♪ this is "nightly busiitss report" sue herera and bill griffeth. solid gains. ocks get a lift, even as the bond market's warning of a recession grow louder. t investors brush it off, at least for today. ecord equity. homeowners are sitting on a ton of cash. so why aren't the tapping into it? houston, we have a problem. but a video game maker fou solution, and he's ready to give astronauts a helping nd. hose stories and much more tonight on "nitly business report" for wednesday, august 28th. ♪ good evening, everyone. welcome. it was a head-scratching kind of day. stocks rose sharply just as about everything got a banks, retailers, technology,

energy, you name it, and it happenedn a relatively quiet day that saw the bond market continue to flash a recession signal, an unusual phenomenon we have been telli youbout. today investors brushed it off so here are the closingth numbe. dow jones industrial average added 258 points to close back above 26,000. the nasdaq gaine 29 and the s&p 500 was up 1. but what will it take for the bullo stay in charge? bob pisani put together a checklist. >> reporter: bulls can't wait to get out of august. they're hopeful for more stanl global economic data, more help from central bank easing, most importantly no radical downward revisions for the earnings estimates in third a fourth quarter. earnings are the key, and so far other than notable downward revision in energy and materiars, flattish for the s&p 500 remains the buzz word for 2019. that's good enough for the market. but the bears have plenty of. ammuniti trade wars are hurting growth and those earnings, and now

lower yields have emerged as the new big worry forey traders. e fretting it is a sign of even more global slowing. this.s the problem with how can you worry about lower yields and at the same time home recentral banks going to lower yields even more? out?o you figure that central banks may not be the help the markets thought they would be. finally, even on an up day there's a growing list of new lows down here, including industrial and material names like 3m and fedex and caterpillar, shreveport mac brand. all of these companies, what do they have in common? hey're all tied to the global economy. for "nightly business report", i'm bob pisani at theexew york stocange. a federal reserve official said today that the central bank is monitoring the impact of last month's interest rate cut. richmond fed president tomno barton gav clues about the future path of rates but he said theomestic economy appears to be strong but international economies are weaker and uncertainty ised elev

especially when it comes to trade. and today more than 200 footwear companies urged president trump to cancel the proposed higher tariffs on chinese imports which te effect next month. the industry trade group said theariffs act as a hidden tax that will hike consumer prices. while duties on some chinese imports were delayed until december, the majority of footwear lin face an additional 15% tariff on september 1st. chinese telecom company teawei remains at the center of the trade dis between the u.s. and china. as you know, there are restrictions on u.s. companies when it comes to doing business withhuawei, which the white house says is due to national security risks. well, today w were reminded once again of its importance. eunice yoon is in beijing for us tonight. ♪ >> reporter: 130. that's the number of applications the u.s. commerc department has reportedly received by american companies looking toontinue to sel to

huawei. sources tell reuters that theis trump admation has not yet decided on whether to grant the licenses with progress on the trade deal so uncertain. huawei won't comment on the report except to say that the compan t hopes u.s. would take it off the black list and end what huawei describ as unjust treatment. meanwhile, beijing is indicating it doesn't want to pvoke the white house with its currency. a central bank setf the value the yuan stronger than expected for the second day in a row, suggesting it wants to keep it stable. separately, there's been an interesting development on the political side that could verff wellt the trade talks. just in the past couple of days ee state media h has started using a title for president xi jinping we normally don'tit see. suggests that the person has iritual authority b combining pope and president into one. people here are seeing this bad sign for a trade deal, because with this new title how can president xi jinping be seen

making concessions to the u.s.? for "nitly business report", i'm eunice yoon in beijing. british prime minister boris johnson today moved to shut down parliament for several weeks. this is in an effort to push through the uk's exit from the european union, even without an agreement in place. a so-called hard brexit is what economists are concerned about, saying it could disrupt the global economy. and in italy its political parea struck a to form a new government that sidelines that haea-rightr. this could mean that italy adheres to the trade bloc's strict fiscales r as you might know, italy's debt load is one of the largest in the rozone. back here in the u.s., the consumer has been holding up pretty we, helping power the economy. but a closer look now shows that the wealthy a consumers actually starting to spend less and it is creating an economic split. robert frank has details. >> reporter: for most of the pa decade the wealthy consumer

was strongest and the working class lagged now the economy has flipped. the high-end segments of real este, art and cars are now the weakest and the walmart economy is the main driver of u.s. growth. luxury real estate is having its worst year since the financial crisis. sales ofri homes it at $1.5 million or more falling by 5% in the second quarter. there is now a three-year supply of mansions and luxury homesn aspen, the hamptons andmi m retailers to the 1% are falling behind walmart, costco and target. barny's filing for bankruptcy earlier this month. nordstrom posting three straight arters of declines, and neiman marcus seeing its first sales drop in sev years. art auctions are down between 10% and 20% this year, and at the annual pebble beach car auct mn this monthe than half of the cars priced over $1 million failed to sell, while cars priced under $75,000 sold

for far morehan their estimates. spending by the ultra wealthy is now below 2017 levels, and the share of national spending by the top some% is actually -- high-income consumers pull back further on their spending it will be a significant threat to the economic expansion. other economists are less worried about the fall-off, saying it is typical for thege late s of an economic cycle. >> at the beginning of the cycle it is great for the wealthy. you haveuge profit gains. you have a roaring stock market. collectibles go up in price dramatically late in the cycle, joe six-pack gets money. you get rising wages. the unemployment rate for minorities and low -- lowed ated people goes down more than for other people.

so the economy's in a natural rotation. >> reporter: either way, spending by the wealthy isen dr by confidence and certainty. they're not finding much of either in today's globa economy. for "nightly business report", i'm robt frank. so there has been a lot of talk in the past few weeks about recession warning, whether it is record low interest rates or that yield curve invasion, and noecline in spending by wealthy consumers as robert just mentioned. how reliable are the indicators? a recession on theorizon or not? we have bill lee joining us, chief economistt the milken institute. he says he does not belve it coming. david coming with cora advisors says he sees a recession later this year. bill, i'm going to start with you. you see the yield curve inversion as a bullish sign. how so? >> everyim the yield curve has inverted in the past it is

because the fed has been drivino up rates try to slow the economy down. this time the yield curve isve ing because a lot of money from around the world is coming to the united states because the united stes is where the highest returns are because capital can be used most productively here. ay bullish sign everybs coming here because this is where the growth is, this is where the profits are, and this is where all of the returns will be. >> david, what s what are you looking at that says maybe a recession next year >> bill, two quick points. one, we have not solved the business cycle. we will get recessions. second, i believe in the curve. and when you look at it the way i do, short-term rates, fed fd rates, 2.1%. the ten-year treasury at 1.5%. yes, the ten-year treasury has come down, but fed funds have gone up from the zero level. we have had the equivalent with higher fed funds and fed reducing its balance sheet by anywhere from 300 to 350 basis point hiken the underlying fed funds rate from the blow point,

includhe balance sheet reduction. inverted yield curve, nine o of tenimes it has a great batting average, it gives us a recession. we simply don't know exactly when, but think it is within a year to a year and a half. >> bill, ove to you now you know, the economic data does in general look strong, but we ar seein slowing in the manufacturing sector. some say that manufacturing is in a recession. as robert -- frank just reported, the wealthier consumer is starting to kind of pull back a lidnle bit. wo that slow the economy? >> absolutely. in fact, we have a global wowdown going on. the question il this translate into a metastasized slowdod in the unitates. right now the thing that holds it back is the consumer. robert's report is showi that even the consumer is starting to feel what is called the weah effect. the stock market volatility is causing wealthy individuals to say iay n be as wealthy as i thought and i better start saving more. will tha then translate into

labor markets where companies start to layoff people? they start to cut back on hours. if that happens, truly you will get a slowdown in the united states and possibly a recessiono but far we have not seen any evidence that the regular man, the working stiff who is going to work every day is going to have a lay-off ahead of him in the next six months to a year. >> david, we shod point out you're not talking about a financial crisis like we saw ten years ago. >> heavensno. >> whatind of recession would you see this time around? >> well, i'm a portfolio manager first and foremost. people never forecast dire recessions, as we saw in 2008, bill. scale e on a one to t it is about a six, where you get worried is in the corporate sector. i think debt levels started to get too high. at the public secr level, even higher than that. the consumer is in very good shape. ery umer free cash flow is healthy. at the end of the day it is about a mild to average

recession with the key being we never know exactly what r thek is that's going to create one. but i think we haven't saw the business cycle and we are going to get gee. >> lemen, we will leave it there and see what the fed comes upcoming in september. ha this discussion onceagain. >> thank you. >> thank you. >> david saurby with cora advisers. >> time to look at today's upgrades and down grades. papa john was upgraded from buy to hold. the analyst t cited new ceo hich we told you abo yesterday. price target now $60. the stock rose 5% today to $50.40. auto desk was downgraded to under perform fro neutral at bank of america merrill lynch. the analyst cited the software company's disappointing outlook. price target, $127. that stock dropped more than 6.5% today to40.08. monster beverage was name add t pick. the analyst cites the new

product called rain. the firm has an out perform rating on theit stock. gained more than 2%. jet blue was named a catalystca , meaning it is a short term investment idea. the analyst says the 15% pull back in the stock over the past three weeks provides an attractive entry point. the firm noteset blue has a good balance sheet and solid market positive since. it the sto gained 1% to 16.75. still ahead, tariff squeeze. why tariffs are making wlis his makers tipsy. ♪ ♪

brown foreman reported t bettn expected earnings for the ninth straight quarter. that's the good news. the bad news is that revenue missed estimates, reflecting the impact of tariffs which the company says weighed on its in ma it is not just the big spirit makers that are caught in the middle of the tiff war, b smaller ones as well. frank holland has more. >> reporter: american whiskey, like ing iconic brand jack daniels and jim beam is on the front line of the trade war. tsu.s. expor falling about 20% since the european union placed a 25% tariff on the spirit in june of 2018. nearly 60% of u.s. whiskey exports are sold there. these duties part of a retaliation to u.s. steel and aluminum. >> the tariffs are the biggest thinec affng us. we ants mate ticipate bottom li beffected throu q2.

>> reporter: the ceo, the owner of the jack daniels brand, emphasizing the impact during ale european tariffs costs them more than $125 million.g >> it is havn impact on investment here in the u.s. it is havingn impact on great american brand. >> reporter: the trade group for the u.s. distilleray san escalation of the trade dispute could impact as many as 78,000 jobs. it is ending a 20-year whiskey boom for u.s. producers. >> since 1997, 1998, the u.s. and europe has really enjoyed free trade with distilled spirits, prompting 300% growth for american whiskey to europe. >> reporter: scott harris, owner of a distillery, was banking on the row bost marketbohen he ht labels and bottles to meet eu regulations. they can't be used domestically and he says it is impossible to replace the 11% of sales he m in europe. >> the tariffs in 2018 pretty

much decimated that we ended up with zero. >> reporter: he is rethinking a million dollar investment in new equipment as part ofxpansion plans. for now he is trying to hold on to the few customers he still has in europe. >> for the past year we've been slashing prices and payg the riffs ourselves to try to, you know, sort of maintain whatever market share we have over there. but that's a very expensive prospect, essentially we are losing money on all europe sales we might have. >> reporter: it is money lost w, but possibl customers lost forever as they find new bottles to make their old fhion. for "nightly business report", i'm frank holland. >> tiffany sales are mixed, and that's where w begin tonight's market focus with the luxury jeweller seeing a d doubleit increase in spending in mainland china. overales were not as strong as expected as protests in hong kong disrupted business and tourists in the u.s. spent less money as well. hong kong, by the way, is tiffany's fourth largest market.

shares rose 3% today to 85.17. cosmetics maker cody raised itnnl forecast citing turn caround plan including cos and increased advertising. the company reported a wider than expected lo. they wer hurt by a $3 billion write down in the value of the company's consumer beauty brands. the shares rote 6% to 9.33. retailer movato faced what it said were a slew of challenges in the past quarter including a volatile global environment, currency headwinds and the impact of the china tariffs. that caused the company to miss earnings and revenue estates an cut its full-year forecast as a result. shares tumbled about 15% today to 21.22. toyota will beeaming up and forming a capital alliance with fellow japanese automer suzuki. the two companies hope the pairing will help speed up development of new technologies such as autonomous cars. toyota shares were down a

fraction to 130.29. hershey brand plans to buy one brands in a deal worth 400 n dollars. the chocolate maker says this acquisitionst wilngthen its foothold in the snack business. it was up a fraction to 160.48. after the bill williams-sonoma reported better than expected erjs and revenue thanks to its increased sales in west elm and retailers.n the shares were volatile in after hours trading. they clo rd theular session up a fraction at 68.78. ag> mor rates rose slightly last week for the first time sincat mid-july. caused refinancing applications to drop off, but right now homeowners areti actually s on a record amount of equity that they could tap through ana rence, forpl ex diana olick breaks down the numbers for us. >> reporter: you don't need to live on a farm to be sitting on a cash cow. homeowners today have a collective 6.3 trillion dollars

worth of capital equity. that's theld amount they c pull out of their homes in a cash-out refinance while still remaining 20% equity, and that's record according to black knight. tapable equity grew by more than $335 billion during the secondr quarf this year thanks to rising home prices. roughly5 million mortgage holders have it and half of them have mortgage rates higher than 4.25%, making a refinance not only possible but attractive at today's lower rates. while low mortgage rates haveed ca refinances to rise this year, a lower share of borrowers are pulling cash out. s so they're simply gun shy from the big recession when home priceslunged and millions of borrowers went under water on mortgages, owing more than their homes were worth. otrs say it is due today's relatively strong economy.av >> savings increased significantly since before the great recession, and so the

household balance sheet isn a better position and perhaps the need to tap that equy is a little lower and there's more discipline among consumers. >> reporter: borrowers may be eyeing home ices, which while still growing are doing so at about half the pace t y were laar. for those that bought homes in the last five years when prices were red hot, the risk of pulling equity out is higher and may not be worth the extra cash in hand. for "nightly business report", i'm diana olick inn. washing coming up, game changer. meet the man who created a video game company unlike any you have seen before. ♪ ♪ ♪

in a year filled with ipos we're about to get one more. fitness startup peloton filed the paperwork necessary to go public. the company's revenues are growints but so are losses. peloton, best known for its interconnected indoor bikes and subscription cycling classes, called itself m aia company in its filing at a time when the media industry faces a number of challenges. julia boorstin has more. >> reporter: peloton isn't just aboutnd technology fitness. the company i i saying ints filing to go public that it is, quote, a media company that creates engaging to the point of addictive original programming. the fitness company, which sells bikes and treadmills and charges a monthly fee for digital access to classes, says the rise of streaming media is a consumer trend working in its favor, the company citing the dramatic growth of streaming music and

video services such at netflix and spotify over the past six years. the music as much as peloton instructors make the service compelling. >> when people work out part of wh they're looking for i not just sweat, but they want an experience. at the end of the day if you're not able to give users the type of content they're looking for e to make theerience good, whether it is a coach, an instructor or a video or even if ic is just m you're not going to win them over long term. >>eporter: but being a med company has the down side. the company cites reliance on licensed music in videos as a ey risk factor to potential work. peloton warning, we may be unable to license a large amount of music or t music of certain popular artists and our business an operating results cou be materially harmed. >> if peloton can't get the t leverage to g rights to that music, some of the own original content might not be as effect ae, and that'shame because they're spending a ton of money on it. $45 million studio in manhattan, ying out all of the

instructors to be able to get their expertise, and if someo won't pay attention because they don't like theel music pon will have serious issues. >> peloton is currently a $150 million lawsuit filed in march by the national music publisher's association, accusing peloton of copyrht infringement for artists including arianna grande and drake who used their music in the workout videos. peloton the lawsuit will cost up to $11 million.si for "nightly ss report", i'm julia boorstin in los angeles. finly tonight, a remarkable story. we want to introduce you to someone who had a passion for gaming that to his first job. it became a career and it took him tolaces he never thought possible. here is bertha coombs. >> reporter: sam glassen berg's family was impressed with his dream job. >> i started out at lucas arts makis. "star wars" ga i spent many years at microsoft, and this entire time it sort of 'mde me the disgrace of the family because the first one

that never went to medical school. >> reporter: but the medical force proved strong. when his dad asked him to make anes thesology training app, it turns out 100,000 doctors downloaded it. that led sam to launch level x video games that train doctors on procedures ranging from intu baiti bating patientsel >> they're red to hand/eye coordination and how you maneuver in a surgical scenio. >> for doctors the game changer is being able to practice and earn education credits anywhere on their phones. >> the ability to use new devices in a virtual environment, in a gamg opportunity, be allowed to push the boundaries of a newevice is not only exciting but the future of interventional cardiology. >> reporter: and maybe the future of health care in far-away environments like the moon and mars. nasa has now tapped the video game startup to help train astronauts to handle medical

issues in space. >> my job really is to invest in groundbreaking technologies and capabilities that in ten wears tin we are ready to go the mars, these things will be so sophisticated. >> reporter: doctors at the translational research institute for space help, a nasa partner organization knowned as trish, say they chose level x over more established training firms beheuse of strong virtual reality graphics and gaming engagennt. rather t making this a really boring type of practice for these nonexpert users, for our astronauts, it will be fun. >> reporter: over the next year they will develop instructional games that cance repro the effects of zero gravity, radiation and different gases that impact the body in space. >> i never would have thought that a few decades later we would be using video game technology to help astronauts train for rea space missions. this is one of the most exciting projects i have ever worked on

in my life. we reporter: made extra s now that he is no longer the blackheep in the family. for "nightly business report", i'm bertha coombs. and before we go here is a look at the day's final numbers from walltreet. the dow added 258 points to cle back above 26,000. the nasdaq gained 29, and the s&p 500 was up 18. that's "nightly business report" tonight. i'm sue herera. thanks for joining us. >> i'm bill griffh. have great evening. we will see you tomorrow. ♪ ♪

woman: this is "bbc world news america." is made possible the freeman foundation; by judy ter blum-kovler foundation, pursuing solutions for edamerica's neglected and by conions to this pbs station fr viewers like you. thank you. laura: this is "bbc world news america." reporting from washington, i am ur