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tv   Nightly Business Report  PBS  August 26, 2019 5:00pm-5:30pm PDT

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this is "nightly business report" with sue herera and bill griff fifth. triple-digitrebound. trump says china wants to return to then negotiating table even s another round of tariffs loom large. >> landmark decision. an oklahoma judge finds j&j helped fuel the state's opioid crisis, and it could have implications for other cases yet to come. streaming strategy. disney's taking a different approach than netflix, it's betting on the power of its ands. those stories and much more tonight on "nightly business report" for monday, august 2 good evening, everyone, and welcome. therwas a changn tone and a change in the direction of the stock market.
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president trump struck a more conciliatory note at a meeting of world leaders at the 7 summit in france, and there was a sort ning of rhetoric when it comes tde between the u.s. and china. it was a shift from a few days ago when bjing imposed new levies on u.s. goods and then the white house increased tariffs on chinese goods. as we reported friday, the present also told u.s. companies doing business in china to relocate. so just the notion of a de-escalation in traenons september stocks higher. the dow jones industrial average rose points to 25,898. the nasdaq was up 101 and the s&p 500 added 31. eamon javers reports from the g7 in >> reporter: psident trump lit a fire under financial markets early monday morning announcing the chinese had been in touch with u . negotiators. >> i got calls and very, very od calls, very productive
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calls. >> reporter: that was enough to send f soaring in the united states, although the traveling white house staff were unable torovide any details of the president at the same time trump insisted the u.s. has the advantage over china. >> maybe i'm wrong but i think we're probably in stronger position now to do a deal, a faireal foreverybody. calls.very meaningful >> reporter: throughout the day the president and the world leaders sought to present a united frontne to the world o year after t last g7 in canada ended in a spate of angry tweets and insults. >> if there was any word forar thiscular meeting it was unity. think most important ofll we got along great. >> reporter: also in france the u.s. struck a trade agreement in principle with japan and leaders saidrohey madeess to resolve a dispute over france's new law to tax digital services. president trump declined to say retaliatory attacks on french wine was off the table and he
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tntinued to hold open possibility of tariffsn european automobiles. but the most revealing moment came when the psident was asked if he was causing the volatility in world markets with his rapid- changes. >> sorry. it's the way i negotiate. it's the way i negotiate. it's done very well for me over e years. and it's doing even better for the country. >> reporter: the countries here were unable to agree on theee traditional joint communique, but france said the seven advanced economies wered commit to global economic stability. for "nightly business report," i'm eamon javers in france. a eamon reported the president referred to thoseon phe calls between the u.s. and china, but beijing had a eunice june h that for us. >> reporter: china's foreign ministry said it is n aware of any weekend phone calls between the trade negotiators and had not heard of a call by china to restart trade talks. that said, china's chief
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negotiator did indicate earlier in the day that china would be willing t resolve the trade dispute if negotiations were calm. whether there was a phone call, there are reasons not to get overly excited.e xpectation had been the two sides would hold talks next month. there's also a feeling here that china is becoming more hardline. the way it was explained to me is that chinese officials arerr d about the economic impact of the trade war, but they're even more concerned about rapidly introducing reforms under u.s. supervision the way the trump administration wants. politically the economic fallout would be dangerous, i'm told the appearance that china could be forced into making chaes by i an outside power would be intolerable. so even i they are talking, the tactic would be not to openly confront the united states but to engage and wait for a better moment to get the best outcome for china. trade tsions between the u.s. and china have some investors looking for safe
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havens from all the recent stock market volatility. are areasli like gold and bondss safe as they once were? investment o of his own nd chief money management firm, hugh johnson advisers, joins us now. >> nich to be w you, sue. >> so a l of people do look to the bond market perhaps safe haven, but we have record low interest rates. you maintain that gold isot necessarily a safe haven either? >> tyeah, problem, of course, is there's an old expression in our business called, you know, that there's no solutions, there are only trade options. so you could go to the bond market, money market, mutual your money might be safe but the returns there are not very attracti or not very appealing. talking about 1.5% to 2. at best. so that's a real problem. and then of course when you look at what we call a traditional as though t price of gold ot
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doesn't also trade up and down or there's vop tsstiated with it. and you know, e, goi into a bear market that might be accompanied by a recession, if that is the se gold does serve as a good safe haven, it does outperfo themarket. but quite frankly, coming out of a br market that'ccompanied by a recession, there's no need or nobody's looking for a safe haven. and the case for inflation is all but .eliminat so gold performs poorly under those conditions. so the point is there's volatility associated with that traditional safe haven called gold. >> therere sectors of the stock market where people have been going to find roiuge away from volatility. i think of utilities, health t care, some se industries that are not as affected by trade with china. but they've become, as we liksa to crowded es. how safe reallare they right now?
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>> you know, that's right. everybody's a little bit worried that that's been played too much. so-called defensive safe tional sector and you mention health care, you mentionutilities, i would add consumer staples to that list. they've had a real run to the upside. so you wonder if there's anything left. but the point i that i hear from a lot of clients that they're very worried about thela lity. they can't sleep at night. if you can't sleep at night, think out y reducingr allocation to equities. if you can't sleep at start to shift towards safer sectors like utilities and consum staples. and probably building. the most important thing is to think about dividend strategies. dividends.with good >> hugh johnson with hugh johnson advise, thanks, hugh. now despite the rise in the stock market today, the teat new tariffs is still very real. and that could create a bigger
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headache for some of the key .sctors of the economy. so tonight we're going to look at the potential impact onhree those sectors, retail, autos, we begin with the retail sector which has a lot of exposure to the world's second-largest economy. re's courtney reagan. >> reporter: much of the focus has been impact on gooade in china. companies have talked about strategies to mitate the rohigher costs tariffs. no retailer is so far in favor of the tariffs, most are figuring outow to lessen the impact so that profit is prices are sta for shoppers. tariffs rangeden from 10% to 25%. now they're 15% to 30%. and president trump told u.s. companies to pull production out of china thaltogether. national retail federation said quote it's impossible foro businesseslan for the future in this type of environment. the administration's approach
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clearly isn't working. the answer isn't more tes on american businesses and consumers where does tend? distributors and retailers of america said there is zero doubt shoe prices will rise, hurting poor families the most. this uncertainty may directly plunge us into aecession where we shed thousands of americanf footwear jobs. the united states has createdrd re expansion built on a confident and empowered consumer. a protracted and costly trade war is the onet thing t can shatter consumer confidence and ground this economic high. that from theetail industry leaders association. even a retail has moved manufacturing out of china over theast decade, more u.s.-sold shoes and clothes are still made there than anywhere else prior to friday's escalation, nordstr nordstrom's cfo said tariff impact would be relatively immaterial a he is reasonably confident the effect will not be too great. macy's ceo said he wa working
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on solutions to manage a 10% tariff on merchandise including clothi and shoes without raising prices. but if that goes up to 25%, the path is unknown. now for macy's and other lan is retailers. >> for the u.s. auto industry, china repres ige l market in the world which is why a resolutiono the trade war with chinaould bring a sense of stability and clarity to that sector. phil lebeau has more. >> reporter: the car business in china is slowing down. and you can see it in showrooms. in ct, as that country's economy has pulled back, aut sales that surged over the last two decades have fallen for 13 straight months. that's hurt automakers like gm, which has several plants in china, and sold 3.6 million vehicles there last ye. last quarter its china profits fell by more than 50%. now with president trump and
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china's president xi threatening to raise tariffs again, automakers are preparing for the fallt. take tesla. one report out of china says thr automaker wilse prices later this week in response to china once again lifting tariffs on american-made .ca tesla will be able to avoid those tariffs when the starts building the model 3 in china. ceo en musk broke groun on tesla's shanghai plant earlier this year and says it should be up and running in a few months. meanwhile som bmw and mercedes built in the southeastern u.s. and shipped to china would also be hit by higher tariffs. aie uncey that swirls around the china auto market shows no sign ofdo slowing . especially with the u.s./china trade war flaring up again. meaning an industry that was counting on china to rev up profits has shifted gears and must accept slower growth in the
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futu phil lebeau, "nightly buness report," chicago. then there's the technology industry. arguab one of the most influential sectors in the markets because of its weighng in the s&p 500. josh lipton looks at the potential fallout. >> reporter: many tech companies count on china as an important market and depart of their supply chains. ke the semiconductor industry. it does a lot of business in china. according to one estimate, there are some compani in that sector generating more than half of their revenue in that country. don'tforget apple. china represents an estimated 12% of its sales. it's also where the company assembles many of its products like iphones and ipads. there's a big date coming up for apple, september 1st,ts when wearable like t watch and air pods could get hit with a 15% tariff. given trade tensions some analysts think a smart bet for tech investors coulde stick with those companies that don't
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have exposure to china.ur >>op two picks, netflix and facebook, zero exposure to china. we like these stocks. we don't think they'll bera impacted by tensions. >> and there's one thing most experts agree on, that the increase and iuncertainty making it even trickier to navigate this criticalct . for "nightl josh lipton, san francisco. it ie tim to take a look at some of today's upgrades and downgrades. lyft was upgraded to buy from neutral. the analyst cites factors including risin fares and expects the ride hailing company years sooner than his previous estimate. the price target is s$60. thck gained 4% to $51.21. dish you've graded to strong buy from market perform at raymond james. e analyst says the company is as a paid tv service only or ays expands into. 5g wirele the price target is $44. the stock was up about 4%o
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$32.26. locker was downgraded to neutral from positive at is que hannah. the s analys the company's outlook is optimistic. price target $39. the stock finished up almost 5% on the trading day. still ahead, a judge rules against johnson & johnson in an opioid lawsuit. why is the decision a relief to shareholders? a legal ruling against johnson & johnson in a landmark case ran an oklahoma judge said the company helped fuel that state's opioid crisis and ordered it to pay the state
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about $570 million. this is the first trial in the u.s. seeking t a hold drugmaker accountable for the opioid epidemic. the stock rose in initial after-hours trading, probably because wall street was expecting the monetary penalty to be much higher. meg turell is atrt the cuse in norman, oklahoma. what can you tell us about this particular decision? >> reporter:sue, this is an incredibly closely watched decision, both by the public and wall st analysts had said that j&j could have been on the hook for $1 llion to billio when the verdict came down, the decision came down at $572 million that may be why you're seeing stocksrise. attorney general mike hunter directedis comments directly to the ceo of johnson & johnson afr the decision came down, take a listen. >> johnson & johnson is a member of the busess roundtable. and i'm asking the ceo of johnson & johnson, alex gorsky, to puton his m where his mouth is and get out his checkbook.
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>> reporter: j&j said in a decision that it willppeal this decision and that it's going to seek to stay the order thatt pay $572 million roughout that appeals process, 2021. it expects to take through now there is other litigation that is about to start potentially in the fall involving johnson & johnson and more than a dozen other companies. j&j said thisho outcomed have no bearing on those cases and said in those cases it is open to all sorts of outgmes includ potentially a settlement. now about this case we talked with j&j attorney sabrina strong directly following the decision. >> our position on this is that the decision is flawed. there's no basis for liability against the company, whether yo lre looking at the or looking at the facts. >> reporter: so a momentous decision today here in, oklaho but not at all the end of the opioid litigation. >> deed, meg turrell in oklahoma city, thank you.
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join iing us no talk about what this means for the rt of the pharmaceutical industry, chris meekens, health care policy analyst at raymond jamess thor joining us tonight. so they were found liable but wall street was expecting a penalty of maybe $1 n to $2 billion, it was only $572 ollion, something a surprise there. what impact is all of this goi h e on future litigation that meg was referring to, do you think? >> yeah, so the state was asking for $17 billion. generally the street thought it would be $1 billion to $2 llion. it ended up being about half that, $500 million. fthinkm a broader perspecti perspective, while johnson & johnson may want n to tell what's going to happen in future litigation, there's no question people areating this. and i think it could result in maybe a lower settlemt than what some peopl were thinking in the other cases in ohio. >> what abou the issue of settlement which meg brought up as well?
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we saw purdue settle, we saw teva settle, might we see more of that rather than future litigation?ga yeah, i think generally spking the companies are going to look for a way to settle. in addition, one of the benefits of settling is that you won't necessarily have to pay all tha cash up front. there are multie different mechanisms in the funding of a potential superfund to look at ways to fund opioid treatments ing forward in states across the country. >>here is a very, very large case that will be heard in new jersey where they've consolidated so many of the pharmaceutical com on this. the judge has hoped that the companies will be able to t fd a settlement before this thing goes to trial. what do you think's going to happen there?ea thaty gets down to the >> yeah, i think the ruling in oklahoma really benefits both so companies know that they
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probably are going to be held liable b o the oklahoma ruling. and from a city, county, state government side, they may not be able to get as auch money they were planning. sohether you're a pharmaceutical manufacturer like taba, purdue, johnson & johnson, that's really a pf these esson, lawsuits, you're going to look tructure ato settlement to really put this behind you, to really stop that ovhang on the stock. >> in terms of the monetary damages that were demanded of j&j today, it was as billio med lower than what the for.t was looki does that change the math for future sents?uture litigation or >> i think it does. i think it may bring it down a hair. but youe still looking at more than 1,500 lawsuits across the country involving cities, counties, and states. so while oklahoma was one of 50 states, there's still going to be a large amount of money. for example, the drug
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distributors,e anticipate youe could see them being hit for north of $20illion among all the distributors in what a settlement could look like. >> chrisit meekens raymond james, thanks for joining us tonight. bristol-myers moves closer to buyg cellgene. cellgene is selling a psoriois drug amgen for over $13 billion in cash. the companiesalpen the will address anti-trust concerns related to the $74 billion proped mergeretween bristol-myers and cellgene. amgen, cejean, and bristol-myers were all up more than 3% da drugmaker zogenics is buying motis therapeutics for $250 milln. they devel drugs for rare genetic diseases. the eal is expected to close i september. shares slid more than 8% to
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$45.79. pdc energy has agreed to combine forces with fellow energy producer frc energy in a de valued at more than $1.5 billion. pdc hopes thatcquisition will bolster its free cash flow. pdc shas rose more than 17% to $29.65. src energy shares jumped over 12% to $4.65. pitney bows is selling its software stutions u to data company sing sort for $700 milliono pit bows says the sale will allow it to focus on shipping, mailing, and tere financial services, and reduce its debt load. the stock dropped more than 8% to $3.31. kfc is the latest fast food chain to test a beyond meat product, a plant-basedchicken. the beyond fried chicken menu item is going to be test marketed at one kfc store in atlan atlanta. if the response is positive, the item will be rolled out to other
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stores. beyond meat shares rose more than 5% to $155.13. coming up, disney streaming serviceasn't launcd yet but analysts say it already h an advantage over other there w one major economic report released today, and that the commerce department says orders for long-lasting items rose 2.1% in july. that's the second straight monthly gain and better than economists had predicted. within the report a measure ond investment sg also picked up. gasoline prices are still falling. the average price of a gallon of
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regular now is ha$2.66,s 8 cents lower than it was two weeks ago. according to the surve5 it's 2 cents lower than we were paying last year. the highest average price in the nation right now is$3.57 in honolulu, lowest $2.07 in baton rouge, louisiana at the boxffice this summer nner and it hopes to be the big winner this fall when i launches its streaming service called disney plus. over the weekend disne gave a few more details on how it plans to compete in the very crowded streaming space. julia boorstin has more f us tonight. >> reporter: disney giving a look at itsua al d-23 convention and how disney plus aims to apply the same blockbuste approach to streaming as it has to successfully dominate the box office. far fewer original shows than netflix, but disney's focusing on the big brandsith big budgets that could stick up from the streaming clutter. diey debuting a trailer for on
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"star wars" spinoff series, draw og over 13 million views youtube in two days. it's one of eight new shows to debut on the service on november 12th. disney revealed a new trailer for "star wars: thee r of skywalker" opening in december, reminding fans disney plus will be the exclusive streaming home for allf disney's upcoming movies including "captain marvel" the day of the streaming services launch. >> their content is distinct because it lives within these established franchis. the mandelorean looks like a high-quality series, but said within the "star wars" universe which has a large fan base built aiin. >> new d show the media giant's strategy to appeal to consumers in the face of so many streaming alternatives, including netflix, with even more coming from apple, at&t, and nbc universal. disney plus' standard $7 plan or $13 bundles with espn p and hulu will include u to seven
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user profiles and four streams at the same time. ncand it will ilude streaming in 4k and hd. to compare, netflixes charg $16 for 4k and four streams. unlike netflix, disney plans to release new episodes of its originals weekly, rather th dropping them all at once. disney indicating it will continue to mine its deep library as well as fox's with its "simpsons" movie, as well as a spinoffyor dislus in the works. >> disney is going to be incrediblype ctive with netflix, content and pricing, we'veoff the announcement seen so far. what it means for netflix is life is going to get much more competitive for them. >> as disney gets closer to launching its streaming service, the incumbent, netflix, has been struggling. its shares have lt 20% since its earnings in mid-july. 7% overshares are down the same period. netflix is facing growing concerns about its decliningcr u.s. suer base in the face of heightened competition from disneyhend .
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for "nightly business report," i'm julia boorstin inos angeles. before we go, here's another look at the day's final numbers from wall street. the dow rose 269. the nasdaq up 101. the s&p 500 added 31. i th "nightly business report" tonight. i'm sue herera. >> i'ml bilgriffeth. have a great evening, everybody, 'll see you tomorrow.
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