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tv   Nightly Business Report  PBS  September 28, 2018 5:00pm-5:31pm PDT

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>> announcer: this is nightly busisiness report with bill griffeth and sue herera. big gains. the bulls were in control of an often choppy quarter as stocks enter one of the best times of the year for the market. new ho, the fda approves a new drug for migraines, creating a market to treat a major source of pain. >> wireless revolution, why verdictsen hopes it's on the verge of ushering in a new era. those stories on more ton on nightly business report for friday, september 2h. and we do bid you good evening,nd everybody welcomes. here we are at the end of the week, month within quarter. and what a three months it has been. it turned out to be the s&p 500's best quarter if five years and registered new highs along
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the way with investors cheering a rise in profits and a strengthening economy. of on this final trading day the quarter, stocks were little changed. the dow added just 18 points closing the quarter at 26458. the nasdaq up 4. the s&p up -- down a tiny fraction. but check out the gains for the quarter overall. the dow was up 9%. the s&p and tda n each up around 7. of course the question now is, will this momentum continue threw the fourth quarter? mike santei looks at what may come next. wall street's bulls are making the turn into the fourth quarter in good stride but being chased by a set of nagging concerns that have pursued them most of the year. the s&p 500 finished the third quarter with a gain of more than 7% leaching the benchmark up more than 9% so far this year. putting the market on pace for t better than 1urn including divides for all of8. 201
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the market strength is supported by a u.s. economy growing better than 3%. correspondent profi rising near a 20% clip and interest rates that remain at hiorically low levels. technology, retail, health care and transpoeration stocks standouts over the past few months, offering a fairly p encouraginture of the underlying economy. so what is there to wry about heading into what is tip che the strongest quarter of the year? well the concerns are in a few familiar areas. has growth peaked for the u.s. economy or certain sectors as the market seems to suggest? i will moreense trade disputes with china upend global growth and further stress international markets? do the midterm elections present an risk? and how might the federal reserve rate hiking restrain the economy just as the boost from last year's tax cutsasn'ts. the bull market is showing wear and tear that reflects some of th worries. home building, auto, bank, airline and semict con
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stocks all viewed as economic bell weathers to do some degree struggling despite the s&p sitting within a% its record level warnings about earnings short fls from big companies are highest level for more than a year. and profitn forecasts 2019 will be tougher to beat than this year. these are all the kinds of concerns that crop up in the later phase of anc econo cycle. but, of course, no one ever knows for sure how close to the ena cycle we are. what's more, investors have lived with these perceived threats all year and that is not keeping the stock market from climbing to so-called wall of worry. for nightly business report, mike santelli. so let's turn to lisa erickson for her four quarter market outlook, the head of the trav investment bank at u.s. welt management nice to have you nith us t. >> thank you. >> i think mike pointed out the dangerouses if you will to the market. heu agree from my notes, to some
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of but you think of the fundamentals of the market remain intact. >>e do we have a continued cautiously optimistic look for the u.s. equity market for the fourth quarter and it reay is based on good, solid fundamentals.k if you l at the economic picture. mid we track an ongoing dsh board of eco indicators two thirds remain in positive territory. you are seeing good support generally from what's going on in the broad u.s. rkplace. and then in addition if you look at the correspondent earnings picture, the earnings estimates continue to remain good for corporate america, staying around the 2o level going i the end of the year. we really believe both factors will continue t support the market. as but if you had to rank the headwinds mike itemizing there, what do you think are the biggest threats to mrkets wheted raising interest rates more, or trade tariffs continuing? what are you worried about? >> well one of the key concerns that we have is reallyhen
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inflation front. a base case is that inflation stays modest. again we have had nice growing economy but not at excessive levels. there is no treen to believe that inflation suddenly spikes up. but if it is higher than expected that certainly could be a deterrent to the economy. and i think anoth key is really just policy mistakes. while, again, the fednd central banks around the world have done a great job keeping their hands on the tiller they are moving fromit a pn of unprecedented monetary easing. and so it's going to beor little bit difficult for them to navigate that going forwd. >> h would you rank geopolitical risk. >> well geolitical risk is certainly up there as well. i'm glad you brought it up. that's one of thesons we would say we're cautiously optimistic asre as opposed to flatout optimistic. there are a number of hot spots around the globe that could impact t o growth picture the inflation picture. and that is certainly a consideration. >> let's make this meaningful to
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,vestors. i me when we ask money managers and others their favorite sectorssuly we get technology, usually the industrials right now, the internationals. who do you like right now going he fourth quarter? >> well, in the u.s. equity markete do have technology on our list. in addition to consumerti discary. and the reason why is in a moderate growth environment we nvthinktors are really looking for that extra ounce of growth that they can get. b and certainh of knows sectors within certain subindtries and pesk companies really have the opportunity to take advantage of change going on. rtainly technology is bigger part of our lives in many ways, both in the business worldfo an individual consumers. and certainly in consumer discretionary there is change going on. we believe there is nice trends that individual companies candv taketage of. >> on that note, lisa thank you very much. lisa erison with us bank wealth management. and later in the program our markn monitor will js and tell us which stocks he thinks
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are the best bets for the fourth quarter. in the meantime, down component wahl greens is payin $35 million to settle charges of misleading investorsian fina targets. the s.e.c. alleges in the complaint that the focompany's er ceo act the negligently in giving financial estimates six years ago when it announced that merger with boots alliance. as is customary, as part of the settlement, wahl greens theater admit more denied allegations. >> fellow pfizer receive approval for a lung cancer drug. the medicine is a once daily oral drug to treat a rare form of the lung cancer a leading cause of cancer deaths. sharesfi ofr rose a fraction in trading. a eli lilly got the stamp of approval for a new class of migraine medicint offer new hope for the millions suffering from the debilitatg headaches.
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shares of eli lifrl rose on that news. t megrell looks at the big money in this growingmarket. >> reporter: migraine sufferers know the painful episo t are mon just headaches bringing severe throbbing pain often accompanied by nausea and sensitivity to light and sound. there are three optioor migraine prevention. the fda approved the ealey ly drug emgality thursday. it joins recently adrroved mts from teva and amgen. >> we know over 30 million migraine patients in the united states. and if you look at thatnly 10% of them are on preventative migraine agents. because there hasn't been a new medicinen two decades. >> migraine patients have been tread with oltder generic drugs repurposed from other sources. the wrinkle shot botox is approved to treat chronic migraine andng b in about 600 million in sales. the new medicines are in the same class blocking aec me known as c dpchlt rp in might
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have grain. it's given in once a month or every three months. while the drugs don't prevent all migppines they didve in clinical trials to reduce the number of attacks per month. they cost the same too at least on their face. et75 a month or $6900 a year. but wall st analysts expect major discounting to win market share and alreadyhe companies are offering inincentives. amgen which reached the market first offers the dra dwrug for a f$5 monthly co-payor some patients and gives some drugs away for free. teva also offers co-pay assistance to patients may pay nothing. and lily says some patients may receive tg for up to a year for free. they estimate t medicines could draw as much as shh 6 billion a year by the 2020ars. a market for a major source of pain. for nightly business report, m tyrrell. and now to a follow-up of a story we told you about yesterday. tesla. edares of the company dro sharply today following s.e.c.
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charges against ceo elon musk that he made misleading statements about taking the mpany private. tesla shares were down nearly 14%. phil lebeau h more on the legal side facing musk and his company. >> reporter: elon musk finds himself in a fight with the s.e.c. that could cost him had his job runni >> the securities exchange accuses musk of making false anl ding statements when we o he tweeted about taking tesla private with funding secured. he never had a deal locked up. >> we allege that musk statements were false and misleading because any lacked any basis in fact. >> musk calls the charge unjustified andays he is always acted in the best interests of investo. now knows investors are wondering about musk's future. since he reportedly balked at a settlement with the s.e.c. that would have allowed him to stay on as ceo. with that deal dead, the s.e.c. wants to ban musk from running any publicly traded company.
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>> if the s.e.c. is willing to agree to something less, the case is probably resolvable. but if he walked away from that youre probabl right he might not be willing to agree to anything reasonable. >> for ilts part the board of directors including musk's brother says it supports the embattled ceo. >> this puts a lot of pressure on the board. you know the board's responsibility is to delegate the management, not t enable management. >> in s.e.c. case comes just days before tes is due to report third quarter sales. and many believe those numbers will showhe auto maker making steady progress. progress that is now overshadowed by a huge and potentially costlywe fight b musk and the federal government. agil lebeau, nightly business report, chic time to look now at some of today's upgrades and downgrades. beginning tonight with lowes uy upgraded to from hold at sun trust. company'sst cited the
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current turn around plan. price target now $138. the stock rose a fraction today to 114.82. devin energy grayed to overweight from neutral at piperaftery citing the frohash flow into next year. price target now $53 gaining 1% to $39.94oday. and n individuallyia price target raised to 40 oh at ever core isi, the highest on wall street. the analyst cites the chip maker leadership in artificial intelligence. the firm maintains the outperform rating on the gastoc ing 5% to 281.oh 02. phillips 66 partners was downgraded to underweight from equal weight at morgan stanley. the analyst cites the valuation. the price target $50. the stock up a fraction to 51.14. still ahead a security breech atoo fac that's affecting about 50 million accounts.
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a government shutdown as expected has been avoided. president trump signed the $850 spending bill keeping the government open through december 7th. the legislation funds the military and several civilian . agenci facebook said today it has discovered a security breech that hasd affec almost 50 million of its accounts. the company is still investigating this issue and has yet to determine whether the accounts were semi or whether information was accessed. but facebook says the hackers exploid the so-called view-as feature which has been now fixed. >> i'm glad that we found this and that we were able to fix the vulnerability and secure the
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accounts. but it definitely is an issue that this happened in the first place. and i think that this underscores the attacks that our commune and our service face.he andeed to keep op investing heavily in secukty. >> facebays it does not yet know who is behind that attack. the stock fel 2.5% in today's session. it is being called a wireless revolution. verizon is rea to launch new wireless technology that could change the way we use the ternet and watch tv. julia boorstin explains. >> reporter: verizon is launching the nation's first 5 g wireless service, the fifth generation of cellular technology. starting october in houston, indianapolis, los angeles and sacramento. thog new techn promises are promises to match the speed of cable services and create real competition for cable companies vocessizon will charge $50 a month for the service and throw in a free apple tv for new
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subscribers. here is the ceo said about the future of content consumption. >> when we talk about content it's such a brutal narrative. wremembern we used to talk about content we talked about tv.ar but there are so many other tntent that's in the interest. we need tobe are the explaining talking about content that there -- there are many other content thatil be superimportant for 5 g and custers if in th future. some we might create ourselves like we have in the asset. some of course we partner with the best brands in the world. >> at&t is following with a 5 g unch in a dozen cities this year. and t-mobile is planning to create a national 5 g network by 2020. as the telecogiants prepareo face off with new faster offerings for consumers, the question is whetherri n, at&t and others become a bigger thre a to the cable satellite companies and the 90 million usehold that pay for
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broad band phone and tv. one thing that can help the cable tp rainy weather can disrupt the 5 g signal. the conversion will cost billions of dollars and equire the companies to install tens ou sands of new antenna the fcc share says he wants to make sure the telecos can invest in 5 g technology. >> the biggest barrier is the domestic regatory bar years. for example it takes one to two hour to install a small cell on the utility pole for 5so g? cases it takes the two years to get the regulory proufl. >> he says the it's important that u.s. remain the leader in th technology and not fall behind china. for nightly business report. julia boorstin in los angeles. >> lions gate and amazon get together. that's where he begin. bloomberg has been reporting that one of the film studio's largest investors said a new
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partnership between lion gate appear amazon could lead to a merger. v they saidizon could be a suitor as well. although theia telecom said it wasn't interested in buying a traditional entertainment company. nevertheless lion gate shares popped to 24.39. meanwhile amazon and veroton were lower. and the c suite atne jcp looking sparse with the chief financial ofrpz steppindown october 1st to pursue another opportunity. the news comes just a few months after the retailers ceo left abruptly to be the same job at lowes. shares of jcpenney fell 4% to $1.66. appear black berry says lower costs helped to offset weaker sales in software and services businessot as a result earnings and total revenue came in ahead of expectations. the tech company saw increased demand for its self-driving
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technology software and added as a result it plans to increase investments in that business. shares rose more than 11% to 11.38. vail resorts smaller than expected loss and weaker revenue in a quarter tt's seasonally slow for the ski resort operator. the company said results for the fest year sd to due to poor winter conditions but added that it's encouraged by the strong season pass sales as it heads into the busy period.ar were off 4% to 274 peart 42. honeywell said it's raising the quarterly dividend by 10ers 2 cents a share. the yield on the stock sits under 2%. shares of conglomerate rose fractionalo 166.40. and fast fundamental chain bow jangles is considering selling itself. routers is reporting the small cap company is exploring strategic alternatives and working with bank of america on the process. shares of bow jangles jumped 12% on the news to 15.70.
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well, if your portfolio i up nicely this third quarter, the market monitor has ideas how to keep it going into the fourth. joining us tonight shaun ohair hair aire is president of pacer etf his first for hime ton in nightly business record process. welcome thanks for joining us tonight. >> thank y for having me. >> you're looking for value going into the fourth quarter. and i'm starting with your first pick tonight, it's micron technology, the chip stocks suffered. micron had a tough week this week asy well. o you like it here? micron we like technology because we like the harder side of tech as opposed to the soft side or the social side we're ovweight technology in several funds and micron as a chip maker we have in concept we call the four horseman of the internet, artificial intelligence autonomous vehicles, ecommerce and streaming and the demand for the kmips will be increasing as those things -- those types of services increase as well. end they generate a lot of f
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cash flow. they hit a low multiple. >> you're not worried aut pricing pressures. that seems to be the problem for tech companies, the chips. compan >> yeah, i mean there is a lot of competition. we all know -- several of the chip makers but the demand ir believe o time should outstrip the pricing pressures because the demand we believe long-term is fairly significant. >> okay number two is exwhich nix a bet on the cloud. >> yeah, it's a publicly trudied real estateompany where most people see companies like amazon orp gogel or micromicrosoft talk about the cloud business. it's not really a cloud. it's a data center they generate revenue. he can which knicks is the largest data center operator in the u states. 70% of all internet traffic in the u.s. t flowsough one of their centers. and as these big behemoth compete and try to grow the cloud business and this also feeds into the previous anemia of the four horseman wbelieve
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th demand story is big here as well. >> finally a high profile retailer nordstrom had a tough year. ey were for sale then they weren't for sale. they are competing with companies going onlind mean it's been a tough time for the company. why do you like them now? >> we own a specialty basket of retailers which ndstrom is in it. we screened them because of their free cash flow, generate a lot o free cash flow. i think as far as position versus other retailers they had n't have tos and d take off line the stores and problem. that they've crafted we think a nice strategy here, multhannel strategy, which is in store and online. and thenordstroms and nordstroms rack, a discount operation and they kobld together a loyalty program for those. and again any generality free cash fanw and theement now is committed to buying back stock. we look for nordstrom to continue to perform like the other retail players. >> shaun thanks for joining us
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ton. >> thank you. >> shaun o'hara with pacer etfs you c a read moreut his nbr.com the website at coming up, will tariffs put the fast growing ebike business on a new track? bane and kkr are reportedly ng a $20 million fund that will be used to pay severance to acousands of former toys "r" us workers. rding to dow jones, the fund's creation by the private equity owners is an unusual move. a third party will help structure the fund. meanwhile, there are reports out tight that mexico's incoming president has spoken with canada's prime minister
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about the ongoing efforts to redo the north american free trade agreement. theresident president-elect lopez obrador said he spoke with prime minister justin trudeau and told him he will insist that nafta remain a trilateraldeal. at this point as you know only the u.s. and mexico have reached a new agreement. the deadline for an agreement with canada is this sunday. american households are optimistic about their personal finances. according to the latest reading from the university of michigan's monthly survey, sentiment ieas r highs. expectations for improved personal finances a at the highest level since 2004. the survey showed gnat only concer was about the impact of trade tariffs. speaking of which tariffs are causing financial pain for start-ups in the fast-growing ebikes industry. adidi roy is in fountain view, california for us tonight. >> reporter: ten yeerps ago best
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friends dante and terrie started an electric bike company. peda goes just as ebikes were taking off. >> the last 10 years we've going to 20 to 50%. >> last year they made 18.6 million in reveaking them a leader in the fledgling ebike industry expected to grow from $17 billion now to a $24 billion market by 2025. but now the company and the industry are facing a major road block, tariffs. >> how many components of this bike are made in china. >> this bike is probably 80% chinese. >> m torities of the bike parts come from china where most assembled. in fact the most important component in the ebike is the throttle. allowing me to w go fasthout working hard. he says virtually all throttles are made in china. >> for this company the 25%
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tariff on electric bikes adds up to $1 million this year. >> it was a big game changer for us. we have been going around business fine for nine years. all of sudden we get side swiped by in tariff issue. we had to figure out how to deal with it. >> when but whenoo he ld in the possibility of moving production to the u.s. he i raemzewas cost pribltive. the average price of the bike is $3,000. says the tariff would raise the price to 37.50. moving to the u.s. would have doubled the price. so the company chose to move oduction to vietnam. where extra transit and labor costs still raised the av30age price by oh. >> there will abslight increase for the consumer. and that -- that about balances whate believe it's going t cost us. but we don't know until we get into full production >> besides opening the new production center in vietnam, for ompany is shoppin parts in other countries. the newest bicycle only contains about 20% of parts from china. >> any component we can get outside ofhina we are sourcing
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outside of china. >> well the company doesn't pect sales will be impacted by the trade tensions one analyst sayse expects u.s. sales of ebikes to decline 15% becausefsf the tarince nearly all electric bike companies are raising prices because of the duties. for nightly business report, adidi roy, fountain valley, california. >> before we go, here a look at the third quarter performance. it was a good one. big gains for all of the averages. that will do it for us tonight on nightly businessan report for joining us. >> last tding day of september. >> i can't believe it. >> i'm bill griffeth, have a great weekend, everybody. we'll see you in october.
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