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tv   Nightly Business Report  PBS  September 5, 2018 5:00pm-5:31pm PDT

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♪ ♪ >>ig this is htly business report" with sue herera and bil griffith. when bad actors try to use our sitell we lock them. >> if we don't find scalable solutions to the problems we're now seeing we lose our business. >> facebook and twitter executives on capitol hill facing criticism about election meddling and threats of legislative action. and ramping up production, a leading german automaker is opening a plant in south carolina, evenmidising trade tensions. rent or buy? it's an-o a debate in housing, but the answer may be as clear now as it is surprising. those stories and more tonight on "nightly business report"or wednesday, september 5th.
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. good evening, everyone. welcome. m tyler matheson. sue is on assignment this evening and bill has the evening off. the tech sector fell sharply today and the action wasn't just on wall et, but also on capitol hill, and that is where we begin tonight. executives from facebook andnt g in front of lawmakers on what they're doing to protect their platforms from spewing sleading information and foreign election interference. both said their companies are better prepared for this election cycle and members of congress appeared skeptical and noticeably absent is one of the biggest of the big. google. julia boorstin is covering the story for us tonight from w capitol hilre the news is still evolving. julia, give us arundown. >> well, tyler, it's been a busy day for facebook and twitter here on capitol hill. the day ending here at the house, raburn office building, but it all started this morning at the senate intelligence committee w hearingre facebook
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coo sheryl sandberg and jack dorsey both testified before the senate intelligence committee about their work to prevent election interference. they said they're collaborating with each other as well as government agencies and cybersecurity companies to make sure they're doing evething they can with both new technology and employees to prevent interference with the upcoming midterm election. >> be clear. we are more determined than our opponents and we will keep fighting. when bad actors try to use our the, we will block when content violates our policies, we will take it down and when our opponents use new techniques we will share them to strengthen our collective, fohes. >> before commerce mitty, so that hearing dragging on for over four hoursa he was pressed about how twitterer mes
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content and decides which users to block. twitter shares dipped over the course of the day as he made it clear that he is investing to clear up all of the issues no matter the short-term costs of the comny. our singular objective as a company right now is to increase e health of public conversation and we realize that that will come at short-term cost and weha realize we will be removing accounts. we realize that it doesn't necessarily go into a formula where i think there's a perception that we're not going to act because we want as much activity a possible. >> google was notably absent from today's hearings. the senate intel committee leaving the seat empty that it invited alphabet ceo larry page who declined and the committee rejected's goog offer kent
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rocker in both hearings today. and ther owere a numbe references and criticisms of googleor failing to send an executive and while dorsy and sandberg were pressed on a range of issue, there is aeneral acknowledgement that the senators and congressmen were came tod that they answer these questions here while google sat this oneut. >> julia, i didn't see by any means all of the testimony, but mr. dorsey was very interested at one point when he was asked whether he feltis company's policiesn what was fair mment and when they removed people, whether they were understandable and transparent he didn'tswer was -- even understand them. >> yes. there was a lotog of aping going on today. both s.a.m. sandberg aandberg a admitting they had to do better and the terms of service were not clear saying that they making changes to make sure that they have far more transparence
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oat platfornd they want to make sure that everything is totally crystal clear to all their users and then they're going to have more transparency about political and issue ads? particular. thank you very much. the news is still breaking right behind you. julia boorstin on h capitoll. the justice department plans to meet with state attorneys general later this montho discuss social media platforms and whether they're hurting competition and intentionally stifling free speech. meeting is the first major signal, of potential anti-trust action against silicon valley and the president and conservatives, of course, complained that social platforms have aal polit bias. a sharp decline in the tech sector pushed the nasdaq back below 8,000. that capped broader gainsn the market. the dow jones industrial arage was up 22 points to 29.974 and the s&p was down 8, about a hearter of a percent and in this
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market's no denying that tech stocks play a dominant role, but will investor appetite for the sector ctinue? michael santoli takes a look. >> how much tech is too much? the stock markey has rarel been as dominated by big technology stocks as it is now. the sector makes up 26% of the s&p 500, higher than at any time except the months surroundingne the inter bubble peak in the year 2000, and today the tech sector doesn't even include amazon and netflix, two in the consumer discretionary segm tt. ifse two were like most investors view them the sector would represent more than 30% of the s&p. there's no set threshold that the one sector has become too bloated relative to the broad market, but history h shown that the highest weighted industry group sets up investors for dappointing long-term returns. this happened with tech back in 2000 and with financial stocks which peaked at close to 20% of the s&p in 2007 and still have not fullyecered.
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the concentration in tech todaym has helped to the overseers of the standard & poor's indexes to redistribute among this month and a xuncations services gup will include the telecom stocks such as at&t and verizon. and walt disney ask digital media leaders currently in tech including alphabet and facebook. this will cosmetically slim down the 20% index rating and it will make three of the 11 sectors acely dependent on stocks as bellwethers. of course, the fundamental reasons that tech is so valuable are well understood. all industries are being transformed by software and the internet andy' to economy has fostered the creation of several huge, fastesrowing compaf the scale and profitability rarely witnessed in pastier as. no one knows exactly how much tech is excessive in an index portfolio when nearly every company is a tech company to some degree. still, the industry is not
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immune to the standardimnd economics or the pressures of tighter government regulation. eventually even theest businesses and industries become too expensive and too widel loved. the tricky part is figuring out when those points haveeen reached for for "nightly business report," i'm mike >> let's turn to daniel to talk tech and what he sees ahead for the sectort neuberger berman. good to have you back with us. you juste heard msantoli talk about how the s&p is rejiggering the sectors so the companies aren't quite so dominant, but no matter how you slice the baloney, it's still balon c. these tecpanies are the major drivers in the stock market today. >>se great tyou, tyler. i think what's going on as was referenced by mike is these technology companies are helping to transform, in addition to their own industry, it's really all of the otherie indus because what is under way is the
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digitization, if you will, of society. so all companies w old economy and certainly new economy companies need to compete in a world where the internet and the cloud and mobility, instant communications are really a part of the very fabric of all elements of their business and indeed society and so even with the rejiggering of the indices, i think the trends surrounding the technology businesses are with us for many years to come. thats to me like despite the sort of high prices that some of these stocks carry that you're a strong believer that technology is a good place to put money even now. >> even with some of the strong moves that we've seen. so, for example, if you take a company like microsoft, they're continuing to generat significant free cash flow and ewthey're growing in areas like the cloud. so, for example, their azure platform, if you look at another
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company like cisco which is an older technology company, but like microsoft, it is transforming itself. cisco is moving toward software and more services and we think there's tremendous growth in areas like security and so even with concerns around grow, and i appreciate some of the stocks have certainly moved highy, we still see attractive growth prospects for some of the names. >> i guess in light of the hearings on capitol hill today, one of the reasons that some of the social media stocks soldff andome of the technology stocks sold off was a concern that the government might be in a regulating mood. do you think that that is a risk either regulatory or maybe antitrust moves against the companies and is that aisk to some of these firms? >> i think it is a risk. certainly in terms of regulation and if it were to proceed towards an antitrust case that would a risk. on the regulatory front, technology in many ways is
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maturing like allth of the industries we have out there. food and beverage, health and as these companies have more and more of an impact onyociety and t do need to be regulated and what is important is it is being discussed openly and by certainly the congress and i think from society's standpoint, users are beginning to appreciate some of the risks and some of the issueouthat find on these platforms and so ility and regulation will be a part of the story. >> daniel, appreciate your insights and daniel is with neuberger berman., meantihe president of the federal reserve bank of st. louis is making the case for no more interest rate sincreases. ja saided financial markets may be signaling that monetary policy iwi g too tight, citing inflationec exptations that are still below the fed's target level.ec most e the fed to hike two more times this year and as many two more times next.
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>> it the strong domestic economy pushed imports to a record while slowing global growth softened u.s. exports. it widened 9.5% from june to july, bringing the deficit to its largest in a decade. president trump today said trade talks with canada are coming along. discussions between the two cotries resumed today after ending last friday with no agreement. this afternoon, canada's foreign minister echoedhe president's ntiments. >> the goal for canada from the outset is to get a good deal for canada. that's the objective that we are focused we really believe that aeal thatorks for canada and works for the u.s. and works for mexico is possible and that has been our conviction from the start. >> investors are watching developments closely becauses canada one of our biggest trading partners.
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time to take a look at some of today's upgrades and downgrades. let's start with deutsche bank, starting coverage of caterpillar with a buy rating. the analyst there expects caterpillar's revenue to increase as ming and oil companies look to renew aging equipment. the pricearget at the big cat, $177 a share. caterpillar shares rose more than 1.5% to 140.59. barclays telling clients to buy shares of walmart. the analyst started coverage of the stock with an overweight. rati the firm predicts that walmart's sales growth will rmoutperts peers. the price tart't $110. walm shares rose. 1% to $96. ubs lowering its price target on general electric now to 13 a share. the analyst cites pricing pressures and share losses in the power market. e firm maintains its neutral rating ohathe stock. to fell a fractio $12.56. anthem upgraded to
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overweight from equal weight at morgan stanl. the analy says merger activity in the sector and drug pricing reform could result in accelerated profit growth. the price target now $368. anthem shares rosee man 1% to5. 267 still ahead, a german automaker's big, surprising bet. >> in the midst of president trump's trade dispute, mercedes benz is expanlang an auto in south carolina. i'm phil lebeau outside of charleston. that story coming up on "nightly business report." ♪ ♪ trade tensions between the u.s. and europe are far fromso ed and that's not stopping automakers from increasing their production here in the u.s.
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the latest, mercedes benz which is opening a final assembly plant for its popular sprinter brd of vans in south carolina. phil lebeau reports tonight from there. j j >> mercedes is in hiring mode, adding 400 workers in south carolina to build sprinter vans for u.s. customersow right n mercedes builds theseva in germany and ships them to the u.s. to be put back together and sold. that process helps mercedes avoid a 25% tax on imported vans, but it's also inefficient and time consuming. >> you can go here because of the stock market and the lead time to show up from six months to some weeks and that is very good for our customers because they would like to deliver on very short term. those customers include amazon, ordering 20,000
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sprinters for its growing deliry network. the commercial van business may not be huge, but mercedes has found a niche, growing sales by 75% since 2011. >> when you look at the applications of the future of mobility, the sweet spot between personal and mass transit, the sprinter is uniquely slated to take care of those needs and take advtage of that market niche. >> merdes decided to expand this plae long bef president trump was elected and started threatening european automakers with hefty tariffs. while new, proposed taxes on imported vehicles and their component are unlikely to have a huge impact on the sprinter an, merceders xeexecutives a well a war of the trade dispute and they're hoping to eliminate al auto tariffs. >> as a company, and i can speak for them as i already mentioned. in a global world and therefore we believe in free tariffs. >> a growing auto plant in a
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state capitalizing on foreign rs automaooking to expand their footprint in the united states. phil lebeau, nightly business report,. south carolina the fbi reportedly investigating american express and that is where we begin tonight's marketus f according to "the wall street journal," the probe is focused on weather. the foreign exchange division focused on clients to attract new business. the investigation is set to be in its very early stages. erican express shares down 1% at 105.68. the curtain may be closing on the legal drama between cbs and its ctrolling shareholder, national amusements. less than a month before the two companies are set to go to trial, the wall street journalt reported t cbs has entered into settlement talks with national amusements will win control over cbs. the potential settlement may leave national amusements with voting control as long as it agrees to stop pushing for a
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merger between cbs and via com. shares of cbs up a fraction at 52.95. game stop reportedly working to sell itself to a private equity firm. accordingrto deal re, the video game retailer is working to get a deal done. game stop shares popped 15% on the news to $16.26. and "the wall street journal" said two major health care deals are close to being cleared. it reported that the department of justice couldppve cbs' acquisition of etna and cigna's buy of express scripts within the next few weeks. the government may push cvs and etna to sell off asset tied to medicare before it approves the mergers. shares of etna, cvs and express scripps were higher and cignaow shares were on the day. >> the heart of the u.s. energy industry dodged a bulle the storm churning through the gulf of mexico turned out to weaker tha expected and that sent the price of domestic crude lower as you see there down
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$1.15. as jackie deangelesor rep, from gulfport, mississippi, the storm isn't over just yet. ♪ ♪ >> the forecast was for a possible 1 categor hurricane, but the storm churning through the gulf didn't pack quite that strong of a punch when it made landfa last night. still, it hit parts of alabama with strong wind, rain and storm surges that caused some disruption. >> here in gulfport, mississippi, hit hard by katrina in 2005, the governor declared a state of emergency yesterday. >> make sure that you have a plan. >> the lopsided storm missed this particular area, but it was agreed all around it's better to be safe rather than sorry. >> the phenomenon happens every . hurricane season, and after harvey and the damage left in its wake, the energy industry was worried about gordon. in preparation for this storm evacuations and shutdowns ofonil prod facilities shuttered about 9% of e production capacity and with nearly 50% of the nation's refining capacity
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located in the gulcoast,s well, there were concerns about gasoline. ahead of gordon, oil prices spiked up $70 a barrel, but fell after the sto didn't cause any severe damage. >> the gulf did have a shutdown of the platforms whichns m they weren't producing oil, but that's kind of a wash right now because we weren't exporting oil, we weren't importing it either because of all of those shipping lanes were shut down due to the storm.il hurricane season runs from early june through late november and while oil dodged a bullet with gordon, it's not over until it's over. for nightly business report, i'm jackie deangeles, gulfport, mississippi. coming up, to rent or buy a home? that's the question for house hunters today. ♪ ♪
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senator bernie sanders introduced a billald the stop bezos act. the measure would require large employers like amazon and walmart to pay the government for food stamps, public housing and other federal assistance received by their workers. the pposed legislation comes one day after amazon reached a trillion dolla in market value. mortgage applications fell for the seventh time in eight weeks. according to the mortgage bankers association, volume was down slightly from the prior week as mortgage rates inched higher and that is weakening fo ability for new homebuyers and giving homeowners a reason torefinance. it is an age-old question, should you buy or the answer these days may surprise you. diana olick explains. >> for the past decade, been cheaper to buy and own the home you live in than to rent it. the crash and home prices combined with mortgage rates timade the calcu simple and now both are up seably.
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buying and owning a company jumped 14% over the past year independent is more than three times the increase in rents which are up about 4% annually according torealtor.com. so the number of local markets where it's cheaper to rent than buy is uptl signific as of now just 41% of the nation's population lives in a county where the median income familyan afford to buy a home. looking at the numbers for july, buying a home was cheaper than rentin% in just of the nation's counties. compare that to 44% just a year ago. >> it is an early cycle sector. interest rates are low and incomes start to grow. so in an early cycle environment you can buy and when ler cycle instruments go up and home prices go up, it's harder to ?uy. looking locally it's much cheaper to buy than rent and baltimore, fayettevilleorth carol scale and in madison county, illinois which is just next to st. louis. on the flside, it's much cheaper to rent in northern
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california and the new york city area particularly manhattan and brooklyn. rentinis now a better investment than buying for the first time since 2010 according to resrch from florida, atlantic university and that is you make more money taking the vings from renting and reinvesting it than you do seeing yourng and home equity increase. for nightly business report, i'm diana olick into washi >> let's talk a little bit more about buying or renting in today'oung market with skylar olson. senior economist. good to have you with us. >> what do you say? should i rent or buy? > i'm going to have to say it depend it depends a lot on primarily right?hings, you personally, it depends on how long you're going to staythn property, whether or not that financial decision pays off. we have an inition that you'll be there a short period of time, rent, of cour, very,ery long, buy, of course, but where the tradeoff is, nationally we still estimate that that balance and turning point is still under
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three years. so in terms of the personal decision, that is how good your credit ise because as mentioned before the mortgage big differenceg, with how expensive it is to own that home and lastly, you've got to have that financial plan for what you're going to do with your savings is not putting a home a lot of americans when they make that choice, they actually don't invest as readily in stock markets and that's an important part of that tradeoff if you're thinking about it as a decision.l >> i guess it really comes down to the question.ou where would build equity? you will build equity by i investin a real estate property or will you take money and actuallynvest it and invest what you may be saving on rent versus mortgaging and payinganhe taxes and maint on the house, right? >> one of the ways to think about the mortgage is in many ways it's a forced savings fhicle, right? you areced to pay that thing every month and a portion of that payment is going toward
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equity and you're growing savings in that way. not everyone will turn around and do the same thing every month toward stocks. >> i would think, too, that helping renters is th idea that buyers will be able to deduct less of the mortgage interest going forward and property taxes and the stafter-tax f owning a home goes up. >> that's not really going to if make arence for high-income earners and high-tax states where hom values are very expensive. for most american, that's notng really g to still come into the financial equation in terms of the b financial payoff. >> but it will affect you in seattle. >> it is, yeah. it very mucho will affect me in seattle except for the fact that seattle is in washingtonh wh does not have income taxes. so in many way, we look at what happen with taxes, seattle eyes could be better off in an income, wn you look at how much income they gained from the
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tax cut. so it really depends. >> got to leave it there, skylar, thanks. you can read more aboutng ren versus buying on our website which is mbr.com. before we go, let's take one a more lookthe day on wall street. the dow was up 22 and the nasanq fell more 1% as tech shares slid 96 points down there and the s&p off eight and that, folks, is "nightly bus report" for tonight. nice to be with you. i'm tyler matheson. have great evening, everybody. we will see you tomorrow or somebody will. ♪ ♪
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