this is "nightly business report" with sue herera and bill griffith. >> inflation. consumer prices have barely budged andhat could put pressure the fed to tie interest rates soonerr. rather than la >> facebook under fire. e-mails have reportedly surfaced that could potentially link ceo mark zuckerberg to controversial privacy practices. >> rolling along. why general motors is speing millions to pick up production of pickups. ose stories and much more tonight on "nightly business report" for wednesday, june 12th. >> and good evening, everyone, andwe ome. it is often called the great ate debate and tonight tha debate is coming into focus following the release of the latest economic report.

it showed core inflation is cooling. thatould bolster the case for the federal reserve to cut interest rates something that's been a point of contentioe for arket and something investors are watching closely low the central bank a rates have been a pillar of support for the decade-long expansion. steve liesmanrt s us off tonight. ? low inflation which the fed had suggasted w transitory hung aroundn may and failed to transit out of the economy and headline inflation rose a tenth of aercent and rates are 1.8% and core inflation that takes out food and energy rose, leading the year over year rates decline to 2% and all of this means t fed continues to miss its inflation target and at least markets the fed wil cut interest rates to stoke the economy and try and revive inflation. thedds of a rat cut as soon as july spiked to as high as 84% and something the market is ahead of the fed. >> i think there is a risk that

maybe the market has gotten too aggressi terms of what it's pricing in for the fed. the fed has been prettat clear hey want to see the actual data in the economy and that hey're not going to be swayed simply by market action, but let's assume they are swayed by market action andhe latest market action does not point to a need for a rate cut as early ase june. maou get it in july, but i think they'll actually want to point to something in the data that's concrete. >> there's a distinct tale of two economies in the data. service inflationem rains a fairly robust 2.7% year over year and commodity and prices appear to be back in deflationary mode dragging down the overall averages and there's a bit of bate, some see them driving u prices and others see them weakening the economy and driving down price the f may want to wait and see how it all plays out before acting, and tariffssues right now look anything, but transitory and that means a complicated outlook for the economy for months to come. for "nightly business report," i'm steve liesman.

>> teresa mcdonogh joins us to rstalk about the fac from tariffs to inflation data that willo into any decision the interest rates and carissa, thanks for joining us tonight. >> thanks for having me. >> for the record you areca foing maybe a couple of rate cuts and maybe july and september. how much of that is con tifrtin on c tneseiffs remaining in place? >> i think a good portion t, that, in fe were really only looking for one hike before september, but the of tariffs make us think that we really need to think about the fed stepping ihere and forcing the hand of, you know, whether it's the market o just getting ahead of it, so agree, those two his for sure by september and aat's where we're standing today. how important is each individual data point to the fed at this point? and also the contions of the corporate credit market as well

because the data's been somewhat mixed cl isomicating things for the fed. >> that's right. the fed needs to build its case in terms of making these cuts kind of the shadow third mandate behind inflation and employment has been financial market stability. so they do pay atteion, to a degree, to what the stock market is reacting to, but we haven'ty seen that of reaction from the credit market. so they're reallyonrned about what each data point is showing them and the fact that inflation continueso not be at their target is a concern and it has been the cause of rate cuts in past cut cycles and we believe that that's going to be the case this time wearound, as . >> let me pursue again on the ehinese tariffs. let's asshat we get a deal in the near-term or let's assume we get a rate cutd of some k and suddenly the tariffs go away. does that mean the fed has to raise that rate that it just cut? >> no.

that's an excellent question. i would go back to comments that were made earlier in the show. we really oy hadonetary policy for the past ten years and it's been a struggle to have fiscal policy here driving the economy. so that's where we are today, and w tarife potentially a drag or deflationary measure on the global econo and just to have those removed doesn't mean that all of a sudden we're in a global reflationaryvi nment, so i think a fed cut, coupled potentiallyiffs being taken away. those would be positives and not inflationa the fed will be concerned. >> all right. carissa mcdonogh withe' peo united advisers, thanks for joining us tonight. >> thanks so much. that tame inflation report was not enough to give the market a lift. stocks fell for a second straight day as questions about trade policy remain. bank and tech stocks led the way lower. the dow jones industrial avege fe 43 points to 26,004.

the nasdaq was down 29 and the s&p 500 slipped five, and today oil prices sank 4% on supply concerns. a new report showed a largeea in in crude stockpiles for the second straight week. and when it comes to the economy, chief executives are not as confident as they once were. according to a new survey from the business roundtable, optimism has declined for the fifth straight quarter. the ceos say that they'reut concerned arade relations with china and the resulting uncertainty about global growth. so their plans fan hirin capital investment have declined, as well, in the second quarte a separate survey shows that two-thirds of chief financial ficers see a recession coming by the end of next year. they expect their business prospects to decline as a result. the cause, well, they cite tariffs and credit risks. >> it is no secret that facebook has bee plagued by privacy concerns and problems. report andnew possible e-mails that link ceo

mark zuckerberg to those controversial practices, that sent facebook shares low by more than 1.5%. julia boorstin has the details. >> wall street journal reporting that facebook e-mail uncovered tradeesult of the federal commission mrief see investigation saying that mark zuckerberg w aware of privacy problems and the questions thato they vlate the commitment to that it would protect users' privacy and the article pointing to an exchange before the consent decree went into effect in which mark zuckerberg asked employees about they have compiled ten of users data and that facebook should stop that keendz of stockpiling. facebook suspended that particular, and facebook did not take broader aggressiveotteps to t users' policy. facebook responding we have fullyhe cooperated with ftc's

investigation and at no point did mark or any other employee knowingly violate the company's obligations under the ftc condition seb consent order nor do other eshth mails exist that they did. they addressed this report on cnbc today. >> part of thehallenge with a lot of the tech companies is the founders, when they -- when they were great innovators, but they oftentimes created a sprit class of stock in terms of founder stock that means in many ways they get to enjoy theef bs of the public company without the oversight and restrictions and this isn issue that's candidly bigger than facebook. the settle chlt with facebook overri thevacy violations which includes f ae of up to $5 billion. for "nightly business report," i'm julia boorstin in los angeles. >> facebook is onef those companies that has come under increased scrutiny from regulators and investigating potential antitrust issues, but

as ylan epits it's not just federal officials eyeing big tech. >> it's not just happening in stshington. some of the louriticism of companies like facebook, google and apple is coming from the new york has opened investigations into apple and facebook. mississippi is preparing an antitrust case against google. california has passed a tough new privacy law to rein in thes in. >> government from the feds on down treated the internet industry with a lot of care. kid gloves because they wanoi t what we saw coming. lots of new businesses and lots of new jobs ands l of recreased economic capacity. they're not chi anymore. they're adults. they should be treated like adults and wll see where that takes us. >> today state ags gathered in nebraska to meet with the federal trade commission and that's one of the agencies for

taking on monopolies and both are looking into complaints that the tech iants are locking out the competition. the doj's top anti-trust offici says his office will not shrink from the critical work of investigating and challenging anti-competitive conduct, but states argue the feds aren't doing enough. 39 states in the district of columbia are now calling for tougher enforcement and mor data protection. they said they don't want new technogies to get snuffed out. >> google gets to pick the winners and losers because the system is rigged in their favor d ripe with conflicts. >> google declined to comment for this story and an industry group said tech companies aren't monopolies and the internet has brought consumers more choice than ever before. for "nightly business report" i'm ylan mui in washington. >> it is time to take a look at sof today's upgrades and downgrades. cisco was downgraded to marketr m from outperform at william blair. the analyst cites tightening

demand which could pressure growth. the firm also takes note ofew competition. shares fell 2% to 55.86 and beyond meat w downgraded to market perform from outperform at bernstein. this is its second downgrade in as my days. the analyst cites the stock's valuation. the price target is $123 despite the downgrade, the stock which has been volatile rose 12% to $141.97. >> mxp semiconductor was upgraded from morgan stanley. at ited margin improvemen the company and the price target $114 and shares did fall more than 1.5% to 93.76 today. brinker international has upgraded at telsey advisory group and the restaurt and company partnership with delivery service dr dash. sto target, $47 and that rose to $40.50. still ahead, after a cool spring

is the summer home selling season about to heat up? ♪ ♪ ♪ an faa official said today that boein7 max aircraft may not be back in the air until december. that m is the dateh later than earlier forecasts expected. though, ial emphasized that there is still no official timeline, but the ceo of american airlines says he expects the aircraft to be flying by mid-august. doug parker alsoold his airline annual shareholders

today that he expects the ounding of the 737 max to cost american airlines about $350ll n. as you know, that plane has been grounded since d-march. >> the megadeal between united technologies and raytheoned promo redefine the aerospace industry, but in the days following the announcement, roposed getbout the together have started to swirl. morgan brennan explains.>> it could be the biggest defense deal ever, but wall street isn't convinced on the merger of unitedan technologies ac raytheon. an opposes the deal telling united i technolog a letter why it makes sense and today's massively undervalued utc common stock to buy the lge business to the ior quality company's existing businesses. another activist investor third point is reportedly agast it, as well. both less than 1% stakes in uniteds. technolog many raytheon shareholders own

it as a stable income-producing investment and united tech vestors are betting on a soon to be pure play commercial aerospace manufacturer and once the carrier building system and otis elevator unit is spun off and that's why they're skeptical, too. and that muddies the investment thesis and a lot hanging on execution and united tech saying we are confident that our shareholders will see the merit of the transaction and the value it brings to them and the company. >> we will be working diligently in the days and weeks ahead to make sure that the detailsraf the taction are presented to and fully under stood by all shareholders. meantime, the stock has fallen since the deal wasou aed monday and it has spread to the broader aerospace and def se group. bottom line, investors wonder whether this signals a top for t e spending and whether this deal in particular will pay off. for the nightly business report,

i'm morgan brennan at the new york stock exchange. it soars in itsng debut and that's where we begin the market focus. shares surged in its first day of trading after pricing its ipo at $34 aair and that values the company at $612 million initially. the cybersecurity firm provides cloud-based security to company it is like amazon web services and toredit suisse. the ceo said the company has an important role to play. >> the problem that mostco anies are trying to solve is not beinghe breand whether that's network technology and end point technology and at the end othe day we see the tip being the end point and that's where the data resides and t servers and the end points and the desktops and that's what we're >>protecting. hares jumped in its debut by% $58 even. >> elsewhere, wells fargo is warning that its rnnualenue will likely come in at the low end of expectations. a bank executive says a current

rate eironment has bee factored into the outlook and it could pressure revenue even further and the stock dropped 3% today to $44.91. johnson johnson and kohl great palmolive and both have been found liable in the case of a woman that blamed the talc products for her rare cancer. a california jury concluded that as best it found johnson & johnson's baby powder and colgate's powder caused her mesothelioma. they were up less than 1% while colgate palmive's stock was down a fraction. >> the toy maker mattel rejected another merger offer from the bratz doll maker mga entertainment and according to the ceo mattel's board felt that pthe latestposal was not in the best interest of the company and its shareholders. mattel's shares were up 5% to 11.38. investors had their fir chance

respond to comments elon musk. musk told shareholders that the electric auto maersk has a decent shot at a record quarter and that there is not aemd for his product. it woerpt be long before the company has aar with the range 800 miles. shares were down to 309.26. after e bell, lululemon posted better than expected earnings and saw it rise 20%. lululemon cites investments in its stores and the online operations and the stock rose in after-hours trading and the regular session down a waction to 170.89. rh,ch is the retailer formerly known as restoration hardwa raised i forecast and downplayed the impact from higher chinese tariffs. the company said it renegotiated product cost and raised prices to mitige its effects and it is moving production out of china and looking to expand manufacturing operations in the

u.s. the stock soared in initial after-hours trading and i finished the regular session at borrowers saw an opportunity last night and boy, did they takeppcations for new mortgages surged thanks to a big drop in rates and the housing indy stroo is hoping th it jumped sales after an unremarkable bring season. diana olick is in >> a huge reaction to the big drop in mortgage rates and total application volume surged 27% for the week up 40% an naully, that's according to the mortgagr ba soes yagz and most of that was thanks to a refi boom. it felt to 4.12% for loans20 wi the down payment and that's the lowest level since september of 2017. refis reted, up 47% on the week and nearly double compared with the same week a year ago. lenders must have been busy for sure and volume was up big in the past few wks on these

falling rates. it's not nearly enough to get past the surges that we've seep in 2016 and the huge numbers in 2011 through 2013 but it's definitely a welcome relief for a mortgage market that was etty border line depressed heading into 2018. >> homebuyers saw the light. they hadn't really reacted to the rate drop the week before, but purchasedortgage applications were 10% higher for the week and compared with a year ago. purchase applications might have been even higher, but there may be some pullback from buyers who were concerned abouthe economic uncertainty with the trade war. buyers are also sgll fac a tight and pricey fousing market nightly business report, i'm diana olick in washington. >> let's turno susan to talk about the housing market and its react to interest rates. she'a professorf real estate and finance at the university of pennsylvania's wharton school of business. welcome back, susan. so nice to see you again. >> pleasure to be here. thank you. >> what doou make of the

erratic nature of the housing market right now and its ntaction toest rates? i mean, yes, diana pointed out the surge in refi, but interest rates have been low for a long time and we haven't seen that kind of action. >> well, this is a price point in terms of interest rates and it's dramatic drop to 4.1%. we're getting to historic lows and both refi opportunity is out there and theni oppor to buy now. lock into the mortgages at this 4.1 and it'sni a scant decline and the decline is over time and compared tor a yo it's 100 basis points. >> is this the reason the fed should cut interest rates at some point this summer to try to revive what has been a housing market thisprg? >> well, yeah. it's almost could go in either e direction beche housing market, and these are signs that it is back i play, and that it's want just refi and also

applicatorns purchases and we see somee slowing down in gains of prices, yet, and the price rise is what we are facing now and it's moderating and not a decle and moderating. at the high end we see some decline in price and multi-family and excess supply out there, andry eevel prices are still daunting, always lowerre interest rates good for the housing market. >> right. >> you make the point that home nership has not increased meaningfully since the death of the financial crisis. >> this is true. they are still millennials andl ns of millennials and older and younger peers who are out there still one-third living at home and still one-third renting at all-time high rate at the age point that they are. there's room for more growth in home ownership and demand for am singley housing and there

sure is still an affordability crunch there. not fringe and notoming from interest rate, but coming from tight credit and high hassle prices. >> we'll do the story howowt has shut the possibility of the salt deductions coming back again and the state and local taxes and how much of that has had ann impact housing, as well? >> it has on certain theologies and it's just red state, new jersey, california, markets, wooey can see that it has affected thoed markets. >> susan wapner with the university school of business think thanks so much. >> pleasure. >> coming up, gm's latest push into profit-rich pickups. ♪

sflo. the treasury department has dealtal blow to any salt work around. salt refers to the deduction of state andocal taxes that were capped in the new federal tax law. the regulation bars municipalities in high-tech states from creating charitable funds that could then be used to fund daily operations. house democrats had been working on a plan to increase the salt , deduct but it is unclear what would happen if that measure actually reached the senate. china over in auto sales declined for an 11th straight month and sales in may fell 16% from a year earlier and the drop is due in part to waning confidence in the economy there. the industry isin also f new emission standards which go into effect nextth m >> ford is recalling more than e milliolorers over a problem with the suspension which can become damaged when driving over

a rough terrain. the suvs are from model year 2011 through 2017. the automaker will spend $180 million to fix that issue which will come at no cost to the utrs' owners. >> with profits being squeezed by higher costs and slowing sales,er autom are investing more in the one segment still rolling along and that wou pickup trucks and today gm will spend another $150 million to help increase production at itslant in flint, michigan. phil lebeau takes us along for the a ride. >> this is ground zero in the battle of the big pickups. just three months after gm said it would hire another 100 workers and ramp up production at the flint, michigan the automaker is making another investment of $150 milli to help truck assembly lines run more eiciently. >> we can make them literally and our retail shares are in great shape and now we're

getting to fan that out across the commercial fleet and across erybody that want, you know, a work truck that makes a living with it. >> while overall auto sales have cooled off as buyers show less interest in cars, they are still buying trucksip at a healthy especially at fiat chrysler and pickup re full-size sales climbed in the first quarter. ck sales ison, gm's t fell 13%. gm blames some of that decline on a transition from previous versions of the chevy silverado and gmc sierra into newer versions of those truss and sales increase, gm expects to raise hioduction. >>is really all about freeing up our geral assembly and processing to be able to get another 4000 units for this plant which is a great upside for us. >> aickup trucks areng the most profitable for automakers so they consider invesosent in models to be money well spent. >> and for gm that investmt

has bee paying off. in the first quarter, the average price paid for a new ulverado or sierra was almost $6,000 compared to the previous model. phil lebeau, "nightly business report," chicago. >> before we go, here is a look umat the finalrs from wall street today. the dow fell 43 points and the nasdaq downhe 29 and s&p 500 slipped by five. and that is "nightly busess report" tonight i'm sue herera and thanks for joining us. >> i'm bill griffith. have a wonderful evening. see you morrow. ♪ ♪ ♪

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