♪ this is "nightly business report" with sue herera and bill griffeth. >> we have come to a very substantial phase 1 deal. phase one. pa a aord on trade and said tariff increase also not go into effect next we wn. giving investors something to cheer about. brexit breakthrough? the odds of the u making an orderly exit from the european union improved. lifting sentiment. so what's next? that's the big question investors are asking. with a heavy dose of earnings just around the corner. those stori and much more tonight on "nightly busiss report" for friday, october 11th. >> good evening, everyone and

welcome. what at a day and what a week. on this friday, the market got a little of what it's been looking for, a partial trade deal. president trump met with china's vice premier at the white house where the two sides announced the first phase of what they call a substantial trade deal. investors were upbeat all day ll about something. anything happening. and they got it. the dow jones industrial average advanced 319 points to 26816 after rising more than500. the nasdaq was up 106 and the s&p 500 rose 32. and all major indexes were higher for theeek on the hope that progress was being made in trade. bob pisani has more on the market's response. >> the rally rolled on today with the dow having the best day since early june. all three major averaging snapping three-week losing streaks. investors cheered prospec of a china trade deal how much more steam does the rally have.

the s&p moved 40% 1% from the oltd highs. does the mini deal get the markets through christmas? general consensus among traders is it's not clear. the key problem for thearkets is that it doesn't really change the lower growth narrative for 2020. at least not yet. again we don't have a lot of details.s. and it certainly doesn't end the trade war. this is just a battle over 2020 where we see battles over capital flows and export controls and industrial policy. finally two other factors fueled the rally besides trade talk. a potential brexit breakthrough which sparked a rally in europe and word that hong kong protester discuss dialing down the protests listing the hong kong the market at better than 2%. fourpgt quarter injures kick-off better thap with jp morgan and city citigroup all reporting. and markets shift back to fundamentals. for "nightly business report," bob pisani. >> day two owo the trade meetins

in washington wrapped up early this afternoon. then negotiators headed to the oval office where the first part of the deal was outlined. >> because it's such aig deal and it covers so much territory doing it in sections and phases is i think really better. >> kayla tausche has been covering the story for us and joins from us the white house. kayla what's in the partial agreement? >> well, bill, china pledged transparency on its currency moves. also removed barriers to entry for non-chinese f fancial services firms. sohose firms don't need a chinese investor to o orate interest. in response china will be buying up to $50 billion in u.s. farm .roducts. and the u.s. will not be raising tariffs to 30% next tuesday on $250 billion in u.s. goods. >> the president mentioned phases this in. what's the time line for get

goinindone. >> he says negotiators will be trying to writ the substance of the deal over the next four to five weeks. the time line is crucial becau on november 16th president trump and president xi will be a attending a multilater summit in chile where it's expected the deal wou be signed. the clock is ticking for them tr actually put this agreement on paper. the president says after that, phase two negotiations will start immediately. but those are open ended. we don't know when those will wrap or whether there are deadlines associated with those. and the president says there could be a third phase if they don't get everything in the second deal. >> well what is there to be done? what issues still need to be worked out at this point. >> well there is still a lot to be worked out at this point. foinstance china pledged to open the financial service industry for three specific sectors. but the u.s. was asking for a multitude of th. they were asking for several more industries to be opened. a and they want china to deliver

on that. they also want changes to china's intellectual pperty laws which chb an unwilling to grant. china has been looking for licenses to huawei and remove the designation of a currency manipulator. officials in the oval office today said those will come separately anderhaps sooner than a phase 2 keel. >> kayla tausche at the white house thanks. and now to breks et and the efforts to leave the european union. it appears some unexpected progress has been made and a pathway to a possible deal is starting to emerge. the villa marks is i london tonight. ♪ >> for the past three years, this french politician has walked, talked and breathed brexit. michelle barnier is the eu's top northbounder in talks wh the uk. and by now even he may be running out of steam. >> brexit is like climbing a

mountain. we need vigilens, determinati and patience. >> but today he met his british counterpart stephen barkley and smiles and hand shakes boosted pound sterling because currency traders and invesrs sensed the two sides may be approaching a long losive agreement one that may avoid a disorderly and economically damaging british departure from the eu. in private senior officials tell me they are slightly more hopeful but in public remain reticent. >> i'm not i going into emotion from the podium. we are working towards a deal because this is the determination to arrive a a deal. and i think if therehis a will there is of course a way. otherwise, people would not be working on this. >> among those working hard is the british prime minister boris johnson and irish. their stroll on thursday amp seemed to spark a breakthrough. but even the brexit basher

donald tusk acknowledged on a visit to cypress. >> when the irish teshok and prime minister met they both saw the first time a pathway to a deal. i have received promising signals from the tishok that a deal is still possible. >> nice to meet. >> you back in britainoris johnson batted away question base concessions he may have about customs checks at the irish border. >> it would be wrong of me to give a running commentary on the negotiations. and why -- withhe greative possible respect, i thi look at everything that i have said previously. i think you can draw your enconclusions from that. >> his critics may still consider him a political paper tiger but if a deal is finally sketched outchhis weekend,he

prime minister may have paied his way out of a particularly perilous corner. for "nightly business report" villa marks in londonen. back here the federal reserve said today it plans to start buying treasury bills to avoid unexpected strains in money markets and steady short-term interest rates. the purchases will continue into thee second quarter of next yea. fed chair jerome powell says the move is not designed as emergency stimulus but rather to keep the plumbing of the financial system operating smoothly. let's turn now to luke lloyd to touk talk more about markets and what to expect next. ianestment strategic at strategic wealth partners welcome nice to have you here. >> fad to be here. >> we got a partial trade deal. the market up about 50 oh points and then lost b bter than 200 points. how do you read that? was the market sappointed or just looking ahead to next week? >> so day after day, the thing that continues to drive the

market is the recent news about trade. and we're really trying to tune out the political noise right now and take a long-term perspective. we really believe that the -- we're in a trade range bound until a deal gets done which i hear partial deal i hear they can't agree on big a terms righ now. >> what does that do t the market? the big parts have been about the impact its having on manufacturing, and on agricultural especially. and that seems to be easing up a lilile bas with this partial agreement. >> absolutely. so right now international data is kind of weak. so what that's going to do this partial deal is east up tensions on that but in regard t the international side we see yellow flashing lights. if we see that we will watch the numbers closely until they get better. >> does that mean increased volatility until we get the final pen on paper. >> absolutely the volatility here is to stay np we have the upcoming election in the year. no matter in the trade deal is

done until growth krermts we will be watching the earning season the next two or three months to mak o smur numbers ar god. the u.s. consumer is still strong. as long as the u.s. consumer is strong that's making the economy good. i think the world right now is watching the u.s. consumer. >> and they're going to watch the fed later this month. the presi mnt said today in the oval office there he would like to see them cut interest rates even though they have this partial deal. and in fact, the expectations on wall street for another cut this month went down after this deal was announced. do you want to weigh in? what are y specking here. >> >> i really think that the federal reserve is going to really cut interest rates this montnt even though the probability went down because of the partial trade deal. because we're at least one more this year whether october or the end of the year. but really we still think that the federal reserve needs to cut two more times this year to make sure that we fix this inverted yield curve. and we really continue to go down the right pathhn regards to economic growth.

>> lukeuk lloyd with strategic wealth partners. >> thanks for having me. >> in the meantime tech stocks rose on the news of the partial agreement. semi conductors may feel the biggest relief because of that sectors exposure to china. josh lipton has more. >> chip stocks move on trade headlines and for good reason. china is an important end market are the companies. qualcomm, micron. uld have been o. broadcom appear texas instruments all get roughly 40 to 60% of revenues in china. china is also pennsylvania vital lynch pin in semi supply chains. today, the chips move higher. the smh an etf tracking the chips has now surged more than 40% this year. on track for its best year in a decade. beyond trade headlines, semis have moved higher on what analysts say are improving fundamentals, specifically tt smartphone shipments have been better than feared.

and that a recover in the data center business they say looks likely in the fourth quarter. of course there are risks for chip investoto too. do thought improving fundamentals hold up? and big questions remain. there have been talks of the trump administration planning to allow the sale of some seplies to huawei, a cheyenne tech giant that buys lot of semi conductor components from u u.s. companies but administration officials saying they are not dealing with huawei at this time. for nightly business report, josh lipton, san francisco. it's time to look at some of today's upgrades and downgrades. johnson & johnson upgraded to outperform from market perform at bernstein. the analyst says thes legal overhang on the share price is overdone. the price target is $155. shares rose more than 1.5% to 131.33. boston beer upgraded to buy from neutral atl citi. the analyst cites quote terrific growth of hard sellser brand. the p pos target is $448.

the stock up 4% to 397.03. >> roku was upfrayed to outprormd from secretary are. at rbc capital markets. the analyst citing strong fundamentals as well as the streaming trends these days. price target, $155. the stock gained more than 4.5% to 121.60. delta airlines was downgraded to hold from buy at argue us research. the analyst citing the outlining for increased costs appear softer sales growth that the company talked about yesterday. firm says that the stock is likely to remain volatile a as a result and shares fell a action to 52.95. >> still ahead, ourur market monitor and why investors may be able to find some big gains in small cap stocks. ♪ ♪

♪ ♪ ♪ oil prices climbed after of an explosion on an iranian tanker raced tensions in the middle east. that led tot. concerns of potential output disruption in that region. the commodity got a lift from opt minimums surrounding the u.s. china trade talks. totoy the price of domestic crude settled 2% higher. in the news ntonight, that california wildfire, this one broke out overnight north of los angeles. about 100,000 people have been evacuated so far. and some freeways closed. in so-called saddle ridge fire prea to more than 4,700 acres. and the cause remains underns investigation at this point. general motors took the

unusual steps appealing directly to striking employees. ciumventing uaw learship. in a blog post the auto make earn outlined the terms of the latest offer to end the work stoppage. in response, the uaw sent a message to members saying, it continues to work to get a good agreement and to end the strike. wendy's helps skpers have a big appetite for breakfast where we quinn the market focus with the burger chn unveiling to investors its full bakfast menu. wendy's expect breakfast to account for 10% of daily sales, the menu will be launched early nextier. and investors ate it up. >> um-hum. >> sending shares 4% higher to 20.78. meanwhile forward today said it sees decline in the second largest market. china. vehicle sales there dropped 30% in the latest quarter. the auto maker still planning to launch more than 30 new models in chf over the next few years. including electric vehicles. ford up abo 2% today to 8.78.

and fastenal topped speck aches as the industrial product driblt he is said the strategy of higher prices helped offset tariffs and inflation. shares rose more than 17% to 36.34. iac interactive is planning to spin off its controlling interest in the dating service match group to iac shareholders. iac will eliminate matches dual class structure. iac up a fraction to 227.03. uber increasing presence in the latin american grocery delivery business by acquiring majority stake in corner shop. specifics of the deal not disclosed but its uber's continuing efforts to expand beyond the core ride share platform.fo the stock rose to 30.1 and s.a.p. ceo bill mcdermott stepping down two members from the executive board will be sharing the ceo duties.

this comes as s. a p. reported a preliminary rice in revenue and cloud bookings. shares up 9.5%. time for the weekly market monitor. our guest this we tn has three small cap stocks in the apparel retail sector. jay kaplan coy manager of the royce dividend value fund thanks for joining us tonight. >> you're welcome. >> and the first american f eag. this has the combination of a high dividend yield 3.6%. and the stock cut in half in the last year or so. you must love this for that reason. well as the contrarian that i am i do love stocks thahave been cut in half. but it's also good when they have a good reason for thetock to go up. let me tell you a bit about why that is. they are the number one seller of women's jeans in america. they're the number two seller of jeans in total in the country. and there is a -- i there is a denim cycle. and jeans are back in popularity again. so that's really good. but what's really exceptional is they have a brand called airy.

airy sells intimate apparel to young ladies ages 15 to 25. a now more authentic brand it's regular people rather than supermodels of the victoria secret. only 23 states you now and stationwide business. >> sec pick is designenerands. dfw stores and they are launching a kids line. >> they put kids throughout the whole chain. that's been really good. navy consolidated and acquisition they did in canada. that's also really good. but what's really interesting is an acquisition of t t kamuto brands allowing them to do a private lel. increasing marginens and you have a big dividend. >> that one almost yielding 6% at this point. >> it is. >> here is one that's not. clariss. a company around since the '1880 apparel retaper another one where the stock went down but only yielding 1.25% right now. >> it does right now because

they spend a lot of carbon buying women's brands. they're one of the leadersn women's brands with naturalizer and sammed edleman for example. but also own the famouss foot ware chain and there is a about to be a cycle with nike product that should be exiting and great for sales. >> it sounds like you are betting on the consumer. the consumer is still strong in your book? >> the consumer is strong. you know when we talk about the fear of recession and -- a by the way there is no recession yet. consumer spending is still okay. and the stocks have really discounted a terrible outlook. i don't think the outlook is quite that bad. d. >> and given the -- the mandate of your fund you're always looking for dividend payers so that you're paid evenf the stock goes down, right. we aree looking for dividends. we don't care if the dividends are large or small.ar but we want to see dividends and we think that's a great indicator of what good management teams can do with free cash flow. >> very good. jay kaplan with royce dividend value fund. good to see you again thanks.

>> thanks, again. >> there has been a lotot of ta among democratic presidential hopefulless about taxes the rich often arguing this they don't pay their fair share. the proem is no one can agree on exactly how much wealth americans pay in taxes. robert franke edition through the numbers. >> the tax headlines this week were about how the rich pay lower tax rates than the rest of america. articles and op-eds "new york times" and "washington post" and other publications said the first time in over 10 oh o year the richest 400 americans paid only 2 of the income in taxes. while the bottom half of americans paid 24%. the rearch is from a new book by manuel sayes and gler zukman at university of california berkeley advising elizabeth warren and bernie sanders and wealth taxes. the economists looked at estimated taxes paid f that including state, federal, stating with payroll, local and

property taxes and then calculated the total of those taxes as a share of people's income. the numbers are proof they say the rich should be taxed more. but other economists say their findings may be misleadi. the economiststh did not for instance include the earned income tax credit and other transfers that hel lower earnersen and since the tax rates for the richest 400 americans are not available, the economists estimated the tax rates based on corporate profits. more widely accepted numbers from the congressional bheget office show the rich do in fact pay higher rates than the rest of america. the average 1% pay average federal rates of 33%. compared to o with about 145% or less for theottom earners. jay furman obama's economic adviser looked at all taxes paid found the top 1% found they nay 40 peppers compared to less than 20% for those at the bottom. as furman tweeted, the standard

data s sws that the tax system is overall progressive. now furman and others say there are strong arguments for raising taxes on the wealthy. but for now the numbers appear to show that the wealthy pay higher rates than the rest of america. for "nightly business report," i'm robert franke. and coming up, it's thehe biggest venture capital backed private company out there. you may not know it. butourids probably do. ♪ ♪ ♪ ♪ here a look at what to watch

for next week. on tuesday, goldman sachs, johnson & johnson, jp morgan and united health care are just some of the companies reporting their earnings. on wednesday, the federal reserve releases beige book which is an anecdotal look at the economy across the country. and on friday tariffs on imports from the european union are set to go into effect. and that is what to watch for next week. when facebook first announced its cryptocurrency project called libra it had a lot of big financial companies onboard. but todayay a number of them sa they will no longer be part of it ebay, visa mas card and stripe all said that they see potential in the project but they have chosen to focus on other efforts instead. this comes just a week after paypal announced its withdrawal. most of the time we talk about companies that are publicly traded. but it is also important to watch private companies. even those you probably haven't heard of. julia boorstin tells us about

one such company growing very, very quickly. >> china based bite dance is the most valuable private venture backed company in the world. valued at $75 billion. bite dance as most familiar to american consumers is tick-tock, the video sharing apppp known f 15 second lip sernging downloaded over half a billion times this y alone. bite dance has about a dozen other popular apps in asia. process the flagship is tutao a chinese news and information. and owns sellsy happen snapchat duoshon and indian hello. they say the familyy of apps reach 1.5 billion users around theliorld every month. the company reportedly generated $7 billion in revenue in the first half of this year. with you u.s.-based tick-tock business is still naysant. >> tick-tock sells branded hashtags and experiments with

inapp adsut despite being the most popular in the apple app story in the first half of the of the year. they face significant risks. the content creator can secure sponsorships or get tips by fans. but they don't share ad renue like youtube. raising risks that creators could ditch the platform. plus, there is tick-tock's chinese ownership. >> the a lot of the way the chinese government uses soft powerwe abroad is that it rarel needs to tell. companies what to do it acts in a wayay requiring companies to guess the government and doesovt emmitrevia no orders on high just the understanding you do what beijing wants. >> concerns about censership prompting senator marco yub rube yo to call for government review of tick-tock. it's been fined nearly $6 million by the ftc to semgts allegation that is it illegal collected personal information from children. the company prosed to ramp up

protections as it works to avoid more regulatory scrutiny. for "nightly business report," julia boorstin in los angeles. and before we go, a final look at the day on wall street. word of the partial trade deal sent the market higher. the dow advanced 319 points after rising more than 500 asset part of the day. nasdaq up 106. the s&p rose by 32. and all of the major averages high are for the week.k. >> and what a week it was. >> indeed. >> that is "nightly business report" to want i'm sue herera thank for joining us. >> i'm bill griffeth. have a great weekend. we'll see you monday. ♪ ♪ ♪ ♪

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