♪ this is "nightly business report" with bill griffeth and sue herera. ♪ pieces ofhe puzzle. the health of the economy is a tricky thing to figure out, but a few clues surfaced today ahead of the fed chair's trip to capitol hill. new debate. why investors across the country are now askingf the central bank should be independent from politicians. galactic fete. richard branson wants to take tourists into space, and he's making it possible for investors to be part of his venture. those storiesnd more tonight on "nightly business report" for tuesday, july 9th. . and we do bid you a good evening, everody, and welcome. investors are clearly in wait-and-see mode. they're waiting toee what t fed chair of the federal reserve says about the economy and the

direction of interest rates whei he tes on capitol hill tomorrow. in the meantime, a relativ calm has settled over wall street. the dow industrials today fell just 22 points to 26,783. the nasdaq was up 43 and the s&p added three points, but that calm could leado volatility when jerome powell starts speaking. as usual, a fed chief faces a tough task. he is under pressure from the administration to cut interest rates, but he has said thatne ry policy should not be influenced by short-term political one thing is clear though. the economy may be growing, but that growth is slowing. today some of the pieces to the economic puzzle fell into place. >> and the first piece came from pepsi. the company reported higher quarterly profit and sales. now, part of that was pepsi specific, tied to its new products and higher pricing, but the company also said its results were helped by a strong consumer, which accou ts for mon two-thirds of economic activity. sarah eisen has >>more.

eporter: consumers are inlging in freitos and cheet-os and pepsi in a smaller portion. it is highlighted by 4.5% organic revenue. here are some of the highlights. frito-lay ctinues to be a big driver. because more people are buying smaller bags of snacks orle at t ten packs or 12 packs of small bags, pepsi gets morein pr out of it, which does drive sales growth. also brand pepsi, especially those smaller cans, is growing, rtthanks also in to new flavors like lime pepsi or mango pepsi. and quaker is also growing again for th first time in years thanks to a big for some of its other brands that you find in your pantries like aunt jemima. most of the portfolio right now of snacks and drinks is doingwe in most corners of the globe according to the cfo. >>e are seeing terrific results out of our north

american biness. north american beverage is clearly doing better and all of our international business is performing well, developing in emerging markets, growing about 8%. >> reporter: wha else i helping pepsico right now? a stronger consumer. e.at goes for the u.s. and around the gl >> i think consumers are healthy, and particularly with our level of products. we represent little treats that really make people's days better. so wherever i look around the u.s., whatever geography i look in, ieems like the consumer is in a pretty good spot right now and willing to spend on our products. orter: the market has caught on to the higher growth prospects of pepsico. its stock, up almost 20 perps so f -- 20% this year outrunning arch rival kococa-cola. as pepsi showed today, it isn the growth camp. i'm sarah eisen. the c next growth piee

from the auto sector. new data out of mexico showed the u.s. is importing a record numb cars and trucks from south of the border, just more proof that the u.s aut industry has become more entrenched in mexico despite threats from washington to tax vehicles imported from that country. phil lebeau has details. >> reporter: from assembly lines in mexico to showroomsn the u.s., the number of autos imported from south of the bord is picking up speed. in the first half of this year, the u.s.or id almost 1.4 million vehicles from mexico, up 13% compared to a year ago. and even though overall aut sales have edged lower in 2019, the percentage of models coming fromexico has increased. that's because the number of vehicles imported fm that country is on pace to top the all-time high s just last year. all of this irritates president trump who has complained about automakers blding cars a trucks in mexico instead of the

u.s. st month he briefly threatened to put a series of escalating tariffs on everything imported from mexico, including auto parts and finished vehicles. still, auto makers like bmw madr it c last month they would not shift production gears due to the president's threats. >> we will keep our plants and we will see how far that goes, and, as i said before, our production network is flexible but at this point in time we would not see any rean to change our current plan. >> reporter: with its new plant in san luis, bmw now ships its most popular car, the 3 series, in f the united statesm mexico, not from europe. and autoroduction south of the border is set to grow even more. late this year or early next year toyota is set to open a new plant intr c mexico that y of which suvs, m are likely to be sold in the

united states. phil lebeau, "nightly business report", chicago. today mexico's finance minister abruptly resigne that heightened investor concerns over the new government's economic policy and its ability to meet some of that country's financial challenges. many saw carlos erzwa as committed to budget discipline just as the new administration ramp ps up social spending. his exit sent the peso lower. all right. tomorrow as weeported fed chair powell will testify on capitol hill. in addition to answering questionsbout the economy he's also expected to defend the central bank's independence. steve liesman picks up that part of the story from there. >> reporter: the firing of central bank chief last weekend and president trump's threats to fi or demote the feds al reserve arked a debate, should the reserve be oliticians. from ere is what top economic adviser larry kudlow said on the

question before. >> jay spowell's job safe? >> yes, i believe it is. i will say that there is no effort to remove him. i will say that unequirecally. at thent time, yes, he's safe. >> reporter: there was a in nite attempt by congress the federal reserve act passed originally in 1913 to give the fed independence by making it difficult though not impossible for presidents to fire chairman and governors once in office. the idea, kp the politicians from pumping up the economy throughet my policy for political purpos . it wwritten, the heyday of central bank independence lies behind us. in aorld of rising populism, esw interest r and bloated central bank balance sheets, independent monety policy looks outdated. kudlow said he believes in fed independence, but -- >> that word "independent" rate from an they o another planet. the fed reports to acongress,nd that's in the --n i the

constitution, and the fed is appointed, or the governors are appointed by the president. so i thi that in a day-to-day sense certainly they're independent, but tha doesn't mean that they shouldn't listen to advice from their elders. >> reporter: that advice from the president, also from kudlow, is for the fed to cut interest rates to acceleate growth as head into a coming election year, just the sort of thing a congress from earlier in the last century was trying to avoid by granting the fed independence. r "nightly business report", i'm steve liesman. the number of job openings fell slighy in may but remained near record levels according to the labor dertment, a little more than 7 million positions were posted, suggesting that hiring isly unlio slow dramatically even though the economy has softened a bit. this report is considered a measure of labor demand. small businesses are considered the engine of job creation in thicountry, and today a new survey showed thati

set among small business owners dipped a bit, mostly due to the uncertaintyrom tariffs. but despite that pullback, optimism among busess owners does remain relatively high. so, yes, there are someco signs thatmic growth is slowing, but it is still considered healthy. however, the bond market is saying something e oe. the yie the short-term treasury has been higher than longer term treasuries for more than 30 consecutiveng tra sessions. now, it is a phenomenon which is known as an inverted yield curve, and that tends to happen before recessions. we're joined now by jackh mcintyre w brandywine global investment to talk more about this. welcome, jack. nice to have you here. >> it is nice to be here. >> you say that the treasury sending some warning signs to the federal reserve. what might they go? >>o i think the key message that the yield curve and the bond marke in general is sending the fed is that, hey, we've got low ilation and, you know, surprisingly it is not

transitory. it is the secular disinflationary influences keeping a lid on cyclical -- the businesscycle-type inflation. so the fed shouldn't be worried that inflation i going to get out of hand. they should be more worried that, hey, this low inftion is sticking around too long. >> i think you would agree there's a sub plot to all of this that will face jerom t poweorrow in washington. if he decides to cut interest rates at the end of the month, tdo you think t emboldens his critics who have been calling for a rate cut of some kind? and, conversely if it doesn't cut rates do you think he risks his job? >> so that's an interesting one because i think ahistorically of this stuff is supposed to be happening behind closed doors. we'r i just seein in the -- you know, the world now tweeting, it is all happening io front o eyes. so i think he is going to rise above it, and what is going to drive him is sort of the growth outlook for the u.s., the global

economy ineneral, inflation. so i think the fed is positioned to cut by 25 basis points at the end of this month and then we will have to go from there, no matter if they are get ng pressured to cut further or not. they've got to show they are purely or truly independent. >> so what is the data telling you then? how do you think the fed is going to look at it? i mean thes data slowing slightly. the u.s. is still pretty strong, but thelobal economy is weakening. so where does that put us? >> so the way i'm thinking about it is that wha the fed should do isn't look at today's data. and you're right because the u.s. economy is doing well, consumer confidence is still pretty high. but, you know, i think they need to think in terms of sort of an cutrance policy be preimptive. the global economy is softening and we're not going to immune to that. without inflation, why not cut

rates now and send a message to the market say, hey, wait a second, we're not cutting 100 basis points like the market has priced in b we're going 25 and >> thank you very much, jack. time to look at the upgrades and downgrades. 3m was downgraded today.th sector from perform to outperform at rbc capital. the analy says 3m's reputation as a defensive high-quality industrial stock is eroding he cited litigation and macro pressures facing that company. price target, $176. the stock fell 2% today to $165.70. march iot was dowraded to neutral from overweighted at j.p. morgan. the analyst cited a deceleration in industry trends as well asth stock's valuation. price target, $138. that stock fell more tn 1% to $139.52. squareas upgraded to market perform from underperform

over at raymond james. the analyst cited the company's credit card business, which is gaining traction among other things. this call ends the rm bearish stance on the stock since january. initiatedalysts coverage of chewy, with five placing a hold rating on the stock including.organ stanl the analyst at that firm cites the company's valuation and says investorseed to wait for a pull back before buying. the price target is $33. the stock fell$3 3% to 29. still ahead, is boeing on the verge of losing a title it has ld for years? ♪ ♪ drugmakers got a lift today following a legal setck for a

trump administration rule. the white house wanted drug manufacturers to list prices in their tv ads the rule was set to go into effect today before being blocked, and tt senthares of companies like merk, pfizer and e.i. lily higher cut qatar plans to purchase aircraft from boeing. president trump announcement from the oval office. >> they're buying tremendous amount of planes, and buying commercial planes, a very large number of commercial plane from boeing, and we very much appreciate it. we will be signing a document today, a very large transaction. you will be invited to the signing. it is a transactionhat will be purchasing a lot of boeing jets nd a lot of money spent in our countr that means a lot of jobs. >> the president did not, however, indicate whether that deal was new one or whether he was referring to a previous one last month at th paris air show. qatar said it would buy five boeing 777 freighters for about

$1.8 billion. boeing's delivers though sag, and that is where we begin tonight's market focus. in first half of the year tco any's deliveries fell more than 30%. boeing also reported no newde of its 737 max aircraft as that plane still remains grounded after two deadly crashes. at the same time rival airs is set to pass boeing as the world's largest plane maker for the first i time seven years. still, boeing shares were up a fraction to 353.09. sisco is buying acacia communications for $70 a share. sisco hopes the deal will help its networking business by adding optical technologies. acacia soared 35% to 64.91. shares of dialysis companies davida and fresenius dropped after word that the white house is planning toll ove the kidney disease treatment market.

it is reporteresident trump will announce initiatives to have more kidney treatments perf rmed at homeher than in clinics with the government's intention to c reducee costs. shares for the companies fell about 5in today's trade. after the bell levi strouse posted better than expec revenue thanks to an increase in wholesale denim. they saw sales increase the most in europe followed by asia. shares initially dropped after hours but closed the session up more than 2% at 23.66. it has been just over a year nce president trump flew to wisconsin and declared that american manufactung had been reborn. the president helped break ground on the first u.s. factory for taiwanese electronics manufacturer foxconn. but you know what they say about the best laid plans. scott cohn is in wisconsin tonight. ♪ >> reporter: it is not what was advertised.

>> this is the eighth wonder of the world. >> reporter: a $10 billion factory, building giant video displays, employing 13,000 people. a year later, still no plant and a tiny fraction of thes. j governor tony he waevers, elect last year as part of the backlash, is trying to adjust the state to the new reality. >> we now have clarity exactly what this firsthase is going to look like. >> reporter: in his first national interview about the project, evers says he and the company have now reached an understanding. >> they're going to be making smaller items, probably tablets, glass for cabinet -- tablets and phones and things like that. they're looking at, ihink it was 1,500 employees, which certainly is less thanhe original thought. >> but 1,500 is a far cry from 13,000. >> well, we will take one step at a time. >> reporter: foxconn says it will keep its promise, hentually. >>e talked to our corporate and they have reiterated that we areed commi to 13,000 jobs. >> reporter: if it doesn't hire all of the workers, it doesn't

get all of the money, but close to a billion is already spent on infrastructure and land. kim ney's house is the last one standing. >> thew homeowners didn't k that we would be directly impacted until the day of the public announcement. >> are you comfortable with how this was done? >> well, no, i never have been. it became pt of the campaign, frankly, you know, donald trump coming and saying it is the eighth wonder of the world, all of that stuff. i think -- i think it set people up for expectations that probably could have been handled differently. >> reporter: kim mahoney doesn't know what to hope for. she and her husband refused a buy outoffer from t oer from th saying it was too long. now their neighbors are gone and foxconn is closing >> why is economic development necessary to improve thing what is wrong with farming in rural areas? that's why we moved out here. >> reporter: b with jobs and bragging rights at stake, that's a view most state governments

just don't share. for "nightly business report", scott cohn, mount pleasant, wisconsin. tonight the business world is mourning the loss of ross perot. the billionaire businessman andt one-time presil candidate lied at his home in dallas. he made his fortune in the tech industry, founding electronic data systems in 1962 and then perot systems in 1988. but the public came to knoim when he ran for president in 19nd as anendent, emphasizing his political outsider status. he focused on cutting the national debt, protecting american workers from outsourcing, and he was a critic of the north american free trade agreement. he received 19% of the popular vote. it w the highest percentage won by an independent candidate since 1912. ross perot was 89 years old. ♪

♪ virgin galactic is preparing for lift-off. richard branson's venture is merging with an investment firm which wesult in the company becoming the first ublicly traded space tourism venture. morgan brennan has more on the great space race. >> reporter: a turning point for investing in commercial space as virgin galactic now looks to go public. social capitaledosophia will invest about $800 million for a 49% stake in the space company. social capitalist who is personally investing his own money will become chairman. >> this thing looksike a software business under the hood even though it is flying people to space. so i think this is actually a compelling risk/reward. taking a general stepback, i think i had a really good track

record right now of being ahead of some big trends, whether it was a transition to amazon, whether it was backing bitcoin, what i will tell you is i generally don't put my own principle capit on the table unless i think there's a compelling risk/reward and i'm doing it here. >> it is a space tourism company $250,000 to take customers to the edge of space. it expects to begin doing so within a yeaar so over 600 people have already signed up with another 2,500 also apparently expressing interest. sir richard branson plays it will be one of the big industries of the future. >> the market is enormous, and the amount of people that would love to go to space ison enormo. we have a lot of space ships, which, you eaow, i it will hopefully enable us to build a lot of space ships, the priceill start coming down. that will increase the market even more. >> reporter: he says he expects virginalactic to become profitable on an annual basis by august of 2021.

that's five to ten years from now, it won't be just about trips to the edge sfce but also hypersonic travel around the globe. >> what richard team has built are technologies thatua evey can be used in a hypersonic airplane. what does tha mean? that means if you are used to a ten-hour flight from los angeles to beijing or tokyo, that becomes less than two hours. if you look at the ticketing revenue for that in therl aies, that's $300 million of revenue thathould vaporize. >> meantime, virgin galactic isn't alone in the space tourism race. jeff bezos i developing a trip of his own and spacex and boeing received approval to begin carrng astronauts into as soon as next year. this will be a first that could create a lot of benits but also means less margin for error. after all, as theaying goes,

space is hard. for "nightly business report", i'mna morgan br meanwhile, "shark tank's" kevin o'leary recently took a tour o virgin galactic's hangar in mo haufy,italifornia. has since moved to new mexico, but his guide was none n richard branson i'm landing in the mojave desert to mt sir richard branson at his headquarters. this is where he is pouring hundreds of millions of dollars into building a rocket ship so civilians can travel into space. few people have been to this place and i'm dying to see what is inside. richard, my friend. good to see you again. >> well, welcome to our factory. >> whoa! is it? >> this is the space ship. >> this is huge. >> the space ship is not enormous but it takes eight people. >> two pilots, six passengers? >> etctly. >> whaou are looking at is virginot galactic'sr ship.

use space craft is the f fuselage at t a256 atta up to 50,000 feet, and then they will release the space ship. >> three, two, one, release, reese lease, release. >> then what happens? >> he firesck the . >> fire. >> that takes it up into space? >> you then hold on for dear life as it goes 3,000 miles an hour in eight seconds into space d you have the rid of your lifetime. >> even more impressive is the fact that branson already has a long list of people who dropped $250,000 to get on board. >> 700 peooue have given a quarter of a million dollars a piece. >> yes. >> that's about89 million. do you have a guesstimation when rofitable? be >> about 18 months time approximately i would say. >> that soon? >> yes, the moment we can start sending people to space,hich likely to be at the end of the year, we will make money back. >> among the 700 are really big

names you would recognize. reportedly, justin bieber, katy perry and brad pitt signed up for this six-figure ride. how long are you up there for? >> so the whole -- the whole trip isbout 3 1/2 hours. the amount of time in space is not massive, maybenu ten s. >> are you weightless at that time? >> unbuckle, you float about. we have big windows. you can look back on ohe earth. that is a million dollar view out the window. >> it costs $250k for a seat, which buys you about ten minutes in space. thatomes out to $25,. 0 a minu >> everybody wants to see inside that thing. i'm not leaving until i see inside -- >> no! >> are you kidding? you're not letting me see it? t >>orrow this goes to space, and i just wouldn't want you to touch anythie. >> i'll ty shoes off before i go in. >> it is very kind of you. we'll take the shoes, they're quite nice shoes. >> for me personally, it is lese about being first kid on the block. i want to see other people survive this thing, and when they do i definitely want to get

in that space ship and become an astronaut. >> now having seen it, i have the bug. >> good. i look forward to getting you up there. >> but i want a deal. i'm not paying 250. hey, that's what happens. >> wll take him up there, push him out i think. >> richard branson goes first, then ken, then maybe i'll think about it. we'll see. >> i will not, but that's okay. that does it for us tonight. i'm sue herera. thanks for joining us. >> i'm bill griffeth. have a great evening. see you tomorrow. ♪ ma

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