report" with tyler mathisen and sue herera. >> surprise move. china devalues its currency causing concerns in markets around the globe that the world's second largest economy is in worse shape than many think. old crime, new twist. the world of hacking is entering a new front and it exposes a vulnerability within the financial world. little known benefit. why thousands of young children qualify to collect their own social security checks. all that and more tonight on "nightly business report" for this tuesday, august the 11th. and good evening, everybody. i'm bill griffeth in tonight for tyler mathisen. >> i'm sue herera. if china was looking to jolt the global markets, it certainly

succeeded. in a surprise move, the world's second largest economy devalued its currency by nearly 2% against the u.s. dollar. its largest devalue situation in 20 years. a weaker yuan would make china's goods more affordable to foreign buyers so it's being interpreted that china's economy is in jeopardy of a deeper slow down which sent stocks tumbling. the dow jones fell to 17,402. nasdaq dropped 65 and the s&p 500 sank 20. commodities also came under pressure since china is a big buyer of them. oil fell to a six-year low, down 4% to 4308 and a report from opec showed output increased to a three-year high in july. and it's not just stocks and commodities that are reeling. the impact could be wide reaching. it was a shot literally heard around the world. on a down day, china's devalue

situation of the yu a n is an anchor that dropped bonds and commodities yields around the world. >> i think screaming that china is in trouble, we've seen a series of data points out of china of a serious slow down. >> reporter: factory output is weak and low inflation is making it harder for chinese companies to pay off debt and the government has been cutting interest rates while trying to fend off a stock market collapse. now, devaluing the currency means chinese exports are cheaper to buy but the reverse is also true. goods imported into china, especially commodities like oils and metals are more expensive. companies sure to be impacted include yum brands which owns kentucky fried chicken, johnson & johnson and apple, all rely heavily on sales in china. but a weaker yuan means less revenue when converted back into u.s. dollars.

apple saw shares surge 100% in the most recent quarter. overall, it does 27% of its business there. the lower yuan caused jeffreys to lower the target on apple today to $130 per share. 17 of the top 20 s&p 500 companies with the highest sales exposure in china are tech. the biggest, intel, which does 36% of its sales there. qualcomm, which does more than 60%, and texas instruments with 44%. overall, though, the s&p 500 has only 2% of its sales at risk in china, which leads to an interesting debate. just how much the lowered yuan will influence the u.s. federal reserve. some believe it will be a big factor. >> i think they are going to hold. i think this make it is much more likely that they are going to hold. >> others, not so much. >> i don't think the federal reserve will back away just because of this one event.

anything could happen between now and the end of september. >> i don't think it really changes the equation. the fed will be making monetary policy on the basis of u.s. conditions and because of u.s. policy needs. >> so the real question may be just how much devalued yuan will affect the u.s. economy. and today the u.s. treasury said it is too early to judge the implications of china's currency devalue situation but the department will continue to press china to move towards a market oriented exchange rate and any reversal from that would be troubling. well, let's put it in perspective. joining us to do that and tell us what it means for the u.s. economy, the equity markets and the fed is josh fine man from deutsch asset and wealth management and paul christopher from wells fargo investment institute. welcome to you both. thank you for joining us. >> good to be here. >> josh, what do you think? there's an air of des pperationo this when you look at what they have done to shore up their

stock market. now they are trying to devalue to spur growth. what is next, do you think? >> i think that's the worry, that people are just concerned that china is slowing more than the official data kind of suggested and this move kind of fuels that a little bit. that's the glass half empty. on the plus side, though, you know, it's a modest move. it's not likely to move the needle dramatically on china's competitiveness. one of the factors, they are trying to move to a more market-oriented flexible exchange rate so they can move their currency to a global reserve currency status. this helps in that regard. >> paul, you think this is part of a longer term strategy by china to remain competitive and also to move toward a reserve currency status? >> that's right. the chinese have a history of making important new reforms during periods when a particular sector is under a crisis. they did so at the banks a year or two ago when they lifted the

deposit ceilings and the floors on lending. so this is the sort of thing that the chinese authorities like to do in order to get more competitiveness and, frankly speaking, to show that the market that the yuan can move down as well as up. it is an important step in that direction. >> paul, the equity markets around the world sold off on this news. if they continue this devalue situation of their currency, could you see more downside for u.s. equities especially? >> i think the real risk here is that somehow china triggers a round of competitive or retaliato retaliato retaliatory devalueation. that would end up putting pressure on the domestic economies in emerging markets. they are already under some pressure. that could come home to produce slower global growth and hurt u.s. firms in that way. but i think that's a bit of a

stretch and a low probability. china really has no interest in engaging in that sort of competitive devaluation. it's moving up the value chain and china wants to demonstrate to the international monetary funds and others that the currency is capable of being stable and, therefore, a good candidate to be a global reserve currency. no, i don't think this is a desperation move by china. >> josh, weigh in on what this means for the u.s. fed. many people are expecting a rate hike in september from the fed. others think that the implication of this, of china slowing down perhaps in some people's opinion with this devaluation puts the fed on hold. what, if anything, do you think this does for the fed? >> i don't think this event is going to dictate one way or the other. i think the fed is likely to raise rates before the end of the year. whether it's september or whether it's q4 is a close call. i lean towards step accept but that's going to be dictated by

the domestic data and sort of the fed's judgment between now and then. i don't think that china has moved by itself is going to be the arbitrar. u.s. exports to china are 1% of u.s. gdp. >> josh, people watching tonight want to know about their investments here in the u.s., if they are investing in china in one way or another, especially the multinationals who might derive a lot of revenue. apple, i can think of, or other companies like that. does this give you pause or do you buy bargains at this point, do you think? >> i think you've got to look at it on a company by company basis. but overall, there are some companies that are more exposed, to be sure. i think the overall impact of the u.s. economy and u.s. markets, once the dust settles on this, is not likely to have a round of competitive devaluation or trade wars that could upset

markets more. i think we're going to fall way shy of that. i think chinese authorities are going to tread pretty carefully here. in the coming days, things will settle down and we'll focus back on the u.s. domestic fundamentals, which are not great, but they are improving. >> and paul, why don't you take the final word here. do you think that this should or will change the fed's perspective on their ability to raise rates before the end of the year? >> only if we were to see that unlikely case of a competitive deval devaluation or as a result of countries trying to outcompete china. i don't think that's very likely, as josh said. i think we're going to see the fed focus mainly on the u.s. story as long as the global story remains orderly. >> josh fine man and paul christopher, thank you for joining us tonight. >> thanks for being here. the move by china could possibly hurt chinese consumption of luxury cars.

later in the program, we will take you to a plant in the u.s. that is now making and exporting cars to that country. and now to another global hotspot. greece. the country has agreed on the terms of a third bailout. the plan would provide the equivalent of $94 billion in aid in exchange for economic us austerity. questions remain, though. now to the u.s. economy where employees are working more efficiently, according to the labor department this morning. productivity growth increased to a rate of 1.3% in the second quarter. secondly, wholesale inventories rose more than expected in june. in fact, by the largest amount in more than a year. that suggests that businesses are more confident that consumer spending will increase. >> it's an old-fashion crime with a new twist. regulators and prosecutors today

charged a local group of regulators and hackers in an insider trading scheme that netted millions of dollars in illicit profits. harry thomps harry -- here is that story. >> reporter: today's national case is unprecedented in terms of the hacking at issue, the number of traders involved, the number of securities unlawfully traded and the amount of the profits generated. >> reporter: at a press conference, s.e.c. chair mary jo white detailing a groundbreaking case involving the global group of 17 hackers and traders and 15 firms and funds. the s.e.c. alleging that they netted $100 million in illegal profits. >> all companies should be vigilant. all of us should be vigilant in protecting our systems, taking measures to detect and guard against hacking. >> reporter: the masterminds of the scheme, two ukrainian hackers, access company press

releases before they were made public. the hackers infiltrating three wire services through malware and employee logins and then sharing the information with the traders who bought or sold company stocks or options before the release went public closing out their position soon after. the case highlighting the vulnerability of our financial system and while banks spent billions on building their si r cybersecurity system, they are looking for the soft spots. >> they are always going to look for the weakest links and they targeted the news wires. >> reporter: over a five-year period, the group traded on 800 different releases, most involving earnings reports of companies, including panera bread, caterpillar and edward life sciences. the hackers were kicked out several times but came back showing patience can pay off for a while.

for "nightly business report," i'm mary thompson. and still ahead, the little known social security benefit for children. shares of google rose 4% today following the company's major restructuring effort that we told you about last night. the overhaul creates a eld hold company called alphabet and a new subsidiary includes search and high-growth youtube business which julia boorstin points out, could now be more important than ever. >> reporter: this move shines a spotlight on youtube, an

increasingly important part of google's core business. the division's revenue will not be broken out, investors are applauding this new structure on confident it will provide better insight into the growth and profitability under google's umbrella. >> in the long run, as the advertising-based transcript businesses, surge and youtube begin to slow down, they are going to have different investment characteristics than google. >> reporter: youtube accredited its last quarter for being a huge driver of the company's upside surprise. she didn't reveal financials but says that it's accelerated to the fastest rate in two years of 60% year over year. while youtube's top 100 advertisers are spending 60% more than they did last year. >> they've created a business model there that i think, if you will, has some moral questions to it because they are taking a huge piece of the pie, you know, for content created and owned by

others. it's nonetheless a spectacular business. >> great to hang out would you today. >> looking forward to it. >> reporter: analysts say it will be beneficial and they are hoping to see how youtube is fairing against facebook as it invests more in the video ad platforms. it's worth noting that youtube operates under the umbrella of google is serving as a model for what we're seeing now with alphabet and its operating companies. it speaks to the success that youtube has had withes operating independence. for "nightly business report," i'm julia boorstin in los angeles. american airlines reports an increase in traffic and that's where we begin tonight's market focus. the carrier saw demand rise in july as more passengers flew american and fewer seats per flight. meanwhile, a japanese life insurance company will be buying the u.s. insurer semetra

financial in a deal worth nearly $4 billion as japanese insurers have been looking overseas for acquisition opportunities because of a declining aging population in japan. shares were almost 7% higher to $31.50 on symetra. and semmantec is selling to carlyle group. they will use some of the proceeds from the $8 billion deal to increase its own stock buyback program. the firm announced quarterly that it missed estimates. the stock stumbled on that news to $21.34. on friday, we told you about the reports of the credit card lender capital one financial was in talks to buy general electric's health care finance unit. today that deal is official. price tag on the acquisition is $9 billion. shares of ge fell 2% to $25.71.

capital one was almost down 2% as well to close at $80.87. red robin disappointing investors as earnings were in line with estimates but sales missed forecasts. the company also gave a pretty dismal outlook saying it expects revenue growth for the year to be at the low end of it is estimates. shares slid more than 9% to $80.15. powers watson posted a beat on both the top and bottom lines. this is the consulting line that merged with the willis group in june. it as off a fraction. zebra technologies reporting earnings and guidance that missed estimates. they saw sales rise as it benefitted from the acquisition of motorola's scanner business. shares fell to 83.80. and fogo de chao -- i love saying that name -- posted an earnings beat since going public

in june. there were restaurant sales growth and revenue and earnings fell from the year earlier. shares were volatile in initial after-hours trading. by the close, the stock was up more than 2% to $20. >> i'm glad you had to say that. as social security turns 80, its reach has grown. now, last year, over 59 million americans received more than $850 billion in social security benefits. and some 300,000 minors and children were also receiving benefits from a little known portion of the program. hampton pearson tells us about it tonight. >> many years standing is in large part fulfilled. >> reporter: social security today has grown and expanded in ways that franklin roosevelt never could have imagined when he signed the legislation into law 80 years ago this week. in recent years, the financial crisis forced baby boomers nearing retirement age to look for new ways to maximize their social security benefits.

one of the more creative solutions from financial planners, a little known loophole sometimes known as the viagra college fund. people who have reached the magic age of 66 can file for benefits triggering a 50% monthly payment to any minor dependent children until the child reaches age 18. for example, when dad turns 66, he's entitled to, let's say, a $2,000 a month benefit. his child gets $1,000 a month until age 18. put that in a 529 college savings plan and even a harvard vacation becomes affordable. >> if the benefit doesn't care how much you need the benefit. >> reporter: right now, social security estimates there are more than 300,000 children of retirees receiving benefits and the number could go higher. but small change at social security has been a challenge for reformers because the savings are minimal.

>> social security, we only reform it when we're really going to reform it. we need to do that soon. we need a big package and that might be an opportunity for some of the small reforms. i don't see a chance of that going on their own. >> bernie sanders favors lifting the income gap on the payroll tax. >> a wall street ceo who makes $20 million a year pays the same amount into social security, someone who makes $118,500. >> reporter: there is a challenge to the fdr legacy on the horizon. social security trustees say the disability fund, part of the massive program, could run dry by the end of 2016. for "nightly business report," i'm hampton pearson in washington. well, to read more about this social security benefit, head to our website. we have it there at nbr.com. coming up, a car that's made in america heading for china and

creating jobs in the heartland in the process. here's what to watch tomorrow. dow component reports its earnings. the labor department releases its job openings and labor turnover survey for the month of june and federal reserve bank of new york president bill dudley scheduled to speak tomorrow. that's coming up. what to watch for on wednesday. the number of complaints that passengers filed against airline carriers rose by 20% this year. that's according to a department of transportation report. the two most popular complaints were flight disruptions and baggage problems. the government agency ranked the

best and worst offenders in terms of arriving on time in june. hawaiian ranked best, alaska came in second, delta was third. the worst airlines, spirit, united and frontier. auto sales in china, the world's largest auto market right now hit their lowest levels in almost a year and a half. the china association of the manufacturers said that retail sales of passenger vehicles dropped about 6.5% last month. it was the third time in four months that auto sales had declined in that market. and a move to devalue currency by 2% could cut into chinese consumption of luxury cars. but that's not stopping a midwest assembly line from operating in overdrive. in fact, one automaker is turning to an old hummer plant to help it with production. phil lebeau has the story tonight from indiana.

>> reporter: it's a sign of how far the auto industry has come in america. the mercedes-benz r class now off an assembly line in south bend, indiana, in a plant that once cranked out the hummer. >> we're not just focused on the class, the hummer and h2. we're looking at the front windshield, not the rear-view drive. >> reporter: it's built here because the mercedes plant in alabama, which has long been a hub for suv production is long running out of capacity and with the demand running high thanks to low gas prices, mercedes turned the to the old hummer plant for help. >> we're ready to get back to the plant. we love to work here and love how this facility is. we were excited for it. >> reporter: fact is, many auto plants in the u.s. are close to capacity as the industry moves fast to keep up with strong sales. not only in america but around

the world. >> the peak hasn't been reached yet. we're seeing average age of the vehicle is well over 11 year ons t the road. >> reporter: made in the u.s. headed for china from a plant humming with activity once again. phil lebeau, "nightly business report," indiana. and that's "nightly business report" for tonight. i'm sue herera. we want to remind you, this is the time of year your public television station seeks your support. >> i'm bill griffeth. thank you for watching. have a great evening. we'll see you tomorrow.

jim brown: join us for 50 years with peter, paul and mary. it's an anniversary special featuring america's favorite folk group singing the songs that changed history and became the soundtrack of our lives. fifty years with peter, paul and mary, on pbs. explore new worlds and new ideas through programs like this. made available for everyone through contributions to your pbs station from viewers like you. thank you.