Transcripts For KQED Nightly Business Report 20240714 : vima

With gains. Wall street was upbeat and the bond market calm, unlike the prior days which were wild. Ononday stocks dropped 380 points as investors feared annes cattle an escalation of the trade war. About day stocks poppe the same amount. On wednesday it fell 800 points, the worst decline of the year. Today the bulls cameac the dow rallied 326 points to 25,886. The nasdaq was up 129, and the 41. 500 added but todays gains were not enough to lift the major averages for the week. Dominic chu explains what was behind todays rise. Stos staged rebound today and it was a confluence of events pushingar thets higher including talks of war, economic stimulus, upbeat traders. From the stock market has been taking cues from the bond market all week and today global yields bounced back on reports that germany plans to put in place a stimulus plan that moved bund yields off lows which in turn moved u. S. Yield off lows. Bank of america Ceo Brian Moynihan adding to the optimism. He says he see no underlying signals of recession. Consumer spending is going strong compared to 2018 and the situation in hong kong is ovrious but doesnt pose a big threat. Trade talks, theres no question it has been a wild week and a wild month for stock market investors. In fact, the average dow trading range so far in augusteeas 473 points, but the biggest headlines dominating the ttention continue to be tariff talks and global Interest Rate policy, and that will continue. R nightly Business Report, im dominic chu at the newchork stock ge. So what happens next and should investors expect more volatility in the days and weeks ahead. Joining us is kenny lcari, manager. Good to see you. A pleasure to see you. You say investors should not panic . Right. We have this con time the market seems to go through one of the hissy fits, right . So the last thing that longterm investor should do is make an emotional decision. Typically you me emotional decision when you see days like weve had, which is exactly the wrong time to do it. Take a step back. See what is going listen to the conversation. Understand whether or not fundamentally the story really changed or whether or not these are just issues that, you know, we continued to talk about. In fact, theyre just issues weve continued to talk about. Theres nhing new that happened this week other than that small inversion of the yield curve on whatever day it was, wednesday, which created this panic in the which created the big selloff. Right. For the most part a longterm instor should do just that. They should look at their portfolio, the should see the names they like. They should take advantage of some of the pricen dislocation some of the great names that they have. You made the point to me earlier that you think this volatility is going to continue well into the fall. Well, i think august and september tend to be volatile months just because of the time of the year and what happens. Nyou know,t week we have theres not a lot of data coming out next week, but there is jackson hole, which is that big, you know, brew ha. Fed meeting. Fed meeting at jackson hole, so they will beki t about broad monetary policy. Then you move tto cseptember and you start to have the fall nervousness as mutual funds start tod, rebo as they get ready for yearend. You tend to have volatility around that. That being said, dont get frightened by the volatility, but you should take as a longterm investor, you a shoul taantage of the opportunity it creates. You also made the point that president xi has a big event coming up. Right. It is the founding the Peoples Democratic republic. T right. T comes in october. Right. And you dont think there will be much progress on trade, which has been a driving factor in the market. Thats right. And will continue to be a driving factor in the the reason i think that is because president xi does not want to t appear be forced at this time in not only their history but kind ohat is going on in that country to make a deal or to come to the table ear to have been forced to come to the table to me a deal with the united states. So therefore i think theyre going to work, you know, kind of diligently at pushing it off. Theyre gting to have a m in september. That was part of the reason the market rallied again today, alked about that meeting okay. But in reality i dont think you are going to see much of a deal until we get into all right. Mber. So fasten the seatbelts. Thanks, kenny. Kenny polcari. All right. We learned today that President Trump reached out to ceos of some of wall strees biggest banks earlier in the week as the market started to fall, and he asked them for their thougs on the economy and trade. One of the driving forces, as you know, behind the markets big swings. Kayla tausche is in washington tonight. As t dow dropped hundreds of points wednesday, executives of three top u. S. Banks found themselves on the phone with President Trump in an impromptu 20e conversation that followed a previously scheduled regulatory meeting. They discussed the economy, the fed and trade. Ceo told the president they agreed china was a problem, but said the w uncertainty hurting Business Confidence and investment. He was receptive to that argument, one person familiar with the call said, but reiterated he likes after delaying some of those tariffs this week, trump acknowledged for the first time that consumers could end up paying. The tariffs have really bitten into ina. They havent bitten into us at all, except for the reporters that want to make it look tt y, but they dont understand whats happening. The tariffs, weve taken in close to 60 billion dollars in tariff money, and the consumera has not for it. Now, at some point they may have to pay something. Reporter tensions china remain high as it conducts military exercises on the hong kong border and slams u. S. Arm sales totaiwan. President trump says he has a phone call scheduled with chinas president xi, and in the past it has been those eonone negotiations that have improved relations. For nightly Business Report, im ca im kayla t a new report on housing shows that Home Building fell for a Third Straight month. Housing starts for july dropped 4 , but a rise in permits offered a glimmer of hope for the market since they are considered an indicator of whats to come. Diana olick has more on the mixed signals being sent. Reporter homebuilders should be ecstatic. Mortgage rates are near areeyear lows just keep falling. The average rate on the 30year fixed was or last fall, now it is heading towardsil 3. 5 . Builders say they are seeing more demand, Single Family Housing Starts arent exactly soaring. They rose just 2 annually in july. Usually starts rise as rates fall, but that has not been the case. The two fell together for much of this year, only di verging ih last few months. Kb homes ceo jeff metzger have always maintained over the years that Consumer Confidence means more than rates to the home buying dnsision. Er confidence in housing hit a record high in july according to ath m fannie mae survey, but overall Consumer Confidence fell in august according to the university of michan survey, which noted consumers concluded following the feds lead tha they m need to adopt a precautionary Spending Outlook in anticipation of a potential recession. Still, others think the rate drop willake for a much stronger fall Housing Market. For every 25 basis point decline in the mortgage rate, thats equivalent to about 3 cut in the price of the home. E right now h prices are down for the consumer more than 10 , so it makes it much more affordable. I think today the Housing Market is responding to that lower rate. E are seeing very good activity, especially at the low end of the market. Reporter but the low end of the market is where suppl is leanest. Prices are rising fastest and buyers have the least wiggle room in their wallets. If the economy falters those buyers likely will pull back first. For nighy Business Report, im diana olick in washington. In hos mixed picture is not the only part of the economy that doesnt make much sense these days. As Steve Liesman reports, there nve a number of economic conundrumstors are trying to navigate. If you are not confused you gy not be pay attention. Fed investors are trying to define the u. S. Economy battling through numerous cross currents. There is weak Global Growth but u. S. Ec growth around 2 . Rapidly falling bonds suggest a recession may be coming in the years ahead. Finally, robust consumer standing but a Manufacturing Sector that may be in recession. Even the titans of wall street disagree. Here is what fund manager rli said about the outlook. Recessions are inevitable, the only question is when. Do you see one coming . Yes, i think that in the next two years, lets say prior to the next ection, theres probably a 40 chance of a recessio i think that youre seeing this around the world. Not so, say david rubenstein, founder of the private equity tgiant, carlyle group. The u. S. Economy is in pretty good state. Were notn highland, but theres no doubt as economies in europe and asia glow down and into recession we cant completely avoid that. At the moment i dont see a recession in the imminent future. Even today the data is sending mixedignals. Consumer confidence plunged to the lowest level of the year due to a small drop in americas perception of the current tuation and a big drop in what is expected for the future. Fed chairman Jerome Powell said he takes market signals seriously when figuring out where to set Interest Rates and probably will be cutting in the coming months. In figing out how much he will be navigating the cross current of low global bond yields and the dangers o t ade war against Economic Data showing strong consumer spending, low unemployment and decent u. S. Growth. Rough waters toilot a ship in as rough waters as the u. S. Ecveomy. Im steiesman for nightly Business Report. It is time to look at todays upgrades and down grades. Tjx, the Parent Company of tj max, marshals and home gools was upgraded from buy tool at loup capital. The analyst cites market share gains at thexpense of department and specialty stores. The price target is 60. It rose 2 to 51. 39. Brinker, the Parent Company of chilis and other casual dining restaurants was upgraded from overweight to equal weight. The analyst expects the growth of 2 to hold. Therice target is 48. It rose to 38. 46. Merck was w initiath out perform rating in new coverage. Potentialt cites the for expanded uses for cancer drug keytruda. The shares gained 2 to 85. 06. Still ahead, why the president ial candidates are getting an early start, talking about your money. The ceo of hong ngs flag ship airline has resigned. The head of Cathay Pacific stepped down amid this weeks protests at the main airport, ich is one of the worlds busiest. The Airline Stock fell sharply and it came under pssure from chinese authorities to rein in employees. They were supporting pro democracy protesters. Today the protests were peaceful, but concerns remain amonghe business and investment community. Here is brian sullivan. Reporter this political unrest, if you want to call it that, over the last couple of months and more rallies are expected this weekend, has disrupted the u. S. Financialet ma we have seen our markets on evenly and wedge and we have seen asian markets decline except the last couple of days. We have spoken to members of the Financial Markets and said, will enes like this dissuade investors, ceo compa heads or Public Offerings in the center of asia . E investment banker told us today,espite protests one thing that the Hong Kong Market has going for it is a history o relative company stability. Its had very few failures of major listed Chinese Companies here, which means that duenc dili that is done in hong kong is done with understanding of how cna operates. Whereas, uk, the u. S. In particular, singapore and even frank forwa frankford is littered with failed chinese ipos. R that stability that has taken place over years and even decades may come into question if we continue to see scenes like this, peaceful as they are, and companies, executives and workers decide there may bece better p for their capital for their companies and even for their families. Reporting from hong kong for nightly Business Report, brian sullivan. Were still more than a year from the next president ial ti elec, but already candidates are talking about your money. The bottom line is i know you like me and this room is a ve fest, i know that, but you have no choice but to vote for because your 401 k s, down the tubes, everything will be down the tubes. So whether you love me or hate me, you got to vote f me. And the president snl the onthe isnt thonly o taking m at your pockets. Democrats are as well. Lets turn to john harwood in washington. Good to see you. Reporter hey, su given the week we just had, a lot of people are wondering how strong the u. S. Economy is and hasedt chang the 2020 campaign for the president . Reporter i think it has begun to change it, sue. That was an unusual statement from the president after a week of stock market vcaatility to himself as the protector of peoples 401 k s. But, really, the campaign so far has been mostly fought out on cultural grounds, who is an american, the whole questions of identity, immigration, white voters feeling a apprehensiv immigrants feeling under siege. Now this is sfting to more toward an economic terrain because all of a sudden for the first time in a long time people are feeling a little bit more vulnerable. Thats gsng to change t dialogue going forward. And does it will the president s campaign be able to adjust to that . Reporter well, theyre going to have to. The president has been more comfortable discussing cultuesl isnd trying to rouse his those llar base with cultural messages, but hes got a different problem on his handh that hent been used to so far. So far the cultura the culture wars have alienated some voters who are happy with the economy. Now the president s got to wort about t happening in reverse, that is people who like his messages aut migration, for example, but all of a sudden have a new sense ofil vulnery on the economy. The president has been pretty stable in the polls, but does it drive some people away from him . They have to figure out how to answer that question. Lets turn to the democratic candidates, and there are many of them certainly at this point. At do they need to do to take advantage of what is happening in the economy . Reporter interesting cross currents, sue,em on theratic side. For joe biden, who is the familiar frontrunner, i think the more uneasy people feel the better it is for him. Hes a familiar, stable character, especially for the africanamerican voters tha he dominating right now, even though there are two africanamericans in the race. Its a challenge i think for izabeth warrennd Bernie Sanders who have the most radical economic positions. Do those become mor sca to people as theyre in a situation. And kamala harris, whos probably the candidate below the top three to come up, she hasnt relyefined her economic position goes fully. Does she go for more safety as she has done on health care compared to sanders and warren or does she go for the fences . She will be sketching out her economic positions in more detail in the comingks w john harwood in washington. Thanks, john. Reporter you bet. Appreciate it. Well, the trade war hits deeres bottom line and thats where w begin tonights market focus. The heavy equipment maker missed earnin a revenue estimates with the company citing farmers dela purchases because of uncertainty with the export market. Deere lowed its fullyear guidance but the stock rose 4 to 1. 43. Revlon is reviewing options that may include putting itself up for sale. Bloomberg said the company retained advis gs fromd mcsax for potential sale of parts or all of i. T. Business. They are going through financial struggles and facing increased competition in the iustry. Th shares rose more than 9 to 16. 77. The fda approved a new drug to treat Rheumatoid Arthritis with a cost of nearly 60,000 a year. The approval comes as it faces increased competition for humira, its blockbuster treatment for the same condition. It rose more than 2 to 64. 43. Palo altoxe networkstive Vice President of worldwide sales is stepping down after t spendiee years with the cybersecurity company. Palo alto says arc s for his replacement is under way. Shares dropped more tn 7 to 199. 27. Well, if you look beyond trade and the economic headlines, there are stocks that may be worth owning. Our market monitor says he has found some. Joining us is sandy villere, Portfolio Manager of thevillery balance fun wit about 2 billion dollars under management. Sandy, good to see you. Thanks for having me back, su you are looking for opportunity for stocks at more reasonable prices, correct . Thats wha i do, exactly, yeah. Lets start with your first pick, and that is teleflex. It is a medical device maker. Why do you like it . Well, i think it is somewhat recession proof as well. It is a pure play medal device ompany, and founded in about 1943 these guys have a long history. Theyve got a really exciting product called euro lift of all of their products, but this one they just raised the target to where it is going to grow from 30 up to 35 . It is aery untapped market and theres about 12,000 interventionalst urolo around and only on 2200 platforms. We like thiss property and t company. It is one we would buy in any dips or volatility in the market. Now, we are staying inhe medical device field. Avia med is your next pick. You think you could get about 26 return, looking out about 12 month