. ♪ this isnightly business report" with bill griffeth and sue herera. ♪ hat trick. all three of the major indexes closed at record levels and just in time here comes earnings season. will corpora t results keep good times going or throw cold water on the red hot stock market? they're back. the summer months heat up, so are bidding wars for houses. we'll tell you where and what people are doing to try and win that dream home. and smoke screen. 'll takeou inside the black market for cannabis where illegalie dispens openly break the law. it is all part of a $70 billion nationwide illicit market crippling the we have a special investigation. all of thatnd much more tonight on "nightly business report" for friday, july 12th.

>> good evening,on eve welcome. well, it was a record run on wall street this week. the major indexes breaking thugh all-time levels multiple times, led, of course, by federal reserve chair jerome powell's capitol hill testimony mi where he signalled an interest rate cut or cuts might be near. in the end welose it out with triple play of record closes. the dow rose about 244 points to 27,332. the nasdaq climbed 48, and the s&p 500 added 13 and closed above 3,000 for the first time. all threendes were solidly higher on the week. >> and while we sit here at record levels, the market will be turning its attention to earnings season which gets under way in earnest next week. bob pisani tells us the one thing investors mt keep an eye on. >> eerarning season is upon us, citigroup kicking things off on monday. for investors it will be about

guidance. prayerfully the second half guidance will be cautious and on the weaker side due to global growth and tariff issues. what about the bulls? they're arguing dovish central banks and the prospect ofad deal getting done by the end of the year, well, that's going to win the day. th problems is earns for 2019 are basically flattish, but the s& up nearly 20%. that means the market is really expensive now. it is pricey, 17 times forward earnings. that's historically high. all right. so bulls, bears, who isight? traders are sort of hedging their bets. the market believes the cyclical sectors with the global exposure have a high chance of nt disappg, and that's partly why energy stocks, material stocks, certain industrials lik transports have underperformed in the last several months. look at fasten all's, makers of tools, motors and they posted lower gross margins and revenues this week. they cited higher costs largely related to tariffs.

on the flip side, destic te sectors with less exposure from the global economy should be more protected from slow down. we are seeing health care, utilities and to some extent consumer staples doing better than the overall market in the past couple of mths. the market seems comfortable with the flattish earnings, but they could quickly go from flattish to negative if there's no u.s./china trade agreement and it certainly will go negative if tariffs increase. so buckle up. the market could be in for a very bumpy ride. for "nightly business report" i'm bob pisani at the new york stock exchange. let's turn to chrorro to talk more about what to expect when earnings season kicks off next week.he s chief investment officer at regions atlanta. good to see you again, chris. >> welcome back. >> thanks. >> bob mentioned guidance. you think the sooeet is pessimistic at this point? >> yes, the consensus is think y negative, but i what is happening here is all of the corporations are guiding downward.

they like to do that to manage expectations, especially after the second quarter. ive i think it is probably overdone. at the end of the day whenar we done with earning season i think we will see a slight increase. it won't be terrifi than expected. >> but there are companies that you are worried about, you lled the detractors, high-profile companies out there in a broad spectrum of industries here? >> yes. obviously the big will be boeing with the 737 issues and problems they have. i also think apple, potentially detractor. it is hurt by the trade war. the other problem is you are acoming through theil will iphone cycle and sales probably will be declining. those a where i see trouble spots. >> why gm? >> gm also t on thede side. the other part too is realize when the dollar's strengthened fairlydramatically, and any corporations that have earnings from overseas getting converted back to dollars areng to be weaker. >> all right. so you also gave us a couple of sectors that will be leaders,

financials and health care. why? >> sure. so financials, which is one people might miss because we've been talking so much about a rate cut. >> right. >> it is not here yet, so the banks are still enjoying that higher federal funds rate on theirpo ts, so that's going to translate into better business for them. also, they have a lot ofue rev that is based on asset-based pricing. when the market is up, those fees are up. solshey should enjoy that this quarter. >> i find it interesting that you feelhat expectations have been too low for this coming earnings season whe we sit here at all-time highs right now. >> wwell, that'st we're sitting here at all-time highs, but i think anco -- if there's herd mentality, once you bove corporations start guiding lower, then eve jumps on board. >> right. >> so that's what i think has happened this quarter, is everybody is jumping on board because youre always a hero if you guide lower and come out on top. >> very quickly, a headwind, the price of oil, down -- >> yes, that really hurts the

energy sector. the price of oil declining really hurts the energy sector and that's going to hurt the overall s&p. chris, thanks so much. >> thank you. >> thanks, chris. >> chris cordero joining us tonigh with regions atlantic. steve mnuchen urged congress to start getting seriousbout the nation's debt limit, which the u.s. is set to hit later this yyear. n mui tells us, mchen says time is running out. >> reporter: treasury secretary steven mnuchen warned congress today that the government could run out of cash in earlyef septembere lawmakers return from summer recess. as a result, mnuchen called on congress to increase the debt ceiling before they leave. now, if lawmakers don't, the u.s. could be left unable to pay its bills and forced to default on its debt, aop catasc scenario that both sides say they are determined to avoid. now, congress has been at work on a broad deal that not only lifts the debt limit but increases the caps on federal spending to prevent painful

budget cuts. previously they thoug h they until late september or even october to reach a deal, but the warning from treasury has set off a scramble to get the job done in just a few weeks. >> we're having our back-and-forth conversations, but we understand ohe value that. we also understand how important it is for us to lift the caps so that we can meet the needs of the american people, and we're having those conversations at the same time. >> reporter: there had been a flurry of phoneet callsen mnuchen and pelosi over the past 24 hours, and they both say they do intend to honor the full ith and credi of the united states. for "nightly busine report", i'm ylan mui in washington. ford andwa voln are forming a partnership to develop and build electric and autonomous vehicle. the goal saves millions of dollars, maybe even billions maki advanced cars and trucks that won't hit the street until 2023, but will it work? phil lebeau has more from new york city. ♪ >> reporter: the ceos of ford

and volkswagen call it a win/win in the expensive race to builde ectric and autonomous cars. ford gets access to volkswagen ev platform, volkswagen gets access to the autonomous technology and is taking a stake inut ei equal to ford with both eected to save hundreds of millions of dollars. >> if you share a technology that might cost you five to ten billion, if you share it you get it cheaper. i think it is relatively easy then to decide where are wese going to u it. >> reporter: the deal is the latest example of automakers pooling resources to tackle an expensive problem, making self-driving vehicles that will some day pay off. gm is working with honda and others on its subsidiary cruz. meanwhile, nissan remember know will work with waymo to build self-driving vehicles for japanr and eope. the question is whether these partnerships will pay off and whher the two automakers can truly make this partnership

work. >> early i saw the chemistry between the two of us. there was aumility from both of us about these kinds o situations and how we could learn together and make progress. >> the firstri ele vehicle developed by ford and volkswagen is scheduled tooll out in europe sometime around 2023. omakers believe they will be garnering major savings, which will help them as they steer through an uncertain time in the auto industry. phil lebeau, "nightly business report", new york. > the dull days of summer may be over sooner than expected i the nation's housing market. the supply of homes for sale, which had beenng increa could turn lower again soon, and that will likely mean the ret n of bidding wars. diana olick has the details and the strategies. >> reporter: after a year of perfect for the northern virginia home, frank and his wife finally found it, and so did six other buyers. >> we knewe were going to have to come in pretty hot, and

that's what we did. >> reporter: they waved all contingencies and even offered a bit more than what they thought the hse was worth which was risky. >> if the appraisal did not come back at a priceimilar tohat we paid for it, we would have ts pay the cout of pocket which we didn't want to do. >> reporter: bidding wars like this had been slowing dramatically thanks to more listings nationally. just 12% of offers written by redfin faced a bidding war in june, down fromea 52% a ago. now the supply of homes for sale is not growih as m and housing demand is rising as more rates sink. so bidding wars are coming it is especially competitive in more moderately-priced markets like oklahoma city,on ric memphis, buffalo and whatlanta, e supply is now significantly lower than a year ago. >> a lot of our clients looking for what everybody else is looking ter. >> repor even in pricier d.c. where beacher works, the supply of homes for sale had been up 24% in january, but now its up just 7%.

so he is coaching his clients to make sure they are ready financially. >> we always tell our clients to look in the mirror and not out the window. that means understanding your financia capacity first. >> reporter: and ready to sharpen their bidding tactics. >> some of our buyers will research the seller's on linkedin, try to find some type of personal connection that they can have, when writing a letter to a company their offer, they're looking to make some detailed andso pl connection or compliment about the home. >> reporter: and the jetter can't be, "i love the house." you have to have a narrative, project the arc of your life and how the house fits into it and don't be too cheesy and no pictures. those could cause legal issues. frank and h wife wrote a letter saying they wanted to start a family in the home. turns out theadellers h done that too, perhaps why the franks won the home. for "nightly business report", i'm diana olick in washington. coming up, recor don't seem to scare this week's market monitor because he has

three dow components he says you need to own. ♪ ♪ >> amazon's annual sales extravaganza prime d is almost here again and it seems to get bigger every day. thes companrime day kicks off 3:00 a.m. eastern time monday and runs for 48 hours, up from 36 hours last year. but while h amazon maye created the day, courtney reagae s us hundreds of rival retailers are offering competing discounts, too. j >> reportey used to be a quiet month for retail. not anymore. prime members in 18 countries, one more thanil in 2018, wbe able to shop more than

deals, some of which will be available only for part of the two-day event. amazon doesn't release exact sales figures and while it is still a smaller online sales day than cyber monday or black friday, analysts are still projecting a big day. ea if we could see a 50% bump up from last to something in the.3 to $6.5 million, the membership that members are paying to amazon is up in the last two years. i think it will continue with the different offerings out there, kindle, audible, the subscription boxes that pop up the site. >> reporter: estimates for the number of u.s. prime households range from around 60 to 100 million. since you have to be a mber to get prime day deals, amazon uses the event to attract new signups. >> it is a recruitment vehicle for amazon to get people to sign up for prime. they will feature alexa-enabled deviceet you hooked and all of the other services. >> reporter: prime members are

valuable. one survey shows amazon shoppers prime members spend more than double what nonprime amazon shoppers spend in a year.ay primes not just a big day for amazon either. it has created a halo effect for rivals. ee bay, walmart, target, macy's, best buy and many others have competing deals. in fact, target saysri day 2018 was one of its biggest digital days of the year. this year adobe analytics predicts large u. retailers could see sales surge 79% compared to an average monday or tuesday in july. and if amazon site crashes again this year, like it did for hours last pri day, that opens up even more opportunity for competingai rrs. for "nightly business report", i'm courtney reraan. oe loses out on a government cloud contract, and that's where we begin tonight's market focus with a judge dismissing oracle's allegations that the pentagon's bidding process for that $10 billion cloud computing contract was tainted by

conflicts of interest. what this means is oracle is now eliminated from the process, leaving just amazon and microsoft to compete for that contract. oracle shares were down a fraction today to 59.1. both amazon and microsoft shares up a fraction. the parent of budweiser, ab inbev is delaying its ipo in asia due to weak investor interest. it was expected to be the argest of the year, raising near $10 billion. ab inbev more than 3% on the news to 86.94. the justice department has reportedly op-ed opened a criminal investigation into johnson &reohnson. theyooking to see if the company had knowledge of possible cancer risk from the talc-based products. johnson & johnson repeatedly denied thadu the ps caused cancer. the stock fell more than 4% to 134.30. united airlines will now be

extending its boeing 737 max groundings until early november. the carrier plans to about 2,100 flights in september, 2,900 flights in october as well. the shares were up nearly 2% to 91.23. shares of alumina fell after the genetics company lowered revenue guidance d to problems with its direct-to-consumer market and lower sales of its sequencing systems. they fell more than 16% to 305.05. the industrial equipment maker hill and brand is brieiuying hillebrand, expanding the portfolio to plastics technology. fell to 16.75. the federaln trade commiss has boportedly approved a $5 billion settlement with fa over the social media company's privacy issues. eae investigation centered on reports thaty 90 million facebook users had their data improperly accesd by the

political research firm, cambridge analytica, last year. facebook rose about 2% to 204.87. time for ouret weekly ma monitor. he has names of growth stocks he says can weather the latest market volatility. this is his first time onhe program. we welcome greg hahn. he is president and chief o investmeicer at winthrop capital management. great to see you. thank for joining us tonight. >> thank you. >> as it happens, these are all three dow components. we start with disney. i can imagine people arein not to buy it for the yield because it is only 1% and the stock is at an all-time high right now. but obviously yhe think's more growth there to be had, yes? >> yes. we havehe weathered storm with disney, but it is at a critical turning point and we think the potential now with disney plus and the growth in the subscriber base is going to be meaningful not only for revenue growth bfo their operating margins. >> next on the list is nike. you say theh revenue gro is

accelerating. the stock has done pretty well, up about, let's see, 15%, 16% for this year. but you still think there's room for more? >> nike is a shift in an apparel company to almost a technology company. so their move into this direct-to-consumeran marketplac being able to buy direct and still balance the traditional retail distribution is going to be -- i think they can manage it well, and that's a huge growth opportunity. the otherhing is the 2020 tokyo olympics will be a big calyst for sales. >> finally, cisco, you like this one. it has beenn a tough category lately, but it has done well in the last seval months, and they just made a huge acquisition this week, $3 billion as well. what do you like here? >> so this was a recent addition this year, and weeally -- we built it because of the 5g playout. we are lking to make a play in the 5g space, but we also like their position in cloud technology. o the acquisition of acacia

communications helps build out the fiber optic piece and gives them a entry point into china, which up to this point they had minimal exposure into the china market. >> as bill mentioned, we are tting at all-time highs. it has been a record week. do you thinkhis market has substantially more to run, especially if the fed does cut rates? >> yes, so our whole thesis this yearua is ay declines in earnings growth. so we are pulling risk out of the portfolio. ese are three ideas we have that we really like because there isatalysts for earnings growth. but throughout the market that's not the story. it is really try to button down and play i defense goingo the second half of the year. >> very good. greg hahn with winthropapital management. again, thanks for joining us tonight, greg. >> thank you. investors are calling cannabis the new gold rush, but there is a brazen illegal threat to that booming industry. up next, a special investigation, weed killers. . ♪

♪ the booming business of cannabis is what many investors have been calling the new gold rush, but with those potential riches comes this reality. there's a much bigger boom in the blackt mar for weed that is crippling legal sales, and as a result oy a fraction of total cannabis demand is being illicit market. so what is really going on inside unlicensed dispensaries which play by their own rules? melissa lee has a cnbc vestigation tonight, weed killers. >> reporter: it is a weekday afternoon in los angeles, the epicenter of cannabisn the

united states. this busy dispensary is open for business. >> hi. >> reporter: but if everything looks normal, it isn't. this is, in fact, an unlicensed, illegal dispensary, part of the booming black market in calirnia and around the country. it is what the cannabis industry says could be the big to sky-high expected revenues. >> the legal cannabis market in a very short period of time can grow from zero to somewhere in the neighborhood of 50 to $75 billion. >> reporter: that optimism faces this reality. an estimated i $70 billionn illegal marijuana sales nationally, seven times the legal market. case i point, california. early projections of more than $1 billionn annual cannabis tax receipts in 2018 are far from the $345 million collected. that's in large part bause t illegal market can easily undercut the cost of running censed dispensaries.

it is not hard to see how. >> you guys ready? >> yeah. >> yes. >> okay. go. >> a team of cnbc producers equipped wit hidden cameras visited ten illegal dispensaries throughout l. most aren't hard to find and they're open day - -- and night. they all have one thing in rammon. they are bnly breaking the law, operating with no license, selling potentially untested products and allowing customers to openly in this illegal dispensary down the street from the university of southlin rnia, customers are dabbing, smoking a highly potent cannabis dncentrate. anf you want free weed, this store and others were happy to give itheway. as signs say, all you need to do is write a positive review weed ps, an online site that lists both legal and illegal dispensaries around the country. >> okay, right here.

>> right there. >> okay. >> reporter: despite a daily limit on the amount of cannabis stores can sell to a customer, you can bias muuy as much as yo at many of the illegal dispensaries. >> we can get as much as we want, there's no limit? >> no. >> reporter: we did not buy anything from theisnsaries. >> the black market is a huge problem, and some say it is a 70 to0% of sales and it is a big threat. and so a lot oftates are thinking about how do we alleviate it. the two things, it is price and convenie ae. >> repornd nowhere are legal operators feeli the impact more than in california, the country's largest legal cannabis market where voters passed proposition 64 in 2016. businesses had to mp in ance with the license by january. that clearly didn't happen. we showed a compilation of our video to los angelesity attorney mike fewer.

>> repor you?ny surprises to >> no, i know there are unlawful dispensaries operating in the it might be some of the locations you just showed me are under investigation right now. >> reporter: howobig of a m is this? >> it is a very significant problem, and from a public health and safety standpoint it is especially crucial that buyers of cannabis only go to the licensed shops. >> reporter: an illegal store can rake i10,000 to $20,000 a day authorities say. so far 151 illegal dispensaries have been shut down with more criminal prosecutions pending. none of the illegal dispensaries we visited responded to our request for comment. the dange in these illegal stores is potentially unregulated products, like these sold to unsuspected customers. legal dispensaries are required to sell regulated products which are tted. is is exactly why legal store owners like cameron executive vice president of project cannabis, is outraged at

how bold the black market has beme. >> we're facing, especially in llifornia and in.a. specifically, an illicit market that is extremely strong. we are outnumbered three to one, illicit operator to legal operator. so we have outrageous pricemp ssion we have to see at our stores. >> reporter: how much easier do you think it is to operate as al ille dispensary compared to what you go through? >> it is a lot easier. e ey had no complia standards, no permitting process, no documentation, no legal process that they had to . go thro >> reporter: they're breaking the law, potentially threatening the health of consumers a your business. >> correct. >> reporter: and they're doing this in plain s iht? plain sight. >> reporter: as we found in all of the dispensaries in which our cameras captured illegal activity, itoo appears the in the black market in cannabis isn't going away any time soon. >> there are currently 186 licensed dispensaries in los angeles with more than 250 illegal ones according to the police, but realistically no ono

really the exact number. as far as weed maps, thatls company t us it provides a valuable service to the cannabis industry. before we go, here is a look at the record day on wall street once again. e dow rose about 244 points to 27,332. the nasdaq climbed 48, and the s&p 50an added 1 closed above 3,000 for the first time. all three indexes solidly higher on the week. that is "nightly business rert" for tonight. i'm bill griffeth. thanks for watching. >> i'm sue herera. have a great wkend. ♪ ♪

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