this is "nightly business report." with sue herera and bill griffeth. roadmap. the u.s. and china plotting out their trade talks andnvtors breathe a sigh of relief. critical shortage. a life-saving medicinhat's becomingde harr to get at a time when demand usually spikes. stickershock. why full-sized pickup trucks now come with a super-sized price tag. those stories and much more toght on "nightly business report" for this friday, august the 17th. good evening, everyone, and welcome. so just howmportant is trade with china to the markets? today we lrned that it is key. stocks were flat for most of the morning but all that changed when a reportturfaced t president trump and president xi hoped to discuss trade in

november. and there's currently a plan being worked on ahead of mid-level talks next week. that lifted the dow by 110 points to 25,669. the nasdaq and the s&p 500h b rose by 9. the major indexes were mixed for the week. going into those trade talks the white house has been playing up what it calls china's economic decline. t some say a closer look at the numbers show things may not be all that bad. >> reporter: china's stock market is in terrible shape but it m not reflect the state of the chinese economy. president trump's national nconomic c chief larry kudlow raised eyebrows when he said in a meetth president trump that china's economy quote looks terrible. does it really? gdpt estimates show china's growth near 6.5%. that doesn't mean there aren't concerns. new u.s. tariffs are makingmo i costly for companies there to operate, and china's central bank has been pumping money into

e economy. experts say the 25% drop in the shanghai exchang from its january high does not really reflect a dramatic derioration the chinese economy, in fact, it tells us very little ado n't necessarily play anywhere near as dominant a role inhe lives of its citizens as the u.s. equity market does. the shanghai market f ralliedrom 2014 and 2015,ore than doubled in value. again it collapsed and is trading 45% lower than 2015. according to one analt, this would have very little impact on consumer spend organize consumer sentiment. there's a bit of a disconnect. the fact that china's sck market does not necessarily reflect the state of the chinese economy has very important policy implications. so for exple, further declines in chinese equities may not push the country's leaders into an favorable trade deal with the united states. for "nightly business report," i'm bob pisani at the new york stock exchange. there is also progress being co.e on trade with me

a top white house economic adviser said that washington is quotevery, ver close to coming to an agreement. mexico's economy minister mad simila comments today saying he hopes to resolve issues surrounding t renegotiation of nafta by the middle of next week. > now despite the positive news on trade today, there are other issues the market has to contend with and that's one wf the reaso pimco is talking about the potential risk of recession. mahirwara is chief investment oins us at pimco and he with more on that. you're waving a yellow flag in this regard. let's go through indicators you're watching. theirst is inflation. things are picking up, aren't they? >> yeah, we're starting to see inflation pick gup. noth dramatic. inflation's going to end this year around 2.5%, up from 1.5% last year. inflation is a lagging indicator, and the key thing is where we are today, if you're

wrong about the 2.5%, all the risks are to the upside. whether it's from a trade war, whether it's from the trillion-dollar deficit that we're running at a 4% unemployment rate, whether it's from oil price spiking. it is one of the things we're watching. >> which leads you to being concerned about the correlation between stocks and bonds and the inability for the average investor to perhaps diversify. >> right. bonds are a great diversifier in a plain, vanilla recession, therapy treasuries would be your best asset. however, along the way as inflation starts to rise, you may find the stock -- bonds may not be such great diversifier versus stocks. we look at other things like elgold, for example, to you in your portfolio. > it's a very technical term, dispersion, that you're watching. but basically it's where investorsasically get their best returns. and it's been concentraond for so on equities.

but you're starting to see it disperse into other areas too, right? >> that's right. you're going to see more volatility. you're going to see more winners and losers. for example, for the last several years when the economy was growing strongly and the fed was not hiking rates, was suppressing volatility, you could buy atost anything and would go up in price. we think this is a time to start being more careful. one of the things we particularly like are short-dated corporate bonds at 3%, 3.5%yields, giving you decent returns without taking a lot of risk. >> all right, mahir ra thank you, waving the yellow flag on s for ion tonight, tha joining us. along those lines, consumer bentiment hit its lowest level since sept that's according to the university of michigan's index. consumers are concerned about rising prices. the decline i sentiment was primarily seen among less-affluent households. president trump has asked

the s.e.c. to study the possibility of requiring publicly traded companies to release their earningsts res only twice a year instead of the current norm of four times a year. the president said the idea came up during a meeting he recently had with corporate leaders. >> this took place when i had a, you know, a -- the world's top executives, among the world's top executives, and the head of pepsi cola, a great woman who is renow ring. she said, because i asked what could we do to make it even better? and she said, two time a year reporter, notrl quar and i thought of it. you know, we are not thinking far enough out. we've beenccused of that for a long time, this country. but we're looking at that very, very seriously. we're looking at twims a year instead of four times a year. i>> andfact pepsi's outgoing ceo confirmed that report saying the ia of allowing companies to focus on their longer-term strategy is also bng discussed

among business roundtable members. and late today the s.e.c. said, in fact, it does continue to study public companyng reporti requirements, including the frequency of those reports. tesla's ceo, elon musk,er ge an iew to "the new york imes" which is being described as emotional andoff-kilter. he called the past year quotend excruciatinghe most difficult and painful of his career. details of his struggles sent the stock down nearly 9% today. as you know, tngs intensified for mr. musk last week when he tweeted that he had the funding to take the company eprivate. as reported last night, the s.e.c. is reportedlyig inveing whether the tweet was intended to hurt short-sellers. short-sellers are sometimes portrayed as the bad guysn wall street, rooting for company stocks to go down. but shoing is a legitimate investment strategy. dominic chu explains how it works. >> reporter: buy low, sell high.

that's simple market cliche capturing the essence of investing. purchase an asset like a stock today at a certain price. and if it goes up in value, sell it for a higher price at a profit. for most investors, if that formula works, y make money. fit goes down in value, you lose. but what if you could make money by reversing the steps? sell high, then buy low. that's the basic framework for a short sale. here's how it works. let's say zyx corporation shares are trading at $100 each. but a trader believes the shares are only worth about $90, given its businessprospects. that trader then goes out on the hunt for anyone who owns shares of the company who's willing to let her borrow them with a promise to return them at some point in the future. once the shares have bn borrowed, the trader sells them at the current $100 price and pockets the money. if she's right and shares fall to $9 in the future, she then

takes hermoney, buys the stock at $90, and returns those shares to the original owner. sell high, get b$100, low, spend $90, keep the $10 profit.t but flip side is if the shares go up in value, the trader loses. theoretically, the potential loss is unlimited in a sanrt sale ction, which is why only seasoned traders use the strategy. the actual transaction and lodge stijs of a short sale are more e compli but you get the picture. for "nightly business report," i'm dominic chu. right now the five most shorted stocks in the s&p 500 are under armour, disvery communications, mattel, advanced micro devices, and kohl's. let's get more on short-selling and the role that it plays in the stock market. he's a professor of finance at nyu's srn school of siness. welcome, it's nice to have you here. >> glad to be >> talk to me about the fact

that you think that the t- shller in the market is part of an overall healthy environment for the market, correct? >> yeah, i've never understood why people think being long is moral, being short isimmoral. there's something wrong with the picture to me. t if you beliet something's going to go up and you want to buy the stock and hold it, all the more power to you. by the same rationale, if you think sething is overpriced, i think you should be able to bet against that investment. i think it'sealthy for the market to have both optimists and pessimists in the >>room. he five companies that have the highest short interest, the highest number of shares that have been shorted by short-sellers. are those necessarily companies that investors should av d if they want the stock to go up? >> no, i think there's comrenies where t a lot of disagreement about the future. some of the most successful companies in theld w have been short targets at some point in time. including facebook, amazon,

netflix, google -- a some point in time each of these companies has been targeted. they've managed to succeed and becomecredible companies in spite of the shorting. i've never believed just because people are down on a stock that you shouldn't invest in it. >> you make the point is not the short-selling in itself that's damaging to the company, but rather, it's the reaction of management to those short-sellers? >> i think managers overreact. both short-sellers and people who are long on the stock, they managef the price instead managing the value of the company. tthink any managemhat focuses on what investors are doing in the marketplace is doing the wrothing. i think management needs to focus on what they need to do within the company. and let the market take ce of itself. >> i'm temptedhe to ask, are going to be people watching saying, maybe i should try this. should the average investor think about short-selling? what do you say? >> there are twoin const you've got to keep in mind.

the first when is you sell short, your time horizon i not often under your control. i'll give an example. you buy something, you can hold and hold as long as you can hold on. but research shows your time horizon might ne under your control. the second is when you go out etere and try to get those shares ton them, they might not be around. that's the short squeeze. if you walk in with open eyes, there's nothing wrong with short-selling. t if you think it's an easy game to play, you're in the wrong game. >> on that note, thank you s much for joining us, nyu's stern school of business. time to take a look at today's upgrades and downgrades. we have a downgrade for walmart but it's not as bad as it sounds. raymond james is cutting its rating on the stock to outperform, from strong buy. the analyst says walmart's purchase of flip cart will weigh on operating earnings. flip cart is india's largest commerce company. price target 107, the stock fell a fraction to 97.85.

dean foods downgraded to underweight from neutral at jpmorgan. the analyst cites reduced confidence in that company's ability to meet expectations.ar pricet reduced to $6, the stockell about 5% to $8.20. yum china's rating downgraded to perform from outperform at oppenheimer. the analyst cites headwinds at its kfc brand. he says same-store sales improvement could takeeveral quarters. 34.86.ock fell 1% to diaz w's rating cut to negative from neutral at susquehanna. the analyst cites margin rressure from its loyalty program and hig costs. the price target is $22, the os stock fell a 5%, $26.49. farmers are spendingoney on machinery despite trade concerns. and that's good news for deere.

with many farmers growing concerned about rising tariffs, many wall street analystspe ed that would negatively affect deere's latest result turns out the equipmentmaker said demand is still strong and that helped lift the stock. morgan brennan digs deeper into deere's report. >> reporter: dte trade tensions, john deere saying replacement for big agricultural equistent is bg sales and expects that at least for now to continue. on a conference call with analysts, chief financial officer raj kalisor gave an upbeat outlook. >> grain needs to grow

consistently even with trade factors just to accommoolte variousy changes. overall we are encouraged by the outlook for the res of 2018 and the early interest for our latest technology to come in '19. >> reporter: it was enough to turn the stock around after shares of the farm and construction equipmentmaker started the day lower on an earnings miss. equipment sales roles by more than 30% but fell short of expectations due to higher costs nd material, think steel, freight. deere stuck with its prior full-year guidance which had analysts wondering whether and after years of slumping demand the company's recent recovery could yield higher equipment prices. >> if you're athe peak of the cycle or in the sweet spot of demand and you can't get pricing power at this point in the cycle, you're never going to get that. that's the concern that investors have in these technical stocks. >> reporter: deere shares down about 17% over the past six months, seen as oat-risk due trade tensions between the u.s. andchina.

the concern, chinese tariffs on u.s. stocks like soybeans could mean lessdemand. the tractors and combines that deere makes. the company's been dinged by higher steel prices, but tariffs on that metal he helped push up. still the optimistic guidance helped buoyshares, sending them demand runs like, well, a deer. campbell soup i getting serious about selling off som of its assets. that's where we begin tonight's "market focus." the comny has reportedly hired goldman sachs to look at its options. the sal of some units would help pay down debt left in the wake of its $6 billi acquisition of the pretzelmaker snyder's lamps, the f storyst reported by cnbc. the stock hugged the flat line most of the day rising one cent. google's ceo told employees the company is notushing to launch a search product for china. that was good news for bydue, a

prominent intert search fir in that country and it gave the stock a lift risg 2%. google shares fell to 1,215.85. morgan stanley is cutti its profi estimates for general motors. the analyst there says gm relative to its peers has the biggest exposure to china in terms of profitability and cash flow. the firm says gm is also facing increased competition the stock rose along with the broader market to close at 36.38. meanwhile amazon is reportedly planning to take on tivo. according to bloomberg, the company is creating a new type of digital video recorder for the streaming era. that sent tivo share down 4% to 12.20. shares of amazon off a fraction to 1882.22. time for our weekly market monitor. the last timee was on in november of 2017 he picked cisco, which is up 26%. vanguard dividend appreciation

10%.up and fidelity msci health care etf which is 14% higher. jim lowell, i chiefestment offer at adviser investments. welcome back, congratulations on those picks. >> thank you very much. good to be avback. >> youa little bit of a defensive strategy, not ouard, but you're saying that basically we're a little long in the tooth and you never know what's going happen, so you've picked a few stocks that might shield our investors, right? >> that's right. i characterize it as defensive growth. theme funals are strong. earnings, interest rates, economic data sugsts slow growth, not no growth, is the road we're on. the midterm election coming up is going to be b vitriolic att and we think the chance for negative momentum, a mood shift in the market is there. vanguard's dividend appreciation -- >> that's your firstpick. >> first pick, an etf that basically had battleship lance sheet, blue chip names, companies that have consecutidely raised dds over the past 10 years or more,

so cash in the coffers, solid management, goodloe-risk profile. i also continue to like fidelity's hmscilth care etf, a broad swath of everything from major pharmas to medical equipment systems as well as bio te nology. healre's low-risk, togh-return relative to the overall growth group makes it a good defensive growth play. and then on the bond side of the fence, i think hopefully everybody is relatively short in the investment grade duration space. something to complement that could be vanex angels high-yield etf. it looks at high-yield bonds that were formerly investment grade bonds that f tl offt wagon but have a chance of climbing back up. the riurn profile there, especially in a slow-growth economy, looks likt's worth a reward. that is yielding north of 5.5%. >> always a great bowie there too, by the way. >> thanks, bill.

>> do you have a timeline for this? you're clearly becoming defensive, looking at slow growth. how much time are you giving yourself to see this slow growth play out? >> we're definitely going to look at what happens not just up to but through the midterm elections in how could impact policies that have clearly been creating uncertainty for not just the domestic but global markets as a exwhole. fople, we pulled out of the emerging markets lock, stock and barrel,ha assuming that is going to be an area that really will continue to be under the gun of tariff andrade war concerns. so unless we get clarity there, we'll continue to be shy of the emerging markets. and definitely ramp up our defense here in the u.uick question. literally the name of one of your pks was a van ek vectors fallen angel high-yield bond etf. what is a fallen angel? >> a fallen angel is formerly investment-grade bond funded, it's fallen to jk bondstatus. those bonds have a profile that

isd, delive a slightly better risk/return ratio relative to just a brother junk bond or high-yield space. we like it as a good complement to a well-diversified bond but we think for investors looking for some way to add a slight increase in yield with a different kind of pl, that would be the etf to pick. >> jim, thank you. >> thank, jim lowell, adviser investments. back to sool means back to the pharmacist for those parents of children who suffer from life-threatening letter jits. but this year there's a shortage of a key medication, epipens. >> reporter: alisa's 6-year-old son hudson has a severe nut allergy. as he heads back to school she needs to stock up on epipens. >> i went to the same local cvs pharmacy i always do, and this year i was told that the epipen

generic, which is what my insurance covers, was out of stock. >> reporter: she's not alone. manufacturing disruions for the life-saving allergy drug have resulted in pharmacies around the country running low on >>supplies. n my busy pediatric clinic, we have noticed there are a number of patients, forexample, calling in, tondering wherey can procure their epipens. >> reporter: calls to 2,000 pharmacies from boston to san francisco revealed almost every single one had no epipens or just a few in stock. she called moreochan eight l pharmacies before she found one, th one set her insurance will cover. >> i said, put it on hold, i will be there in the gorning, i there, last box. >> reporter: mylin says it's exploring options with its manufacturing partner, pfizer, to stabilize supply. pfizer says it's experiencing delayed shipments due to process changesnd cited supply of third-party components in the manufacturing process. epipen isn't the only option on the market. there's also the click and the

avicue, b it's the most dominant. >> the school prefers the epipe' because t what they have trained their staff in how to administer. >> reporte just this week fda approved the first generic competitor to the ipen. mylin introduced its own generic at t end of 2016. this is the first directly bstitutable productold by another company. that company, teva sarmaceuticals, said i applying full resources to the launch in the coming months. but that may not be soon enough to help parents like alir get ready ck to school. as hudson prepares to start first grade, his ipen is one of his most important school supplies. >> to read more about the epipen shortage, head to our website at nbr.com. the new status symbol on american highways coming up.

are you ready for the $50,000 pickup truck? that's right. a new report says the average price for a picku will soon cross that level. a sticker price typically associated with luxury models. phil lebeau has the details. y>> reporter: if this isour image of atrickup uck, beaten up, looking like an old dog, thk again. toy's pickups are often shinyen testam to driving in luxury. with refined interiors and the latest tech features. that's why the avera f price the three most popular pickups is now well over $40,000. and according to the auto website edmonds, those buying the new chevy silverado wil likely pay over $50,000. >> for pickup trucks to hit that

how far ly shows they've come. the transaction prices have grown by almost 48% in just one decade. >> reporter: why are full-sized pickups coming with super-sized prices?ig first the b three keep raising the bar. as soon as ford s latesties rolls off the line with newca pabilities and features,si gners and engineers are working take the next ram 1500 just as capable. and where possible adding on even more features. that's pushing up prices. at the same time, new full-sized trucks have become status symbols. especially inme suburban arica where pickups are often replacing high-end suvs. >> these are really well-appointed vehicles that come with not only status, but also all the creature comforts that would come with an suv.th only thing they're generally missing is that third row which a lot of folks aren't really looking for. >> reporter: while americans are paying more than ever for a full-sized pickup,t has not cut into their desire to buy a truck. in fact this year full-sized

pickup sales are up almost , outpacing the auto market as a whole. before we fgo, oneal look at the day on wall street. late-day rally with hopes for e u.s./china trade talks push the dow up 110. the nasdaq and s&p both rose by 9 points. for the wee the major averages were mixed. that will do it for us tonight. m sue herera. thanks for joining us. have a great vacation. >> i'm going to try my best. i'mill griffeth. have a wonderful weekend. she'll see you on monday. >> right here.

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