Transcripts For KQED Nightly Business Report 20240622

Sales to their highest lel since before the financial crisis. The National Association of realtors says sales rose 3. 2 in june helped by steady job growth and an improving economy. That report helped send shares of Home Builders higher even as the Broader Market fell today. And while it may seem like the housing recovery is firing on all cylinders, diana tells us there is something not quite right. Reporter the number for the Spring Market are in and strong. Home sale rose more than 3 for may and are now up nearly 10 for the year. Thats the highest monthly pace in over three years but the sales came at a high price. The median existing home price hit 236,400. The highest ever. Thats due to tight supply barely up at all from a year ago. At some point, there will be a choking point with prices rising and we are facing a rising interest rate. That hurts availability. So we may see buyers being chopped off. Not because of the lack of desire to buy a home but the price increase is preventing many people being able to buy a home. Reporter median home prices are also skewing higher because higher priced homes are selling more than cheaper ones. Homes below 100,000 actually fell from a year ago. Still, despite higher prices Mortgage Bankers feel better about their business. Today they revised the forecast of purchase loan volume higher from 730 billion to 801 billion. A sharp jump they say, based on more borrower applications approved. Fewer all cash sale and some loosening in mortgage underwriting. Mortgage poix applications are down over the last month, signaling high prices may already be taking their toll. Were already seeing that that demand is weaking. Buyers are less and less willing to go to the top of their budgets to buy a home. As that kind of trickles down well see fewer sales. Reporter a slower second half perhaps but a better year overall. For nightly business report. Now to talk more about her outlook for the u. S. Housing market. Senior economist at wells fargo. The last time we talked, the news wasnt nearly as good. We have very strong data on existing home sales and strong data for several reports. What is really driving what were seeing now in the Housing Market . Reporter youre right. The housing report today was a very solid report. It was up more than 3 . And it come on the back of another strong increase in the previous month. Were seeing the Housing Market is moving in the right direction. Were seeing a whole host of other housing indicators like housing starts, permits, and penning home sales increase. What is really driving the market is the rise in Household Information as well as a better labor market and we could be seeing some potential buyers jumping into the market to beat the rate hikes. Who is buying . Who was not buying . Great question. So who is buying . We still are seeing that the share of first time home buyers is relative to historic knowns. Weve seen that share has increased in recent months. So 30 of first time home buyers came into the market. A lot of those first time home buyers are millenniumials and of course some of those millenniumials are using government sponsored low down payments to be able to get into the market. What were seeing for millennials, what are some of the economic benefits of what were seeing with this little housing boom . Yeah. When we look at the Economic Impact from a real gdp standpoint the Housing Market will finally start to give a bit more of a boost to real gdp headlines which will offset some of the negatives that were seeing in net exports. Were also seeing a slower pace of growth in the Second Quarter in structures and inventories. It is a well needed boost. All right. Thank you very much. We appreciate you being with us. With wells fargo securities. Wall street seem to be suffering from a tech earnings hangover following the report from apple and microsoft. Both those stocks were the worst performers on the blue chip dow index. Encouraging results just were not enough. By the close the Dow Jones Industrials were off. Nasdaq declined 36 and the s p 500 lost 5. More on boeing results. It made one of the bright spots today, rising 1 on the day despite cutting its 2015 earnings forecast. Still, we hear why investors were so encouraged by the results. On the wings of a Strong Performance by its commercial Airplane Division boeings 2 q earnings were better than expected. It beats the street consensus by 25 cents a share with stronger than expected revenue. One big factor is the companys commercial plane business. Boeing delivered a record 97 airplanes last december. 37 of them streamliners. Meanwhile the operating cash flow was a very healthy 3. 3 billion. Boeing is in position to take advantage of future opportunities. I think if i look at big opportunities and risks, certainly going forward, our opportunity to execute on our commercial aircraft backlog and to do that profitably and returny cash to shareholders and fund our future innovation that is the single biggest opportunity we have. Mullenberg admits boeing still faces challenges with the tanker program. After taking a charge last week of more than a half billion dollars. Boeing stock has long been driven by the success or failures of the companys commercial Airplane Division. Right now that business is soaring as we fly into the second half of this year. Nightly business report, chicago. Today boeing handed its largest ever order for its 767 jetliner. Fedex said it plans to acquire 100 new freighters. The deal includes a firm order for 50 new aircraft with the option for 50 more. Coke turned in a Strong Quarter and a drop in sales in diet coke. The Worlds Largest Sales Company saw its sales rise and reported Strong Demand for its nonsoda products like teas and water. It was able to raise prices and it help sales. American express, a. 10 cents better than forecast. Revenue though missed and fell from last year. Coming in at 8. 2 billion for the quarter. Shares were initially lower for the results. Mary thompson is here with the one t take away. They were soggy. What you have to have is patience. Thats the key takeaway from this report. This is a company that continues to get revenue. The company has to spend in order to boost its revenue. It has been very open about that. Its increasing spending in the second half of the year. Earnings will take a hit from that and that should hopefully help the company retrieve lost revenue like the revenue it is losing because of its exclusive relationship it had with costco. So again, the company in this quarter, hurt by the stronger dollar. What does it spend on to generate revenues . Advertising . Advertising, it spends on a variety of digital initiatives. New car members. It is spending money to get these people on the door it has to do that to get it the re new. Get it to the 8 target. Thats why they will want to see they are growing that revenue. Today may have been a busy day for earnings but tomorrow promises to be even busier. There is one company that could provide a read on the economy and thats caterpillar. This could be a troubling sign. When it comes to which which stocks to watch as an indicator of Global Economic health few are more closely followed than caterpillar. It is one of the biggest makers have heavy equipment like dump trucks bulldozers and drills. And theres a reason why so many investors care about its financial results. It is a bellwether and American Company of products are made in the united states. We have to look at the strong dollar and what effect does it have. So heres what wall street analysts are expecting from caterpillar tomorrow morning. Estimated earnings per share of 1. 27 on sale of 12. 6 billion. Beyond just the headline numbers, investors will be looking for any kind of comary about future demand for cat products. The biggest they know to look at is the forward looking expectations. But caterpillar is just one data point when it come to oil and gas, metals and mining. Ben is a global strategist at jpmorgan and he is watching the Bigger Picture of whats driving the reason weakness. I think a major challenge for the sector is that itt looks very week. Particularly relevant factor is Global Demand which has been college could you please and the basis for Global Demand coming down in turn is a weakening china and emerging markets driving that. So far in 2015 caterpillar shares have been among worst performers in the Dow Jones Industrial average due in no small part to the market. Traders have pushed the stock to six Straight Days of losses. So tomorrows earnings could do a lot to either add more fuel to that down side momentum or provide a reason for at least some optimism. For nightly business report. As investors and wall street both focus on earnings and especially earnings per share, bob explains why those critical numbers sometimes arent all theyre cracked up to be. One thing that has been overlooked this earning season is the influence buybacks have had on earnings. They usually lead to a reduction in the share count outstanding and that translats into higher earnings. Thats why investors like buybacks so much. And it continues into this quarter. 20 of the s p 500 have reduced their share count by at least 4 . That the a lot. Apple has reduced its share count by 10 in the last two years meaning earnings are higher than two years ago all other thing being equal. Thats independent of any sales increase. Inl of cost reduction. Many other companies have been aggressively buying back shares as well. Include bed, bath and beyond. Harleydavidson, auto zone. Some company have become buy back monsters. My phrase. Theyre aggressively buying back their stock year after year. One good example is ibm. They have reduced the share count by 22 . Many investors want to put tot same money to work growing the business by increase in sale or innovating. Heres the bottom line. Use to it increase earnings. Its fine. Still ahead, Social Security and medicare. Will they be there when youre ready to retire . Somewhat soft retail sales number that came out last week that we told you about may not have been a onetime blip. Today the National Retail federation revised its forecast for overall sale and said it expects back to School Revenues to fall from last year. As a result of economic and maybe more importantly, some political head winds, we have to revise that were revising the annual retail sales to 3. 5 from last year. We think its unfortunate. Were ready to grow but we need help from washington and were not getting it. Some of the they can the Federation Said would it Like Washington to focus on including tax reform and infrastructure spending. Mean while in new york city, the proposed bill by the mayor to curb the expansion of uber the popular ride handling app, has reportedly been skramd. According to the new york times, the city wont seek a cap on the number of new ooner drivers permitted to operate. In exchange uber agreed to participate in a fourmonth study on congestion and i can tell you the answer congestion is bad. In new york state, a panel appointed by the governor said that the minimum wage should be raised from the fast food chains to 15. Across the country, Los Angeles County took a step toward lifting the minimum wage to that same amount. The move would affect hundreds of thousands of workers and is similar to the action taken by the city of los angeles. And secondly, the university of california system announced plans to increase base pay for its employees and contract workers to 15 over the next two years. Also in washington the government said the Financial Outlook for both Social Security and medicare remain uncertain. The annual report card out today from the trustees went so far to say the 11 Million People who receive Social Security disability payments face steep benefit cuts. Next year john harwood is in washington. What did we learn about the financial help of Social Security medicare and indeed that Disability Trust fund . We learned that it still needs help. The Social Security reserve runs out in 2034. That is actually a year later than projected last year. The Social Security Disability Fund as you mentioned, its reserve runs out next year which is the same projected next year. They need more money. The same is true of the Medicare Hospital Insurance trust fund which is due to exhaust its reserves by 2030. Also the same is projected last year. The problem hasnt been del with. The dibble issue is one that has been faced before. How can Congress Deal with that . What is being planned . How much more money will be needed . Well republicans are insisting on a reform an overhaul of the program. They think too many are on it. Nancy pelosi, the House Democratic leader said today that Congress Needs to step up and fund that shortfall now and not let the reserve be exhausted. So there is a partisan fight over that. I suspect more money will be appropriated in the end and there will be at some point a reform. Probably when a new congress and a new president addressed the problem overall of Social Security. What would happen if the main Social Security Retirement Trust fund or the Medicare Fund runs out of money . What happens then . They can still pay benefits. What we see in the Trustees Report is that through 2089 they can still pay 75 of current planned benefits. But it is a lot. Thats the amount of the short fall. By cutting inflation adjustments or by raising taxes. All of those are in the table in various ways for republicans and democrats. Republicans lead more toward trimming benefits. Democrats toward raising taxes. That will be a big focus in the 2016 campaign. Tyler, disappointing drug data weighs on biotech and thats where we begin market focus. Ely lily and others reporting results for studies for potential alzheimers treatments. Biojen said it has slowed cognitive decline in a small study. Data didnt impress, lilys was the bright sbot its treatment more promising to investors. It rose. And the most off more than 6 to 18. 16. Home depot is buying repair Products Market called interline plans for nearly 2 billion. This is biggest acquisition in nearly a nearly a decade. Shares of the dow component rose about a dollar to 114. 90. And another deal to tell you about. St. Jude medical will buy this. It makes a can heart pump. It surged 10 to 63. 43. St. Judes fell to 76. 67. Investors buying up shares of blue buffalo like a cat in the trading debut. It makes healthy pet food raised 700 million after shares were sold at 20 a piece. The stock closed at 27. 20. That is a 36 gain. Shares of tupperware the container posted Second Quarter net but revenue slid. The full year guidance also missing the mark qual come announced it will cut 15 of the work force. It says it will save about a billion and a half dollars. It might break itself up as it delivered its third profit warning this year. It also cut its revenue forecast. Shares of the chip company popped initially in afterhours trading but then plummeted before the close. It was off more than 1 . And Texas Instruments reported the crime. Hurt by command. Results missed on both the top and the bottom line. T. I. Was off about 2 to 49. 30. Coming up a part of the Energy Market that is flying under the radar even as it attracts a lot of investment dollars. Tomorrow a huge day for earnings. One if not the busiest of the season. Visa and as mentioned, caterpillar all reporting and a read on the market. Thats what to watch for thursday. Wells fargo is now the most valuable bank on the planet. The San Francisco based firm recently surpassed industrial and commercial bank of china as the lenler with the largest market value which is approaching 300 billion. Just to put that in persctive, thats b 40 billion larger than j. P. Morgans value. Investment popular with Retail Investors like you and me is now bigger than the one that contains all the smart money. According to the Research Firm etfgi, there is now more money in Exchange Traded funds than hedge funds for the first time ever. Nearly 3 trillion in more than 358 exchanged products. Gold prices have fallen for ten straight sessions. I covered that market for years and i can tell you, that is the longest losing streak since 1996. Meanwhile, Oil Prices Today settled below 50 a barrel after Government Data showed u. S. Crude inventory rose last week. While oil tends on grab all the attention in the Energy Markets, theres another area getting a lot of investment dollars. Morgan brennan tells us what it is. Thanks to the onshore drilling boom it has surged more than 30 since 2005. Yet theres only one way to transport the fossil fuel in large quantities. Im that lines. And there arent enough. As demands continue to climb, Energy Utility company are plowing billions of dollars into new Infrastructure Projects to transport, store and process. They estimate 54 billion has been invested in new gas Pipeline Capacity since 2009. Nearly double at 104 billion will be spebl from 2016 through 2018. Experts say even with be nat gas prices under 3 demand for infrastructure wont slow. Even if production does. You have about 25 per cubic feet per day proposed. In that region. I would say at least around 20 or so of that project capacity is fully backed. So those projects that have those backings are very likely to move forward. The lions share project targets the northeast where the they currently yield a quarter of all u. S. Nat gas production. Research firm ihs expects to see 17 Pipeline Projects over the next three years. And the flow of gas in these pipelines has changed as well. Power plants in the south and midwest use more gas for electric Power Generation and as petro chemical facilities along the gulf coast look for more as well. Among Company Building out, new companies with existing ones. Analysts stay ever growing need for infrastructure is also sparking a wave of activity. In july alone, Marathon Petroleum subsidiary announced the nearly 15. 5 billion acquisition of Marshall West energy partners. As the deal focused on nat Gas Transportation logistics in the northeast and Williams Companies said it received a takeover bid. It owns 70,000 miles of pipeline itself. Energy transfer has said it will pursue that deal whether williams koomts or not. For nightly business report, im morgan brennan. I dont know about you. Im feeling disor yenltd. Ienteddisoriented. We havent talked about greece in three days. I know. But well be back. Thank you for watching. Thanks for me as well. Have a great evening and well see you back here tomorrow night. May be well even talk about greece. We probably will. Tonight on quest just how many fish are in the sea . Northern california scientists are using underwater robots to figure out if marine protected areas are helping to bring fish populations back from the brink. And humans have been staring at the sun since the dawn of humanity. Quest gazes at a nasa mission aimed at unlocking the secrets of the earths neighboring star. Major funding for quest is provided by the National Science foundation and the corporation for public broadcasting