companies happen. apples in the lead. the market capitalization of 173 llion. amazon is a distant second followed by alphabet. >> the t hasury departmen proposed rules on how companies can bring home income sitting overseas. that income now amounts to more than $2.5 trillion. experts say this key step

in the process known.s repatriati the tax law signed in the end of last year allows them to come back at a special low interest rate. >> short-term health plans will soon play a larger role in the insurance market. the trump administraedon has outlew rules for coverage as an alternative to the affordable care a. bertha coombs has details for us ltnight. >> short-term h plans appeal to consumers like john conley who earn too much to qualify for subsidized exchange plan, but can't afford premiums for apa coverage. the trump administration says new rules extending the duration of those plans will offer relief for people like t aansas contractor. these can be very affordable options. they may be as much as 50 to 80% cheaper than the obamaare exchange plan. so this is a really important opti for millions of americans. >> under the new rules, insurers can offer short-term plans that last up to a year.

that's u from three months under the obama administration and they can be renewed for up to three years. the time line taken from cobra. the employer insurance program for workers who lose their j. unlike cobra, short-term plans aren't required to provide affordable care act benefits like preventive care and pregnancy coverage or protectionsor pre-existing condition. less robust coverage makes premiums cheaper. >> what af lot times consumers don't realize is they don't cover very much.he if get sick or get injured and all of a sindh the bills start to pile up.ic crits worry the new plans will siphon off healthy consumers from the exchange market. the charge,ecretary azar refutes. >> the obama care individual in exchanges is largely drawing to the tune of 87%. people who are getting subsidies fromhe taxpayers to buy their insurance. people are wanot lely to walk

away from insurance that is free or heavily bsidized. >> the estimates are 200 to 600,000 exchange members will make the shift in 2019. exchange insures could, too. f they are worried that they're going to lose theirhe thy enrollees to these short-term plan, many will fee like they have to offer them, too. so you could see a real race to the bottom, here. >> insurers canli begin s the longer plans in october, just as affordablect care open enrollment kicks off for019. for "nightly business report," i'm berthaor coombs, new humana raises its full-year earnings forecast and that's where we begin the earnings lcus. itted profit expectations after saying stronger membership growth in the medicar business caused results to target. humana plans to build upon its existing partnership with walmart which offers patients a co-branded medicare plan.

shares rose more than 1% to 318.be. after the, the pharmacy benefits manager express scripts reported better-than-expected earnings and it expects customer retentionates to improve. the company raised its 2018 earnings guidance. the wall street journal said carl icahn t pla vote against the health insurer's acquisition of express scripts. shares of express scriptsin ially fell in after hours, but then rose. they finished the regular day off 6% to $74.44. following a quarterly earnings beat nutrisystem said it's betting its recently launched dna product will drive even more growth. >> where the world is growing is toward personalized nutrition and wowt this does is a you to take a test that based on the results we'll be able to tailor your program based on what your dnas. that's really important these days because what everybody is looking for is customization. it will tell you about yourbo mesm and your eating

behaviors. it will tell you about your ha nutrition, nutrition concepts are best for you and it will tell you about >> and when it comes to competitors in that space, s nutrisysted it is loaning innovation and its multi-brand strategy set it apart. shares fell 4to $38.30. sprint grew its customer base at a quicker than expected base helping earnings top expectations. the wireless carrier did warn that higher prices for its new phone plan could cause subscriber growth to slow. shares of scripts fell 1% to $5.38. soda stream said increased demand for its water makers and gas-filled units led t its most successful quarter ever. the company reported profits and sales well ahead of estimates and said that it expects earnings for the year actually to be triple its previous soda stream shares spiked 26%. no surpriseo 110.30 today.

after the bell, tesla reported a wider than expected loss and it wasn't all bad ns. total sales edged past expectations and gross margins improved. the electric automaker expects cash reserves to be higher in the second half of the yosr. shares in the extended hours and they also finished the gular session up 1% $380. ter the bell, wynn resort it is said weakness in its macao hotel andasos offset strength in other areas and causing overall earnings to ms e mark. shares of the casino operator fell after hours extending a4% loss from earlier in the day when shares closed at $159.99. gambling is a multibillion-dollar business. one of the bigger names in the industry sent a chill in the sector. caesar's entertainment warned of tough cditions in las vegas. the stock plunged more than 20% before paring some of those

losses and it sent the other gaming stocks lower, as well.br contessa you er has more. >> t ceo was delivering hisfe earnings cnce call. why the diss? caesar's told analysts that suffering from competitive pressure on room rates and the skilleded, vents inags having a compared to the previous year when the mayweather fight happened. that sent stocks skidding. such intense volatility and trading was halted three times and there's no reason to panic. >> we had some cautionary comments that you upon, we'd seen some softness not due to vegas being soft, but due to the window in the third quarter softer than a year ago. this was not any kind of a condition around vegas that was anticipated and it just had to do with more event planning. >>caesar's has launched sports book operations, and mid-august.

the casino giant said its mobile sports gaming will be available throughout new jersey, but we'll have to wait to hear whether revee from sports gambling offsets the predicted softness in las vegas hotel occupancy. overall, caesar's predicts 4% to 6% groh for .20 for "inightly business report" i'm contessa brewer. >> more investors are swapping . stocks for bon should you? ♪ ♪ ♪ here's a look at what toor watch tomorrow.

cbs reports earnings. les moonves will be on that call. this follows, of course, the allegations of sexual misconduct against him. jobless claims will be the final read on the jobs market before friday's employment report. high-end speaker maker sanos is dely expected to make its debut. it should be a very interesting da to watch tomorrow. thursday. >> absolutely. wells fargo has agreed to pay a $2 billion fine over mortgage-backed securities. the bank and the justice department had been in negotiations f months and this ends the run into that matter. wells fargo is facing federal and state investigations into its sales practices. >> fidelity is the first fund mpany to offer core index funds with fees and it's part of fidelity to make investing easier even for those with small sums to put into the market. separatelyanguard plans to offer free trading on more than 1800 etfs this month.

both decisions t intensifi price competition that has ndready taken hold in the asset managementtry. >> as we reported earlier in the program, the yield on the ten-ye treasury hit the key 3% level for the fir time sin june. according to the investment company institute investors for months now have been moving money into low-yielding bond funds and out of relatively outperforming soft funds. why is this happening? david deets joins us. he the president and chief investment strategist at point manageme y and i think have answers to that. good to see you, david. why that rotation from stocks hich has done pretty well into bonds? >> so there are many good reasons and one classic is a la reing strategy. rebalancing basically ooks the outperforming asset class and sells some of that to rebalance so you get back to your pre-programmed asset allocation in this case. for example, over the last 12 months the s&p 500 with

dividends up nearly 16% while the ten-year treasury including income is down 4% and that's a 20% disparity and that's a wake-up call with the chips with the high-performing asset. >> i know you agree with this. you are doing this with your clients' money, andbonds, as rates are going up, feds are rates. bonds should not perform that well. >> where do you put that income in bonds? >> bonds have not performed that well but if you are predicting the stock market is hard, try to predict the interest rate market. you started 2. and we are now over 3% and that's a significant increase and bonds are more attractiveheow thanwere in the start of the year and i say take advantage of that and k rebounce bo neutral. >> how do you feel about equities overall, though? >> still, even with the 3%, most people can't make thean retiremt distribute from their endowments or institutions what they want.

i t still thinkre will be a strong bid under that equity market. so i think the answer i really to look for those areas which have been kind of laggards. areas have value been laggards and many of the areas overseas will be laggards and some of the areas that are cautious are the ones that are talking about the cocktail party. >> buying the bonds outright. what doou say? >> it really depends on your horizon, but if you've got a long enough horizon, i say buy the bond outright. there are so many good reasons and one is you save thean fee the fund, but also you are locking in a guaranteed profit. you know where your interest payments are going to be and you look at what you will get with maturity and what the maturity will be and it goes up and down and you never know when you'll need the value and the money. >> where will you be on the eld curve or the duration of the bond? >> certainly, with the yield curveflattening, there is a great case to be made now to go shorter. for example, that two-year

treasury now close to 2.5% with the ten-year, you don't get that much more t an extra eight years of risk and i wouldsh sayo ter all things being equal. >> good to see you. davideets with point view wealth management. >> before we do go, one final look at the day on wall street. the dow fell 81 points and a pretty volatile day and it was higher early on and the nasdaq rose by 35 and the s&p was down two. > and that will do it for us tonight on "nightly business report" for august 1st. i can't believe it. i'm s herera. >> i'm bill griffith. have a good evening. we'll see you tomorrow. ♪ ♪

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