s t "nightly business report" wit bill griffeth and sue herera. ♪ rally extended. stocks climb for a second straight day even as questions about the economic expansion remains. meeting with mexico. top diplomats are in to discuss new tariffs days before new duties on mexican import are scheduled to go into effect. >> lifestyles of the rich and powerful. amazon's jeff bezos is reportedly buying three fifth were able dos and w to take our cameras inside. those stories and much more tonight on "nightly business report" for this wednesday, june 5th. and we do bid you a good evening, everybody, and welcome. it was another rally day o street today. the dow and the s&p have now ecorded their best two-day gains since january.

enthusiasm from yesterday carriedodver to as investors aeared even more nfident that the federal reserve will cut interest rates some time this year. tech rates rose and thety uti and interest rate sectors and with u.s. and mexican officials talking theay and some of trade that rattled investors last week were put in the backburner and we'll have more on that in just a few minutes and the dow gained another 207t pos you see to 25,539. the nasdaq was up 4 and the s&p added 22. >> and stocks rose despite mixed repos on the economy. job creation in the private sector hit a nine-year low. according to thll pay processor adp, businesses added just 27,0 jobs in may. the forecasts were for 175,000. a separe report, however, points to agt strning services sector which makes up the bulk of economic activity. the ite for supply

management reports an uptick in activity helped by gains in new ders and that pickup in activity was echoed by the federal reserve's beige book which is an anecdotal look at the economy across thery count from ui reports tonight the central bank? the federal reserve said economic activity was modest a littleng and that's bit better than the preceding period. almost all 12 fed districts reported at least some economic growth and some even enjoyed moderate gains. only oneri di, st. louis said that economic activity was unchanged. nationally, employment was about the same as last time. mostde districts reported to moderate job growth and the ight labor market remains a constraint the fed did find there was increasing wage pressure and improved benefits across a range of occupations and meanwhile the fed sai prices rose at a modest pace and as for trade uncertainty there weretnecdotes

f boston and dallas in particular. in boost op, the reportou calle huawei and the impact on semiconductor firms. it also said that tradert unnty is causing delays of new models in the auto industry. meanwhile, over in dallas manufacturers, retailers and the service sector, they all pointed to tariffs as concerns forrice increases and for demand and some companies said that long delays at the mexican border wereddg to their transportation costs. overall, consumer spending wasn lly positive and real estate and loan demand, they both pointed g towardwth. the fed said that the outlook for the coming months was modest and positive, however, i will point out that that forecast is made before the recent flare-up with for nightly business report, i'm ylan mui in washington. >> while some economists say the risk of recessions growing. not every state can afford one. robert frankin exp >> a report from moody's found

that while most states are prepared for a recession, two of them would face a budget crisis and be forced to cut costs or raise taxes. those twostates, y guessed it, are illinois and newpo jers. looked at how much revenue would likely drop in each state in the downturn and whether they had enough reserves to fill the gap. moody's warned thatilven a m downturn could be damaging to crisis tes in the 2008 and they have become much more reliant on the personal income tax and it is more reliantop on the 1% and the income to that 1% are the most volatile, but the biggest factor is pension liabilities, which for illinois, would be six times its total tax n revenues in tht recession. new rsey's would be more than three times revenues which means that for affluen residents of those states and probably connecticut, too, taxes will go up.

politicians and tax experts say these states missed an opportunity to save during the good times. >> put some away in the rainy day fund and fully fund your opension when tough times come along you're prepared for that and politically the temptation is on to just let the party roll when times are good. >> instead, the new governor of illinois is already pushing to eliminate the state's flat tax with a progressive income tax where the wealthy pay a higher rate and nooumg'sr gover phil murphy insisting on a millionaire's tax which the legislature isighting. for "nightly business report" i'm robert frank. >> from recessi fears to mixed economic data to the call for interest rate cuts and just wher does the economy stand right now. joining us to talk about that is craig, he is the chief economist at finding sparks. welcome back, craig. nice to see you >> good evening, sue. >> you know, there are a lot of different opinions floating out there economically and you fall in the camp of fundamentally stable,

y? >> i thinkou look at the consumer and the consumer's been in a good positio and we see the unemployment rate at 3.6% and we've seen the wage growth above 3% now and the consumer debt load isn't too onerous in this cycle and that's the basis for this stable economy andsi ss investment is positive and we see some weakness and we're starting to see some growing concerns and obviously th the trade uncertainty that's creeping in and today i was most encouraged bthe ism number and the fact that it ittle bit ounced a and that was an encouraging number to us. >> having said that, you believe the fed will cut rates this year. why? >> for a couple of r and the trade talks with china have deteriorated and m they'vee so than we expected coming into the year and so i think that will start to feed into the real data and you'l start to see weaker growth. on top of that, you have the tariffs that creates a whole new level of uncertainty for business owners in the u.s. and

you have inflation running at bew the fed's target and the fed's talking about a new approach to the tarting and u'll have to prove that you're committed to that and that will put them in a position to be more dovish and the marke has priced this in and the markets are expecting a rate cut and that's what we one in the market and if the fed were not to cut rates in the second half of rhe year itks creating another scenario like we saw last december where the markets were disappointed in monetary policy. >> it's a vicious circle, is it not? au it is. if they cut it's b the economy is weak and if they don't cut then the market gets upset and the economy may weaken and confidence may suffer. >> absolutely. and i think to some degree at's where we ar now and the markets are expecting -- the nice thing for the fed right now is like we look at previous cycles going back to 1998. we don't have a lot of inflati n righ and in fact, it's below their target and it gives them thebility to be patient and to cut rates 25 or 50 basis

pots and underneath the purview of their mandate and try to boost growth aittle bit and stimulate things in the middle of all of this uncertainty. >> craig, thank you so much. >> craig with finding sparks. >> thank you. >> oilrices are now in bear market territory meaning they have fallen more than 20% sin their most recent peak in late april. a government reportoday showed an unexpected surge in stockpiles of crude. ices were already under pressure because of fears of slowing glol growth and this is the third bear market for u.s. oil since the start of 2015 and today's close is its lowest price since january and domestic crude settled down more than 3% to $21 a barrel. >> the international monetary fund warns that a trade war could wipe $455 billion off of global growth. the most recent u.s.-china

tariffs could further reduce investment and productivity. >> some of the risks that we had identified backe a cou months ago have actually become materializing. one of the ricks that we have identified is the risks associated with ts de tensi and two months ago we said be very careful what youre doing with this major growth engine that is trade barriers will actually be a break on growth. >> for some perspective, the estimated decline in gdp would be larger than south africa's economy. >> and a number of companies today cited the impact of tahrives in the earnings reports. bourbon mak brownforeman said it would drag sales growth down a percentage point for the entire year. american eagle outfitters warn that if tariffs are expanded to

apparel, its r financiults would take a hit and campbell's soup put it this way, it said that if retaliatory tariffs wita would be a voited a significant ct would be eliminate sglood a delegation in mexico was hoping to art a tariff that will go into effect nexteek. kayla tausche is in this week. what does the administration want in these negotiations. the white house, sue, has left the negotiations open and the demands open. they said that they want mexico to substantially stop the flow of migrants d andgs into the united states, but they haven't exactly said what the number is that they they want mexico to reinforce its border with gua they also want mexico to consider a proposal to become a safe third country. that means that mexico would have to accept all asylum seekers coming through from central america instead of the united states and mexico o far has called that last one a red

line. >> what are tic ms offering? they came with a list of their own of demands and y offers. di get a sense of what they are? >> we mentioned that they are t willing to accept the u.s. proposal to accept central american refugees. that being said,heare, hecording to reuters proposing a marshal plan forrebuilding of central america. they also are planning to fpropose a diversion some funds from the state department program from 2008 that was to combat drug and human trafficking and we'll see e exactly what white house says about where those proposals stand right now.o >> do you have a sense of how likely it is that we will get a ? >> i think, sue, for today the prospect of a deal is low. the preside likes to make his own deals and not only is he traveling overseas this week, but many key members of his immigration policy team, jared kushner and stephen miller and john bolton, the national security adviser and all of those officials are abrred with

thedent and he has a high-level delegation on his behalf, but it's expected that the president will want to do this deal himself. >> weal will be watching. kayla tausche at the white house. time to take a look at the upgrades and downgrades. cronos group was downgradedt bank of mrill lynch today. it is having a launch in the u.s. price target now $20. ares rose 10% to $15.99. pivotal software wasowngraded to neutral from outperform at web bush. the analyst calls the company quarterly results a train rec and described its deferred revenue and billings numbers as disastrous and the p target is 15 and the stock itself was , disastown 41% today to $10.89. roku was upgrad to buy from neutral at guggenheim. the advertising on its streaming platform is becoming more

profitable now and the price target is $119. the stock rose more than 8.5% today to 101.7 b as tech power grows, so does s spending inashington. ♪ ♪ ♪ as people spend more time online companies like and google are becoming more powerful and as julia boorstin tells us, new reports show just how dominant they've become. >> with new antitrust scrutinyg loom for facebook and the otr tech giants, two new

reports show the trends behind eir growing power. for the first time ever american adults will spend more time using their mobile devices daily, three hours and 43s minuhan they do watching tv according to e-marketer with mobile team continuing to replace tv time in coming years. the u.s. internet ad market, t largest, surpassing $100 billion for the first time this year according toew pwc study and google and facebookomated. google with 37% market share and facebook with 22%. >> wha this all about is data and advertising, and if advertising keeps going a up the secular tailwinds of people moving to online aertising and advertising on social media continue to grow, they're just going to see tamped down earnings over the last few years, but they'retill in the sweet spot. >> the federal trade commission which wil oversee antitrust in facebook will find facebooknt

domiver social and it owns messenger, instagram whatsapp erodes the competiti environmen >> i do look at this group and i do think there is a reason for increased regulation and i do think there is the possibility for breakup a when i look at the companies most at risk it's facebook and google, which if they were ever broken up, their stock prices in my view will be much, much higher. >> facebookeoesn't domin everything. the smart speaker industry is booming and expected to spawn a massive new ad business with amazon andap e, the leaders just, facebook's portal is a small player which mark zuckerberg might point to is a sign that facdeook doesn't rve antitrust scrutiny. he hasn't hampered amazon's ability to make gains while google and facebook's market shares are relatively steady, inzon has grown to nearly 9% the u.s. digital market. for nightly business report i'm

julia boorstin in los angeles. as big tech power grows so has scrutiny from washington and that hast led mos of the companies to spe an awful lot of money in laundering. aditi roadw h aditi r all of that for us. >> that's more than any other u.s. company. in ct, for the past two years the earch giant has topped list of spenders outranki traditional front-runners like boeing and at&t. it wasn't always that back in 2009 google spent just $4 million on lobbying but that number started to climb in 2011 and 12, justed as it start facing more regulatory heat. in 2012 alphabet paid $22 million in fines to settle ftc charges to privacy. the company agreed to change its business practices following concerns that they were stiflin competition. over the last decade, spending on lobbying has gone up 500%.

it's not just alphabet. according to the center for responsive politics, amazon and facebook ranked among the top as well. those three companies spent on double digits ranging fro competition to privacy. that's more than the amount microsofp spent leading to its trial with the doj two decades uto, it is unclear what effect it will have on influencing government regulation. >> the problem is policies and practices are -- are raising questions about whether they should be regulated in some way. those questions resurfaced when euro regulators took antitrust action against google which resulted in fines of nely $10 billion. industry, perts say those actions might have stepped upre pres on u.s. regulators who are now looking at the practices of alphabet, amazon, facebook and apple. >> google is putting resources

into the eu regulatoryle ches announcing it has appealed the $1.7 eu fine for marc stifling competition in the online advertising dustry. for "nightly business report" i'm aditioy r, san francisco. china slaps a fine on ford and that's where we begin tocught's market in the latest ongoing trade tensions between the u.s. and china, chinese regulators have fined ford's main joint venture in china nea fy $24 million setting minimum retail prices on its cars which the regulator feels restricts competition. it is 978 and it's one of the largest orders owide-body jets. it is discussing orders as many as 100 of the two-aisle jets. the 777 planes which is boeing's long-range aircraft. the report did say no deal is imminent due to the trade war, but boeeg r more than 1% to

348.75. lab corp said that more than 7.5 million of its customers m have been impacted by a data breach. the blood testing pvider said it was the same breach that rival quest diagntics said may have theiratients. g-3 apparel had better than ngpected earand it did miss revenue expect airgzs and the company has an array of brands tha include calvin klein, tommy hilfiger and dkny, but it had started raising prices to offset tariffs and that stock fell 9% to $24.51. after the bell clothing services called stitch fix saw interactive clients and that sent the stock higher afterur and it did close 2% to

$23.57. also after the bell, claudeera's came in below wall street'sat expens. the software company reported its ceo is stepping down and retiring and it all sent the stock initially lower after hours on top of aan more 3% decline during the regular session and it closed at $8.80. >> as we've been reporting mortgage rates have fallen dramatically over the last few weeks hitting its lowest levels in more than aier. demand for mortgages is not heating up. diana olick explains. >> mortgage ratn are d dramatically, but apparently not low enough to impress today'srs homebuyeho are still up against very high prices. pplication age volume increased 1.5% last week from the previous week according to the mortgage bankers association, but the gains were driven by loan financing and they fell to 4.23% from 4.33%

and that belongs with a 20% down payment and with that said, volume rose 6% and was nearly 33% higher from a year ago when interest rates were significantly higher. refinances are stockily rate sensitive and the dro in rates added 2 million more borrowe to the pool of those that can refi according to black night. mortgagepplications fell2% for the week and were barely .5% higher than the same one one year ago. so they are flat. >> inventory,hat's not necessarily a bad thing and hwe've some lawyers and they do hospital market. >> the reasons beloan trade war th the weakening are economy and they don't wano e trouble in the economy when they're about to make their

biggest investment and that means buying a home. for nightly business report, i'o dianack in washington. >> coming up, ever wonder what an $80 million penthouse looks like in we'll take you inside. ♪ ♪ aly fin tonight, call it the lifestyles of the very rich and famous, amazon ceo jf bezos is reportedly buying three adjoining new york city apartments for about $80 million. tht deal is the prici ever for a manhattan neighborhood south of 42nd strrot. bert frank is back to take us on a tour. >> when you step off theev

elor, what is your first experience? size does matter. >> you're a getting exclusive look inside amazon ceo jeff bezos' brand-new penthouse. before the richest man in the world paid $80 million for this unit, plus the two apartments below, cnbc got an exclusive tour with broker nicky field. the sprawling 10,000 square foot penthouse alone has five bedrooms including a massive, seven-roomsu master e. >> the master bathroom has a priceless view of the empire state building from the master tub. >> when we toured it, the master was furnished with a $5,000 bentley dog bed. one level up is the sunlit lounge. just pastss the $23,000 gla foose ball table is a 5,000 squareoot wrap around terrace and the third level revealed

another lounge, plus even more outdoor space. >> this is what we refer to as view envy. for "nightly business report," i'm robert frank. >> before we go, let's take a look at fil day's numbers onst wall et, the nasdaq was up 48 and the s&p 500 added 22. that isin nightly bs report for tonight. i'm sue herera. thanks for watching. we'd like to remin you that this is the time of year your public television station seeks your support. >> i'm billth grif thank you very much for that support, by the way. have a great evening. we'll see you tomorrow. ♪ ♪

woman: this "bbc world news america." is made possible by... the freeman foundation; by judy and peter blum-kovler foundation, pursuing sol for america's neglected needs; and by contributions to this pbs station from viewers like you. ank you. janethis is "bbc world news america." reporting from washington, i am