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tv   Nightly Business Report  PBS  February 7, 2019 5:00pm-5:30pm PST

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ncer: this is "nightly business report" with bill griffeth and stocks tumble. concerns over trade and global growth mount as the market retreats. banking powhouse. bb&t and sun trust are combining to create one of the largest banks, making this the biggest banking deal since the financial crisis. tck revolution. how amica's love affair with big vehicles is reshaping how the automakers spend and hire. those stories and much more tonight on "nightly business report" for .>> we do bid you a good evening, everybody, and welcome. stocks aid head souther investors were hit with a 1-2 punch of tradend global growth concerns. let's start with trade. the latest is that talks between the u.s. and china may not be
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ogressing as quick as the market would like, especially ahead of tha key tariff deadline now set for march 1st. that sparkedt concerns te trade war between the world's two largest economies will not be coming to quick resolution after all. at the close today, the dow was down 220 points. not the low of the day, though. we're at 25,169. the nasdaq was down 86. the s&p slid by 25. bob pisani has more on today's st >> a number of headlines stirret up fears ahe u.s./china trade war. just before 11:00 a.m. eastern time reports were out saying the white house national economic director, larry s kudlow,d there's a pretty sizeable distance to go for the two world powers to rea a trade deal. moments later, sources told cnbc that president donald trump was unlio meet with chinese xi jinpingefore the m 1deadline. that's sparking concerns that the trade wars might pick up right where they left off
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days ago. the markets had been patiently optimistic about a trade deal over the last few weeks and months but prospec are a little dimmer now. when asked if he had planned a eting with xi, trump told the press not yet. no surprise that defensive sectors were the lone groups trading in the green. big groups like materials and energy names lagged on the session. industrials also dragged the dor dento the red. on top of that europe showed more signs of a global economic slowdown overnight and thated store fears about a weaker macro backeop. right spot was the regional banks, particularly ntrust and bb&t. the bank stocks have rallied 16% so far year but still are facing tougher conditions, thanks to low rates and tepid lo loan growth. for "nightly business report," i'm bob pisani at the new yorge stock exch bob just mentioned renewed fears of a slowdown in global growth which is talked about yesterday.
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but today it was once again a big focus for investors. tteve liesman has more. >> j a few months ago, markets fretted about central banks ending theirpolicies. now those same banks are slashing their growth forecasts, dialing back plans to tighten policy and in some cases even easing interest rates. today the bank of england citing global trade tensions and concern over brexit cut its growth forecast for 2019 by half a point to 1.2%. some analysts who thought the bank of england would hike twice this year now see no hikes. in the u.s. last week, the fed shifted from a policy of gradually increasing rates to a aupoolicy of being patient. fed officials still seehe u.s. economy on solid footing, but global economic weakness is clearly their biggest worry. >> you look a what the risks are, and i think global risks are probablyhe most significant ones.
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that will be what i at least ll be looking at over the course of the next six months is how does that evolve. >> forecasters see that evolution to thedownside. the european union shaved 0.6 percentage opponents from its outlook. australia's bank shifted into neutralnd india even lowered rates. the peoples bank of c its bank reserve requirements making it easier for banks to lend. it's noter base case but former fed chair janet yellen believes tt the gathering global clouds could prompt the fed to cut rates as its next move. >> would you say it's possible the next move is a cut at the fed? >> of course it's possible. if global growth really weakens and that spill over to the united states or financial conditionsighten more and we do see a weakening in the u.s. economy, it's certainly possible that the next move is a cut. but both outcomes are possible.
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>> what the u.s. fed ultimately does will depend on how much that weakness washes up on american shores. a u.s./china trade deal could alleviate at least some of the wor e worries, but it's not clear if that will happen fast enough or be enough to eliminate gathering global risks. fornightly business report," i'm steve liesman. now to something we have not talked about in byears, ak merger. two bb&t and suntrust agreed to combine, creating the sixth largest financial instituon in the untry. believe it or not, it is the biggest u.s. bank deal in a decade. wall street liked what it heard. both stocks gained. suntrust was up 10% today, bb&t was up 4%. wilfred frost has more os thi $66 billion deal. >> the combination of bb&t and suntrust will be one of the dominant forces in the southeast region, becoming the third biggest bank in the area by deposit. it falls behind bank of america
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an wellss fargo whose sto declined in light of the extra competition, as did jpmorgan who has a big presence in florida. the deal strikes a perct sweet spot. it will not be subject to more stringent regulation because n's big enough to be considered strategically important. and there are plenty of cinsin y synergies the ability to close branches. it will also allow increased investment in technology, a key areaighted by bb&t ceo, kelly king who will serve as chairman and ceo of the combined bank. >> our clients want satisfaction. they want what they want when i they want right here right now. so we are all facing an increasing set of complex economic realities where we have to invest more and more in technology. >> more consolidation could follow in the industry, more likely among smaller banks than involving the top five u.s. banks where regulatory hurdles
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would be significant. for "nightly business report," i'm wilfred frost. so could today's bank merger lead to more bank deals? i guess that is tti qu. will this lead to more and how -- why did the atmosphere change where we get a deal now, because it's one of e biggest ones since the financial crisis. >> thank you for inviting me o thshow, sue. i would say that a couple of key faors have started t come up. first and foremost, it was already discussed, the regulators changed t way they were going to regulate banks between $250 billion and $700 billion in assets. that change was pposed last fall. we published at the time that this was the green light thought for bigger bank mergers. and so that was one othe catalysts why we're seeing it today. but i'd also point t outt the banking industry has been consolidating for over 30 years.
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back in the '80se d 14,000 banks. today we have 5,700. it kindf went on pause because of the financial crisis amongst the big banks and now we'ack on track. >> and now the fed is on hold, so interest rates ang not g to go much higher from here. that's not good for the banks. loan portfolio growth has slowed a bit, so they have to find growth somewhere. i guess that's why you'rein ng we'll see more consolidation down the road. fso who's ripe this kind of consolidation? what kind of a bank do you look r to decide if it's going to be bought or do the buying? >> it's an interestingquestion, because i think it spans a variety ofanks in size. it could be small banks in th billio in asset size all the way up to another coupleed hun billion dollar in assets bank. as you pointed out, this ihe biggest deal in over ten years. last yr there wer 259 bank
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deals but they were very small. as we go forwd, i thinkig regional banks could combine together like we just saw today with the announcement from the suntrust and bb&t, butlso we could see smaller banks continue to sell out. economies of scale will drive ,his consolidation. as we kn banking is a commodity product. the low cost producers are going come out to the winners. >> on that note, thank you. >> thank you.>> and there is cautious optimism on capitol hill tonight where t lawmakers areing to hammer out their differences on border security and come up with a spending bill that averts anher government shutdown. usn mui is in washington for tonight. >> the federal government runs out of money on february 15th. that means negotiatorsto nee come to an agreement in the coming days in order to comply with the fizzle rules for passing a bill through thed houe an the senate. today house speaker nancy pelosi
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said she has confidence that members can work out a mi comp. >> i have asked the administration to be as nonin r noninterventio a i am. hopefully we'll get good news in a short period of time and certainly in time for the deadline of february 15th. >> senator richard elby, the top republican in the talks, met with president trump today to brief himth o status of the discussions. nothing is final yet, but republicans say t they needee things to get to yes. more agents, new technology and a border barrier. gop negotiators are staying away from using the word "wall." that could open the door to a deal with democrats over a physicalinfrastructure. one democrat on the negotiating teamays he backs an enhanced border barrier. another sticking point is the money. democrats started at $1.8 billion. up.t's likely to go but senator dick durbin, the top democrat in the discussions,
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said theyaven't settled on a number just yet. but the big x factor in all of this is whether the president will sign what congress sends him. a republican senator is urging trump to accept the deal. >> that's a decision he's going to make. i would say follow ronald reag's approach which if you don't get the whole loaf, take it a slice at a time and then go back and get mpmore. >> t has called these discussions a waste of time, but he's also said he wants t see this process play out, so we'll see where the president stands if and wn lawmakers reach a compromise. for "nightly business report," i'm ylan mui in washington. lawmakers across the to ntic are also tryin hammer out their differences when it comes to how britain will exit the european union. so-called brexit is considered a big risk for the global economy, and right now things are not goin the w prime minister theresa may would like. villa marks in brussels tonight. >> the flag of a eu membership state flies outside the european
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commission whenever that country's leader visits buffa brussels. that means the union jack could become a rare sight here. recently it's and as often as theresa may. first up as jean-claude yunger who greeted t british leader. alongside a host of difficult questions -- >> have you brought specific proposals today? >>end a j about may's brexit demons. that reference was to eu counciw presiden yesterday derided the british politicians he said pushed brexit without a workable proposal. >> i've beenng wonde what the special place in hell looks like for those who promoted brexit without even a aketch of plan how to carry it safely.
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>> this sitdown on thursday has yielded yet more meetings next monday. al way, may's self-imposed late march departure deadline marches ever closer. >> it's not going to be easy, but president junker and i haves agreed that t will start to find a way through this to find a way to get this over the line and deliver on th concerns parliament has so we get a majority in parliament. >> the focus onowning street is the next big brexit vote on wednesday. with many of may's own party still concerned the current agreement could undermine britain's sovereignty. the british prime minister hasle repeatedly f to win over members of her own parliament at westminster. there was no indication that she had any more success with theeu legislature which has vetoer por ny changes to the brexit al. >> it is the only solution that protects peace in ireland and
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the integrity of the iernal markets. >> and as may continues on to dublin tomorrow, a tension j remainst to the north in a border region that could soon separatehe uk and ireland and in turn europe. fory "nighsiness report," i'm villa marks in brussels. time to take a look at a couple of today's upgrades and downgrades. guess was upgraded from buy to hold. the analyst said the company is one of few retailers with an opportunity for sales growth an marginexpansion. the price target is $24. shares rose 4% to brazilian mining company as valedowngraded at morgan stanley. the analyst cites continued uncertainly following a recent dam accident. that also prompted the to remove his price target for the stock. the shares were down more than 1.5% to $11.17 on the session. still ahead, twitter is turning into a big spender, and
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investors are not exactly retweetingi the p amazingly sears has officially been saved from liquidation. a bankruptcy judge today approved a deal to sell the remainingssets of sears to its arairman and lst shareholder, edward lampert, who
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runs eslinvestments. it says that the $5.2 billion deal to buy the company will save 425 stores and about 45,000 jobs. > it was a rough day for twitter. despite reporting better-than-expected earnings and revenue. investors focused on the social media company's guidancehthich was lnd added that expenses will increase a lot. that sent the stock down about 10%. julia boorstin has more. >> twitter is increasing its spending, hiring more employees and investing tomprove the conversations on the platform and cut down on the abuse. bu that pla isn't going over so well with investors. the cfo saying investments make sense as they work on improving the platform l >> if youk at the 500 or so people that we added to the team last year,ore thanalf of them were in our engineering product, scene and research organization so we're trying to build technology advantage that can be scaleae, that can b durable, and that can help us
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solve the problems and helpd people fhe things that they're looking for on twitter faster. >> twitter's active user numbers were in line withexpectations. the company announced it's going to switch to reporting daily users. 2at number increased by million to 126 million. he said this increases transparency and doesn't change anything about the w advertisers pay to target their messages. >> it's nothing new for advertisers. th come to twitter a specific objective in mind. they tell us what audience they want to reach or whatth part of e world or demographic they want to reach and we help them realize their objective. >> somest ana raising concerns about stopping the monthly number that's been a constant since its 2013 ipo. >> when you change the goal post, no matter how articulate your angument is for d so, there's usually a bad reason. and so i tak this as a negative. >> as for what will drive
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twitter's nt leg of growth, he said most of their revenue is from big brand and they're working to make it easier for small and medium businesses to spend on tfo platform. "nightly business report," i'm julia boor tapestry finds itself out o fashion ahat's where we begin the market focus. the luxury retailer cut its full year profit forecast after reporting its firstuarterly ss in two years. the company cited weak sales of its kate spade brand and the slowing global economy we've been talking about. tapestry also owns coach and stewart wiesman's brands. shares touched a f52-week low. yum brands missed quarterly estimates as it spent aggressively on promotions to lift sluggish sales at its pizza hut locations. strong performances at kfc and taco bell helpe the company top same-store sales forecasts. they alsonnnced taco bell
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launching nationwide delivery through grubhub when yum's ceo says is part of along-term plan to grow sales. >> it's about making sure the brands are revant, making sure they're distinctive. the newest attribute is how to you make it easier. pizza hut does it. co bell doing dleelivery. i think delivery is the next way to make it easier for customers for access. >> shares gained 2 cents to $94.61. earnings at dunkin brands topped estimates but revenues hacame in lower expected as u.s. same-store sales were flat. the company say it's bee focused on rolling out espresso drinks as part of a long-term strategy to attractore coffee drinkers. >> we really like what we're seeing in terms of the consumer reaction. it skews younger, it skews toward the afternoon. we're gting newuests and also getting that important switcher. those people who switch from and to brand, we get those
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switchers back as well. so we really like how that's performed over the first ten weeks. >> but investors seem focusedn the lower revenue numbers and shares fell 3% to $66.79. earningsgg's posted an beat on an adjusted basis, but the nonadjusted numbers were negative, ashe company invests in new cereals and snacks. those investments do lead to higher sales, as kellogg's sees sales up between 3%nd this year. it could come at the expense of earnings as the company expects them to fall as much as 7% for the year. that was more than what wdl street wano see, so kellogg's shares fell more than 5.5% to $584. tyson foods reported weaker-than-expected quarterly sales. the largest producer is facing lower pork prices and a drop in demand for chicken. the company reaffirmed its outlook saying chinese demand for pork may increase given the severe outbreak of african swine fever in that country and that
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isci f some producers to cull their herds. the stock fell to $60.12. and that outbreak of the african swine flu came as a surprise to authorities in china who arecrambling t fight the spread of that disease through . that's just adding pressure toct se of the chinese economy that's already in the middle of a trade war. eunice yoon has more tonight. >> china's tariffs were meant to hit american pig farms, but not him. i would say tariffs are hurting people in the short term and might have consequences. >> to retalia against president trump's tariffs, the chinese raised duties on american pork last year to a total of 62%. but even the pig business is global. this farm in eastern chinas 100% american. the u.s. private equity fund along with an american hog farming company invested $100 million in the complex four
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years ago. last year, the farms sold 500,000 pigs. the chinese eat more pork thane anyone e in the world, as much as the rest of the world combined. have been in demand since an african swine flu epidemic hit the industry last summer. >> we're using automatic feeder systems. >> reporter: u.s. technology and standards helped himvoid the disease. >> the slaughterhouses will see our meat as safe a high quality, and so they will pay a slight premium over the market price. >> the epidemic also gave a t boos farmers in the u.s. at first, pork imports from america tanked when the tariffs hit, but the swine fever created ork shortages in certain provinces. the outbreak of african swine fever here forced chinao import american pork anyway, despite the tariffs. >> as we go deeper into 2019,
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prices should come back upgain because the total stock of livestock is really low. it also happens to be the year pig, so it should be a lucky year for pigs. >> and american pigrm s. for "nightly business report," i'm eunice yoon. coming up, the road ahead. why some auto plants are closing while others are expan fiat chrysler sees a bumpy road ahead for 2019. the automaker issued a weaker-than-expected outlook after reporting disappointing ersales in north ama, which is a key market for the company. the ceo said the companylso
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trying to navigate the chinese lrket which weakened in the second half ofast year. that sent shares down 12% in today's ssion. meanwhile, ford is investing $1 billion to beef up suv production at its plants in chicago. it's just the latest example of auto makers spending and hiring at factories to build trucks, while cutting jobs and shutting down assembly lines that build cars. phil lebeau has more. >> ford's big investment on the south side of chicago is proof the suv boom isng rol on. in order to build the new explorer, ford is addin 500 jobs and investing a billion dollars in its chicago plants. >>llhen it's finished, chicago assembly will have an all-new state-of-the-art body shop, an all-new paint shop and new tooling to build this new lineup. >> why are a more workers and money into some asinmbly plants while shu down others? it's all about america's truck
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revolution. over the last five years,s truck and suv sales have soared, car sales have plunged. so assembly plants like gm'sn lordstown, ohio, which builds the chevy cruze will soon be idle. ford's flat rock planting outside detroit will soon cut shift. the fact is america's demand for trucks and suvs isorcing automakers to change what they build and where they build it. take fiat. chrysl it will add assembly lines to build more jeeps, perhaps the hottes brand in sho rooms, eercedes and bmw hired more workers in the south where they build popular suvs. the changing landscape of auto manufacturing in the u.s. is painful for thousands of workers losing jobs at plants that build sedans. but overall, this is an industry that has steadily added manufacturing jobs over the last
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decade. phil lebeau, "nightly business report," chicago. >> here's a look at the final wall street. the dow fell 220 points, nasdaq do 86, s&p 500 slid 25. and that will do it for "nightly business report" tonight. i'm sue herera. anks for joining us. >> i'm bill griffeth. have a lovely evening. hope to see you tomorrow.
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>> this is "bbc world news america." funding of this esentation is made possible by the freeman foundation, and kovler foundation, pursuing solutions for america's neglected needs. >> wow, that is unbelievable. ♪ >> i'm flying! ♪ >> stay curious. ♪