>> announcer: this is "nightly business report" with sue herera and bill griff new risk. india and pakistan clash over kashmir. investorsave a new global worry. fighting back. best buy is holding its own against the likes of amazon, and shareholders are starting to reap the rewards. >> house hunts. the spring selling season is here but ie may b one of the coolest in recent years for homeowners and investors. those stories and more tonight for "nightly business report" for . good evening, everyone. i'm tyler mathisen in tonight for bill diffeth. >> g to have you with us, ty. i'm sue herera. we begin our program tonight with one of the trickiest things for investors to manage, and that is geopolitics, in part

because of the unpredictability. that's one of thessues wall street had to contend with today as hostilities betaren nuc rivals india and pakistan escalated. pakistan said it downed two indian fighter jets and captured a pilot. this comesne day after indian warplanes struck inside pakistan f territory the irst time in 50 years. remember, thiss a region of the world that h become hot spot for corporate investment. pepsi, coke,eneral electric,fir, p & g are some of the companies that do business in pakistan. others have a big presence in india. imanyestors are exposed to emerging market moreer gly and that's why some t heightened tensions as a new risk on wall street. bob pisani has more. with trade talks andko nort a negotiations and multiple hearings in washington, it's easy to overlook the recent

hostilities between india and pakistan, but thatould be a mistake, investors say. down an's air force shot two indian warplanes that had crossed the disputed kashmir border after a suicide bombing filled more than0 soldiers. investment in pakistan is relatively small but a global investment in india is large and growing. foreign direct investment or fdi in india was over $33 billion at the ending of 2018. t the governmenre is working on a road map to achieve its goal of $100 billion of fdi inflows. sing moapor singapore, netherlands, the united states and japan with the investors in india. the two countries had fought several bloody wars in the past and there is a very real risk that eve could quickly spin out of control. >> it's two nuclear powers. odne of it is priced into the market because n knows what to make of it. but if, heaven ,forb this

thing began to spin out of control, it would have a great deal of influence. >> he also n ed that th current belief that the two nuclear powers could never escalate a conflict into a conventional grounding w aal grl nothing but a theory. i'm bob pisani. >>resident trump and kim jong-un started their second high-stakes summit today with a handshake. as eon javers reports from hanoi, the president quickly turned their attention to north rea's econom. >> reporter: hanoi, the former capital of north vietnam, ang st setting for the second summit between president donald trump and north korean leader kim jong-un. american officials hope the example of vietnam's reconciliation with the united states and subsequent economic growth shows a pathhat kim jong-un could follow. trump made the pitch directly to the north korean leader in their first meeting of the day. >> i think that your country has tremendous economic potential.

unbelievable, i think that you will have a tremendous future with your country, a greatleader. and i look forward to watching it happen and helping it to happen. and we will help it to happen. >> reporter: and for a president who practices a brand of personal diplomacy. >> i tnk it was verygood. >> reporter: it all comes down to the relationship between the two leaders. t >> we're goinghave a very busy day tomorrow and we'll probably have a pretty quick dinner and a lot of things are going to be ed, i hope. i think it will lead toer wol -- it will lead to a wonderful situation long term. ourelationship is a very specialrelationship. >> reporter: as the two men headed back to their respective residences after an hour plus social dinner with des, no word from officials on any progress made or even a detailed schedule for day two. many summit watchersay there ar options here for a deal that's short of full ean clearization of the k peninsula. the two countries could agree to a formal ending end to the

ko aan war also agree to open liaison officesn each country. of course the north koreans hope ld offersident trump c some sanctions relief, which they feel is badly needed to help their economy. for "nightly business report," i'm eamon javers in hanoi, vietnam. so let's turn now to art hogan to talk about the geopolitical situations and how it might affect the markets. he joins us now from new york city. art, welcome, nice to have you here. you are the chief market strategist with nationalcu ties. so, art, basically for those of us who are in the united states, invested domestically, you look at the geopolitical events, for example, between india and pakistan. why should investors here at home beoncerned about that? >> that's a great question. that's the thing we wrestle with all the time, whether it's

confrontations close to us or ings far away. india and pakistan have been fighting since 1947. why should that matter to us now? three reasons. a, any geopolitical concerns can slow down economic activity globy. b, they have nuclear weapons and anhing that escalated, that's not what we're calling for, guld certainly become a larger situation in thbal economy. the third and most important thing is this has been going on a while. this headline is very scary. we haven't seen this many planes shot down since 1971. that's why it takes the market a while to put a price on what this means. right now we're just watching it very closely. but geopolitical events like venezu could get much larger than it is but right now the market is staying on the sidelines to see how it plays out. >> so you don't think that today's events with respect toa

into the market? >> no, not a all. venezuela could be even larger and even sooner. e look at this right now if this were to start to price the market, that would manifest in g more defensive, raising more cash, we haven't sn that just yet. that could happen easily. remember, this can escalate ickly. >> so if that is indeed the case and we haven't even broached the north korea situation with you yet, art, b should investors maybe put in a little bit of protection by buying somed h assets or different asset classes just in case we get an escalation in any one of those situations? >> so we're talking about this the last time we were togethof. onhe things that i said to you and it still holds true today, having gold in your portfolio and how much you should have is just as much as makes you slope eep at night. if you feel fine and have long-term investment horizon, you probably don't need any. but with the geopolitical

activity that's out there, get defensive. if you'r a feeling nervousut what's going on in the world, get defensive. you can do that three ways. you can raise cash and have a higher level of cash. buy some or precious metals. or think about other defensive sectors and healthare is the one that comes to mindhei quickest. something we need versus something we want. if you feel nervous about this, get defensive but don't rush. >> on that note, art hogan, tht ks so much. with >> the white house's top trade negotiator told lawmakers that talks between t u.s. a china are progressing, but there's still a lot of work to. >> we are making real progress. if we can complete this effort, and again i say if, and can reach a satisfactory solution to all -- to the all-important outstanding issue of enforceability as well as some

other concerns, we might be able to have an agreement that helps us turn corner in our economic relationship with china. let me be clear, much still needs to be done both before an agreement is reached and more importantly after it is reached. >> robert lighthizer's testimony comes days after the president delayed a deadlin to impose more than double the tariffs on $200 billion in chinese goods. and today the commerce department reported that the overall tefdeit in goods widened sharply, rising 12.8% i december due to ann increase in imports and slowing global demand. those comments from the tradent repreive as well as those new geopolitical issues pressured stocks an putn lid dpanz. the dow industrials fell 72 points at 25,985. the nasdaq as up a modest 5 1/5

and the s&p 500 fell 1.5. fedaleserve chairman jerome powell is back on capitol hill today for a second day of testimony. directly discussing the outlook for interest rates, he did allude to the plan to shrink the fed's$4 trillion balance sheet which is made up mostly of securities bought to stimulate the economy during the financial crisis. >> we've now had threeut conse meetings on the balance sheet and we've worked out, i think, the framework of a plan that we hope to be t able announce soon that will light the way all the way to the end balance sheet normalization and that will result in the end asset runoff sometime later this year. >> mr. powell also t described economic outlook as generally favorable, but one that faces challenges from abroad. there was another hearing on capitol hill that investors did keep an eye on. president trump's former attorney, michael cohen, cast his forr boss as a, quote, con man and a racist and accusei

the pnt of lying about his businessnterests in russia. but one congressman criticized cohen for his own lies. >> his remorse is nonexistent. he just debated a member of congress saying i really didn't do anything wrong with the false bank things i'm guilty of and going to prison for. >> you know that' not what i said. i pled guilty and i take responsibility for my actions. shame on you, mr. jordan. that's not what i said. >> cohen is set to begin a three-year prison term for financial crimes and lying to. congre it is time to take a look at some of today's upgrades and downgrades. home depot was downgraded tork perform from outperform. the analyst cites concerns that the company's guidance is too optimistic. the price target. is $1 shares fell more than 2% to

$183.67. ww, the company formerly known aseight watchers, was downgraded by a number of firms and is now the top short idea at jpmorgan with an ederweight. analyst cites the disappointing earningswe guidan old you about last night. the price target is $14. the stock fel 34% to $19.37. meantime, decker's downgralded to neutral from positive. the analyst cites limited upside in the stock. the stock fell a fraction to $148.54. philip morris was upgraded to buytr from n at ubs. the analyst there sees an increase in organic revenue growth the next three years. the price target $101 and the ock rose a fraction to close at $87.27 still ahead, building gains. as buyers head to those open houses, should investors stock up on the hous

> some brick and mortar retailers struggle, best buy is on a hot streak. the consumer electronics retailer easily toppe street earnings estimates thanks in part to consumers who spent a lot on devices during the holiday period senthe stock up . reagan tellst's w clicking at best buy. >> reporter: it wasn't all thatn long ago that wondered if best buy would survive. then again best buy puts up a strong quarter with comparable u.s. sales up 3%. the seventh strght quarter that metric grew at least 3%. customers spent a lot on

devices, appliances, smart home technology and gaming, though mobile phone sales were weak. best buy did something you don't iar a retailer often does, hit it sales two years ahead of schedule. >> i think there were a lot of people that figured the gas had runut of the tank, but it looks like 2019 should be a decent year for them. >> rorter: part of best buy's recent success has come from adding services, like total tech support, a subscription for unlimited tech support, and in-home adviss that suggest customers add to their tech capabilities. the ceo also sees opportunity for the company in existing categories like home theater as screens orog techns like 4k and oled, innovations in mobile like foldable phones and 5g. best buy is investing inmart me technology and health mon string services. they are currently testing health monitoring for seniors

with a number of unnamed managed care organizations. a business that has a potential to be a big opportunity in the future for best buy. and while there is some concein about a sl u.s. economy and weakening consumer, theisoncern oming largely from international uncertainty. he's happy with what he's seeing with the u.s. consumer. for "nightly business report," i'm courtney reagan. box gets boxed in, and that's where we begin tonight's mark focus. the cloud storage company reported ctweaker-than-ex revenue and issued soft guidance for the current quarter. the tceo said company's billings were not as strong as hoped. the stock fellly sha in initial after-hours trading. it finished the regular higher by 2% to $24.88. campbell's soup beat earnings and revenue expectations marking ait pe start for a new ceo. ganic sales were flat and profit margins fell as the company struggled to attract younger, health conscious

consumers. w share up to $36.21. tjx beatn same-store quarterly sales estimates durg the holiday shopping season. they own marshall's and t.j. maxx and is raising its defensive denld. they are buying backo up $2.25 billion worth of its shares. today thehares closed u more than en3 .5% to $51.56. dean foods missed on quarterly earnings forecast. the dairy product supplier also suspended its dividend. dean said it was exploring options, including selling itself or going private as itst ggles with falling milk consumption. the shares plunged almost down to $3.92. booking holdings, which used to be known as priceline, gave a profit outlook forhe current quarter that came in below what wall street expected as the company will spend moren

advertising an marketing. the company also posted earnings that beat eectations asross travel bookings rose 9% in the latest quarter. that guidance sent shares sharply lower in after-hours trading. during the regularseion, ooking holdings down just a fraction at $1906. the payment company square also issued weak first quarter idanc . revenue in the fourth quarter grew more than 50%, but that was slower than the prior quarter. combine thaith soft guidance and shares initially sold off in tended trading but finished the regular session up 2% to $79.32. it was a mixed quarter for lowe's. the home improvement retailer reported better-than-expected earnings but revenue was a littlesquishy. the new ceo came in during a period of change and has overseen the closing of stoerre and executive changes. he haslans to modernize

digital operations as well. there's hope that spring may have sprung for housing. today we learned that pending home sales, the measure of signed contracts to buy existing homes, rose sharply in january. but as diana olick reports, expectations are tempered for this upcomingelling season. >> reporter: there was some good news in housing to start this year. buyers came back, signing more contracts to buy existing homes than in december, according to the realtors. and the gains in home pricesto e shrinkinhe smallest in three years. >> we're seeing stronger buyer demand, but it's not as if eople are willing to pay any price to get ahome, which is what we saw at the beginning of 2018 and the past four years before at. >> and buyers are being helped by lower interest rates. the 30-year fix is at the lowest in a year and that boosts mortgage demand this week applications jumped noticeably. there was also bad news. home construction fell again in december and what builders are putting up is not in the entry level category.

home affordability is now at the lowest in a decade. even warren buffett, who has been bullish on housing, waved a warning flag in an interview on cnbc earlier this week. >> single family construction is really -- i think it's been quite weak compared to what you would expect ten years of quadrupling from the lows and unemployment at 3.7%. people are just making differeni s. >> reporter: or the choice is being made for them. today's home buyers are facinge the priciest markets in a decade. and while the fundamentals behind tm are strong, like job and wage growth, you can't buy a home if you can't find an affordable one. >> think the spring housing market will see some signs of a rebound. t it wil be slower than expeations, slower than what a some buyer demand would suggest, and tha because housing has these structural headwinds.

they're not going away, even when interest rates areoing lower and even as wages are going up. the structural issues are on the supply side. >> reporter: and those issues will not be solved by spring. for "nightly business report," i'm diana olick in washingt. so what would a weak spring selling season mean for the home builders a other related stocks? joining us to discuss is ken nleon, equity analyst at cfra research. ken, i note that among the home builde t, i don't remembe last time i could say this about an analyst like you. you do not have a single buy recommendation on any of the builders in your world. why? >> so the outlook is cautious. it's going to be very hard for any of these builders to put up positive year-over-year growth. orders are weak. even toll brothers today didn't have the conviction to give guidance for the full year. their orders, which do include january, so that's another month, are still weak.

there' increased traffic coming to communities, but affoability is a big issue. and that affects demand. >> you actually have sell recommendations on kb homes and meritage. has some big implications for other pngts of the hou sector, does it not? >> well, when we look at those sell recommendations, they are sun terms of their geographic profile trir ability to move. it's actually going to be the low end, lower priced homes that will sell quicker. each of those have challenges f th their profile in terms what home communities they have. it essentially means a pivo consumer is strong, home improvement should be one area that should do well. 126 million u.s. households not moving. they have increased home equitya value, the rising household income.

so think of this. it's a lot easier torenovate, remodel or add a room than to take a mortgage at 4.5% for higher priced home. i think that's the behavior happening in the u.s. economy today. >> so speaking as a guy w.h.ho'n the dead middle center of a complete kitchen demolition, which of the home repair and improvement chains do you like and why? >> so we heard your preview before. home depot is a hold. we downgraded it from a buy yesterday. it's the law of largenu ers, it just can't grow rapidly. lowe's looks great. we reiterated our buy, raised our target price up to $119. enjoyave the ability to the backdrop of the economy, but also it's a turn-around stoth n entirely new management team. and bringing in fundaments 101 for home improvement. so that should increase thee velocity of earnings. >> ken, i'd invite you over for

dinner but i've got no kitchen. ken leon, see you again. coming up, a semi conductor surprise after a dee fidelity is reportedly facing a government probe over hiddenfees. according to "the wall street journal" the fee wasmplemented in 2016 and is imposed on somef mutual s. it is described as an infrastructure fee and is aimed at companies selling shares on fidelity's fundat rm. those funds can either pay the fee or push the cost onto investors, which can lower returns for individuals. we've reported extensively

on trade tensions and on the outlook for interest rates. tonight we take look at one sector that has been caught in the middle. josh lipton shines the secto spotlight on semi conductors. >> reporter: chip investors have been breathing a sigh of relisi. trade ts between the u.s. and china have eased, with new hope that president donald trum and chinese president xi jinping willet a deal done, because many chip companies such as nvidia and amd have significant exposure to china. it's ant issue t intel's new ceo recently addressed.>> we're all excited by the progress that seems to beade in the discussions between the u.s. and china, because we think global trade is good for- good for the industry in particular, so we think ove time as the thawing out of the dynamics play out that it's going to open up

opportunities. >> reporte ano reason for increasing enthusiasm, a friendlier federal reserve, which says it will take a pause from hiking interest rates, alleviating concerns that the fed would slow the economy, emand forld impact semi conductors. then there's the outlook for the sector's earnings, which has been slashe that means it's now possible for these companies to surprise investors with better-than-expected news. but questions remai about what demand will look like in the months ahead. alysts say that's not an easy call to ivmake,en uncertainty about theth health o global economy. but someou believe demanld be stronger than expected in certain key markets like the data center and smartphones, and that's providing an investment opportunity. >> from a chip perspective the way you probablyant to play this, you probably want amd for the data center side and finally you probably wanting to buy the memory space. >> but most agree that the

biggest risk to the group is this a deal doesn't get done between the world's two largest economies. "nightly business report," i'm josh lipto here's a look a the final numbers on wall street. the dow fell 72 points, nasdaq up 5, s&p 500 fell 1. that does it for "nightly business report" tonight. i'm sue nkrera, thafor joining us. >> i'm tyler mathisen. have a great evening, everybody, and we'll see you back her.

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