tv Nightly Business Report PBS January 11, 2019 5:00pm-5:30pm PST
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this is "nightly business report" with bill griffeth and sue herera washington worried. the weeks-long partial government shutdown i starting to create anxiety on wall street and nervousness amonginvestors. business at risk. it's not just wall street. main street business owners that reer on the gent are now getting creative to stay afloat. > not so happy returns. the high cost of bringing all of that unwanted holiday merchandise back to stores. those storiesh and muc more tonight on "nightly business report" for th friday, january good evening, everyone, and allcome. the par government shutdown is on track to be the longest in history. presidest trump and con appear no closer to a deal to
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reopen the parts of the got rnment te closed. the reality is hitting federal workers who today missed their first paychecks, and there are new estimates as to the broader economic cost. o far the economy has lost about$3.5 billion. according to s&p global ratings, it will only take another two weeks foruthe wn to exceed the amount of money the president wants to fund a border wall. and on wall street, analysts are starting to take note as well of the potential impact to a number of sectors. bob pisani starts us off asnight. >> the governmentow been closed for 21 days. that ties the record for a i stand-offset 1995-96 between bill clinton and house speaker newt gingrich. >>n giving up balancing the budget i think would be a tragedy that would haunt us for the rest of our lives. >> it is wrong for the congres tot the government down. >> while investors might have shrugged off shutdown concerns later on, wall street is starting to get a little worried
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here. we're seeing analysts' notes saying this will srt to affect businesses. they warned airlines and the business of travel. american airlines has significant exposure with its hub in washington, d.c. others worry about tax refund delays and what the shutdown will mean for stores that cater to lower income consumers. they say prolonged government shutdowns jeopardize food stamps and other benefits low-incomeom cus rely on. that could be a big headwind for retailers that cater to those customers. defense contracts that work with agencies could als be disrupted and they could lose revenue or whole projects altogether. still others are worried about the longer ter impact on infrastructure projects and federal cyber security workers, for example. this is not just theoretical. some damage has already been done. jpmorgan has already lowered its first quarter gdp growth estimates to 2% primarily because of the government shutdown. i'm bob pisani at the new york
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stock exchange. >> there was some movement in washington regarding the shutdown toey. ouse voted to restore funding for some federal agencies that have been furloughed, including the interior department a the environmental protection agency. but senate rublican leade mitch mcconnell said he would not bring that bill up for a vote since the president would not be expected to sign it. separately, though, the house voted to ensure that all federal employees will be paid ft retroactively the shutdown ends. the senate approved that bill unanimounty and the presis expected to sign it. meantime, the federal eserve and several banking agencies have asked financial firms to work with those affected by the partial sh down. banks are being urged to consider things like loan modifications o extending credit. this is the type of guidance that is normally issued following things like hurricanes and wildfires or otheratal disasters. the shutdown is forcing miami international airport to close one of its terminals over this weekend because security
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screeners have been calling in at twice the normal rate. calling in sick, that is. miami is the second busiest international airport in the country after new york's k. officials say they are just concerned there will not be enough workers to handle all 11 nheckpoints during normal operating hours saturday and sunday. as you know, today marked the first day that tsa screeners missed a paycheck. the 800,000 federal workers who aren't getting paid are thef first tol the impact, but the effects are quickly rippling through the econy. and now some small business owne are worried that they're getting pinched. kate rogers has our story. >> reporter: kimberly stewart inruns stestone consulting in northern virginia, a three-person company doing contract work for the government and small business consulting. federal contracts make up about one-third of her business. company e shutdown h has been notified to stop work on projectith the department of transportation, a first for stewart who says she's worked
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rough previous shutdowns. >> it's more than 800,000 federal eloyees that are being impacted, it's the small small businesses that are really, truly at risk of going out of business. >> reporter: stewart planned ahead for p aential government closure with cash reserve and is shifting her focus to tonsulting wo make up some of the revenue she's missing out on during the wnshut but she said her business is jeopardized the longer this drags on. >> having a g shutdown on for such a long time, it really does put my business at risk. it is a thirdf my revenue right now. reserve.d build up a but i'm eating that reserve at this point. >> reporter: meanwhile, in houston, texas, helen collier says she's without a resour the small business administration. her company is also a government kra contractor. while she's able to continue her contract lework, she's uno
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work with the sba on business development during the shutdown to t attempt gain work on future contracts. >> the challenge that we have is key folks that we neeo leverage to go after contracts in that program, they are not working. that's an impact thatbe we're g real creative to see how we can make something >> reporter: both business owners urge leaders in shington to come to an agreement. for "nightly business report," i'm kate rogers. farmers around the country have now been hit with a 1-2 punch. they are being indirectly affected by the partial government shutdown while they continue to dea with the fallout from the trade war with china. aditi roy has our story from california tonight. >> reporter: it's a busy time at monte vista, california. they are sorting more almonds
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than usual. >> our marketing has been conditioned ahi having cna as a pressure reliefalve on our inventory. >> reporter: but the ceo says this year the farm's shipments to china, which usuallyr accoun 9% of total exports, have sunk because of the country's 50% t on the nuts. >> well, in a normal year we wouldn't have this many finished goods stacked up. il>> reporter: they are pg up and he is looking for other s markets top them. worse, matters government aid payments to farmers affected by the riffs are delayed because of the shutdown. farm service agency offices around the country are also os cl, which means farmers can't process a their applications or government checks. hoff says the price he's getti for almonds has dropped 20%, even though consumer prices are about the same. >> you know, we've been resilient and been able to get hrough it. market pricee come back to a certain extent, but we definitely wt to see this
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trade situation resved in th near future. >> reporter: across the country, dairy and grain farmers are also strugglingith what he calls the 1-2 punch of the tariffs and the shutdown. one effect, three critical usda crop reports have been delayed because of the shutdown. those reports show the demand for corn, wheat and soybeans, and how much crop was produced last year. that data helps traders set prices and farmers make decisions. >> all of this crop still has to be processed, packed and shippes toe market before 2019 crop. >> reporter: as he worried about running out of warehouse space foris excess almonds, he remains hopeful about the future. >> you nknow, there's thision that we're going to endure some short-term pain for long-term gain. as long as that's the direction at we go in, then we're okay. >> reporter: president trump is scheduled address farmers at the american farm bureau convention in new orleans on monday. for "nightly business report,"
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i'm aditi roy. on wall street stocks snapped their five-day w streak. the indexes were pushed marginally lower on concerns about the shutdown and that slowing growth in china. the dow jones industrial average fell about 6 points to 23,995.as the nq was down 14 and the s&p 500 fell a fraction. for the week, though, the major aver all showed solid gains. meantime, oil prices broke a nine-day win streak which was the longest stripping of gains in nine years. domestic crudetl s down nearly 2%. after a run of disappointinn gs reports, general motors has finally bucked that trend. the automaker said tod it expects to beat its earnings projections for 2018. it alsoave an upbeat outlook for this year. that's easing some concern about demand slowing here in the u.s. and in china. it was enough to send the stock today.ut 7% it closed at $37.18. phil lebeau has mor details for
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us. >> for all the hand wringing about auto sales slowing down ound the world, general motors says business remains solid. in fact, it's raising its earnings expectations due to strong demand for high profit vehicles like the chevy silverado. >> it was not only a focus on really capitalizing on the new trucks that we have there, the light duty trucks, but also the focus on cost reduction. so it was across the ard. every element of the company. >> reporr: the cost reduction behind gm's bullish outlook comes from the money saved by shutting six plants in north america and eliminating roughly 15,000 jobs. >> tt's a huge contribution to 2019. i think this is what investors have been undereitimating. also the contribution from their new trucks, their full-size pickups, which are rolling out inps dealers as we speak. >> reporter: gm is alsoin planng to roll out an all-electric cadillac to make the luxury brand itsgs flap for electric
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vehicles. it plans t launchn autonomous ride-share service through its i subsidiary , but when that will happen remains unclear, as does the question of what it will take to get investors excited about gm. it's been five years since mary barra became ceo. while she has raised profits for the automaker, the stock has done very little during her hatenure. >> w much more work to do. clearly we've come in and focus every dayn creating shareholder value and making sure we're providing ana suste general motors for the long term. we have much more work to do. so we've made progress, but my focus is on the work we still have in front of us. >> but areou satisfied with your performance? >> i'm never satisfied. >> gm is not the only auto stock stuck in neutral. most of the sector has struggled this last but they hope their optimistic view of 2019 will revse the fortunes of its stock. for "nightly business report," i'm phil lebeau.
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starbucks was downgraded to the analyst cites concerns in china and says starbucks will bow the next brand to warn ofne we in that country. the price target is $68. starbucks fell a fction to $63.73. goldman sachs also cut its rating on yum brands from sell to neutral. they cite concerns at pizza h and taco bell. the pce target is 76. the stock fell to $90.94. the gap was downgraded to f underweighm overweight at barclays. rae analyst there cited challengingic trends and difficult comparisons. price target $25. that stock lost a penny today to $25.24. and netflix was upgraded to strong buy from outperform at raymond james with the analyst citing a solid content slate of programs which could help revenue and earnings per share even higher. price target $450 and shares
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rose to $337.59. the stock has gained 37% just since christmas eve. still ahead, therls biggest banks report their earnings next week, and they carry a lot of weight in the market. but what are the odds that they'll have a blowout quarter? here they come, bank earnings will be in focus next week.il citi be the first to report its resultsnd on . then skrchltjp moefr pchl and wn tuesday.tz david ds president, chief investment strategist at pointview wealth finagement. t of all, big picture.
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interest rates have remained low, the housing market i not setting anybody on fire. trading revenue might be a problem, investment banking. what are your expectations overl? >> overall we're actually -- we have mediocre fundamentalss.or the ba the problem is the economy outlook has deteriorated just a little bit as people are focused on concerns like trade, like government shutdown. at the same time, of course, interest rates are i soortant to the banks. the net interest margin, the difference between whathey pay to get a deposit and what they lend it out at has shrunk as the yield curve has flatteneso the fundamental is a little weaker. the positive is with bank scks down roughly 20% from their january highs, we think there's overpessimism in the group and money can be made if thing stabilize. >> we can divide it up into those banks domestically centered and those that have an international presence. i would think the international banks will also give us a idea
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of how the global economy is doing. >> you are so right, sue. citigroup is the one i'm watching for. we'll hear from them on monday. more than half theirusiness is overseas, so we'll get great insightsot only to what's going on here but what's going on overseas. >> and among the domestibanks, bank of america is the one you're watching most closely, riant? >> i think of america is your ultimate bellwether. why? it's primarily domestic. second, they're not affected by any of course the federal reserve is aptive on the growth wells fargo can experience. goldman sachs is under pressure from their lawsuit. bank of america is pretty clean there. they're on every corner, so they're going to give you a great read as to the health of the domestic economy. >> the fed this year, there was a lot of i wouldn't say controversy, but there was a lot of talk from various fed members about the course of interest rates, the course of the economy, should they keep raising rates, and you brought up the interest rate differential earlier.he if fed does not continue to
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move on its projected rate increase, what impact is that going to have on the banks? >> i think it's going to be a positive impact because i think you'll see some deepening othe yield curve. people will pile in and push short-term rates atdown. going to reduce the amount banks have to pay for depositi. at the sam, as people get more confidence with what's going on, i think there will b greater loan demand and that will push interest rates up, the spreadill be better a you'll see that in bank earnings. >> next week will be very instructive, that's for sure. david, always good to see you. >> thank you, bill. well-known investor is rolling the dice on caesar's billionaire investor carl icahn has importantly built a position inohat cas operator. as first reported by cnbc, the size of the stake was not immediately known. caesar's rejected a merger approach by the owner of the golden nugget casinos. shares of caesar's popped 9% to
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$8.71. onactivi blizzard is cutting ties. the surprise move came last night and raises questions about the company's games for 2019. it is unclear why theyed termin their ten-year fntract. activision sharesl to 46.54. vail results lowered its profit forecast. guest visits were much lower than ticipated. its properties in whistler and lake tahoe in particular suffered from weather-related issues. ares plunged 13% to $187.33. chico's plans to close 250 stores over the next three years as part of a planned digital expansion. the retaisr s it has invested in technology to improve its online offerings and customer service. they also raised its fourth
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quarter sales forecast. shares rose by 4% to $6.18 today. and a private equity firm asys it no plans to sell its stake in canadian medical cannabis company tilray. they will instead hold on to those shares until at least the second half of this year. so f they have limited its invements in the cannabis industry to tilray. tilray's shares, which have been volatile if you follow them, they soared by 19% today to $96 even. after the bell, yetirt re stronger quarterly sales thanks to solid demand for its drkware a outdoor products. they raised theire guida for the full year. that sent the stock higher. shares m finished upe than 2% to $16.72. it is time for our weekly market monitor,ho likes the small cap stocks. he says the extreme market
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volatility has created the most mispriced stocks he's seen in a decade. joining us is craig hodges. welcome back, craig, greatseo you. >> thank you, sue. nice to be here. >> when i was reading through the notes, youy rea do mean there's a lot of mispricing in your opinion in these stocks, so let's start with commercial metals. >> yeah. >> this is what you say is the most mispriced stock in the market today. why? >> yeah, it's really -- the company is hitting on all cylinders. probably having at much success as the company has ever had. at hodges capital we followed the stock for at least 25 years. the stock is trading around $150 in they earned about 2.90nd share traded at $40. so almost the same earnings and the stock is 70% lower. this is a company, it's a rebar manufacturer they have got over a 50% -- they just made an acquisition that's
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going t make them 50% player in the u.s. rebar market. earnings are going up.is acquisition they have made is very, very creative. i think even the company is baffled why the sto is trading like it is. so i think this is one of the most emispriced stocks i seen in a long, long time. >> you also like at home, home decor company. >> yeah. >> as we've mentioned, i mean c thpany has suffered along n th the home builders and others involvede housing market. so is this a bet that the housing market recovers or not? >> not really. this is a -- kind of h ae decor superstore concept. there's only 115 or0 stores. they're going to grow that to over 600. so it should easily grow 20%, 25% over the next five years o so, but only trading about a 20 multiple. so that's a good risk/reward ratio. they're going too into the hotter markets. they're very, very popular with the llenials.
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a good growth concept that i think has been also a stock down about -- it's been cut in half, you know,as here in the four or five months, so it's a good entrn point a good growth company where you're not paying crazy multiples. >> finally helmerick and payne. i was impressed with the defensive den 5.3%. cyou said they havesistently paid and raised the dividend for 45 years. >>e one of highest quality companies we know of, have owned is stock for year. the energy markets -- and they do land drilling services. they have flex rigs, the most efficient rigs out there, land rigs. here's a company that has consistently perrmed in a very volatile business. it is still volatile, but they have been able to ride out the storm. so like you mentioned, sue, the 5.3% dividend i think is very, very safe. and the stock is also down about 30% just in the last three months. so another real opportunity out
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yoere. >> craig, thank have a great weekend. craig hodges. >> my pleasure. >> with hodges capital management. to read more head to our website, nbr.com. and coming up, retailers look for a better fit to cut costs. i'm courtney reagan in fndianapolis, indiana, in a warehouse full returned and liquidated merchandise. i'll tell you why returns are coming a bigge problem in retail. that's coming up on "nightly business repor" here's a look at what to watch for on monday. the national retail federation osts its annual conference. the healththe retail sector will be quite in focus after this week's dim forecast from macy's. the bankruptcy auction for
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place.assets will tak as you know, chairman eddie lampert submittedvised $5 billion bid. at the detroit auto sho the automakers will show off their vehicles of the future. that's what to watch for on monday. consumer prices dropped for e first time in nine months. the decline was due in part to a dropnasoline prices. overall the consumer price index dipped by 0.1%, which was in line with economists' hopectations. the report alsod that health care and rental costs rose steadily. well, the holidays may be over, but gift returns are in full swing, creating headaches for the companies who have to sort through them. the process is so arduous and costly, that manyf those items don't even make it back to the store shelves, and some companies are getting creative whe it comes to managing returns. courtney reagan is in indianapolis. >> reporter: it's that time of year again, return season. during and after the holidays,
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returns spike from all those unwanted gifts. but it's a growing issue for retail beyond theay hol season. >> the general in-store return rate you see in the 7% t 8% range, while e-commerce is in the 20% to 30% raroe. so theh of e-commerce withs itxtra high return rates are causing overall returns to continue to grow. >> reporter: an estimated $380 billion of merchandise was amount last year, an that could grow to a trillion dollars in several years.ea gardner rh estimates less than half of returned goods end up resold at fullprice. the rest gets refurbished, liquidated, donated or thrown away. >> many retailers throw away over 25% of their returns. holistically, that ends up being 5 billion pounds of goods ending up in landfills. >> reporter: some of the largest retailers are losing hundreds of miions of dollars a year on returns, but there are companies that can help l retailerser
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the cost. >> there'sonline auctions for each client. we drive buyer command and ther bu are businesses and it creates competition. so theusinesses areompeting against each other for the inventory and it ultimately the for the highest price market is willing to bear. >> reporter: this is just some of the merchandise that's currently up for auction on the onne market places that they build for retailers, like walmart, amazon,t bbuy, macy's and others. the volume of returned or liquidated merchandise moving through b stock auctions is upl ne 100% over the last year. target,ur under ar jet and others use software to determine which method, restocking, refurbishing, liquidating or donating will generate the highest sales price.la itstform increases a retailer's recovery by an average of 25%. over the last several years, st buy has focused on selling
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open box returned goods online and during promotions to help manage return costs. amazon works hard to reduce the amoun that goes to lquidation and inspects returns. there are nays to manage returns but it may not be enough to keep up with the volume coming back. for "nightly business report," i'm courtney reagan in indianapolis. and before we go, a flat day on wall street if you jt joinedus. for the week, the major averages were higher, up more than 2%. >> that's "nightly business report" tonight, i'm sue herera thanks for joining us. >> i'm bill griffeth. have a wonderful weekend. see u monday.
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