Transcripts For KQED Nightly Business Report 20240622

Decade but it is not quite there yet. In the minutes from its last meeting, policy makers at the central bank made it clear that they still want to see further gains in the job market and more evidence. Inflation. Just today, the Labor Department said Consumer Prices rose just. 1 in july. So while the fed didnt say a hike is coming in september, it didnt say its not. And there in lies the confusion which played out in the markets midday. So mark your calendars. The next meeting is only a month away. When the fed does hike rates, and it will at some point, it will impact everyone who has a savings accounts, wants to take a home mortgage, has a car loan or wants to put money into the stock market. A controversial, even confusing set of minutes from the Federal Reserves july meeting came out in which the markets could be seen as a dovish or indicating a rate hike. Some saw them as neutral or even hawkish. The fed said most of the minutes of the board judged the minutes. However, they said the conditions for the first hike in nine years were approaching. Some said the conditions were met or would be met shortly. A prompt start to raising rates would give confidence. We think if the fed doesnt raise rates in september, it sends a negative signal that perhaps they know something about the economy being weaker than what it really is. There were objections from some officials. They said the inflation data was not progressing and the fed staff revised down that inflation target. Some participants see downward risk to inflation coming from Lower Oil Prices, lower Commodity Prices and a stronger dollar. Most on the board saw those effects. Especially from energy on the dollar as temporary. A lot of talk about china where the spillover did raise some concerns. The chinese stock market was seen having little impact on chinese growth. The one issue was whether or not material economics slowdown in china. That they thought posed the risk. The chinese slowdown is impacting many markets around the world. That is presenting a risk to the u. S. And presenting a risk to the feds september 8 hike. Looking at the twoyear note where it fell from over 70. That clearly suggested the bottom of the market saw the Federal Reserve potentially taking a pass on that september rate hike. For nightly Business Report. The president of the Federal Reserve bank of minneapolis said a rate hike would be a step in the wrong direction. Emhes concerned about inflation or really the an sense of it. That the central bank should wait until next year to start raising the rate from near zero. So lets turn to david kelly for more of his perspective on the fed and the economy. His chief local strategist from jpmorgan. How did you interpret the feds minutes . It is interesting. They do reference china. These minutes do not reflect the devaluation that occurred in the chinese currency. Thats right. These minutes really werent that surprising. Once we got to read them all, of course, they were released early. Theyre exactly consistent with the statement the Federal Reserve released. I dont think there is any information here. And i think also, there is a focus at the Federal Reserve. So if you look at Commodity Prices falling, the question you have to ask yourself is, does this make the u. S. Economy weaker . So far the answer is no. So after reading these, it doesnt change my view. If we get a decent employment report in august, for august in early september, i think the fed will raise rates. And you think that is an appropriate move. Oh, yes, it is. We cant wait for perfection. This economy is a permanently cplus student. So waiting for to it get an a is pointless. I think the economy is strong enough. The Unemployment Rate is low enough that we should not have the policy in place. It is time to get back to normal. What about the lack of inflation . Weve got low wages. Research that weve been doing on wage growth suggests some of the problem is demographic. A lot of Older Workers are retiring and when they do, there are much higher wage rates than younger workers. Take that into account the temporary account of Lower Oil Prices on the year over year basis. That is part of what is holding it down. The wage growth is still slow. Productivity is slow also. But i think wage growth will pick up over the next year as this labor market tightens even further. Youve written recently that you think the odds of an upward breakout of stocks are relatively low but you think the odds or a correction for stocks are relatively low. Would you explain your thinking . Yeah. I think because the valuations, because everybody remembers being burned in the 2000s by the bear market. I think it is hard to get very excited about stocks. At the same time, i dont expect a big falloff until you have either an economic recession or stocks are palpably expensive relative to everything else. The problem thinking well have a big correction, where are you going to put the money . You take it out for a week or. Two you put it in the bond market but youre not getting a return. So long as the economy feels okay, look at the bottom of the correction. Put the money back into the market. It is a little frustrating for people who want big moves in markets. I dont see a big move either way. Well leave it there. David kelly with jpmorgan funds. Anything but a quiet day on wall street. Stocks saw steep declines. Then recovered again. The Dow Jones Industrials dropped to 17,348. It has been down as much as 229 points. Nasdaq fell 40. The s p was off 17. Energy stocks, some of the biggest losers as oil prices tumbled more than 4 to finish at a 6. 5 year low. It kept inventories at 80year highs. The declining crude prices may be reflective of a much broader slowdown. The markets got more evidence that that weakness is real. It was another 12 punch for the markets. Thats without the fed minutes. The europe and the u. S. Were both weak. Even though mainland Chinese Markets were up, hong kong was down and the traders believe hong kong is a more accurate gauge of the chinese economy than the mainland markets. There were other signs of the global slowdown was very real. It dropped 9 in london after announcing that the cash flow in the first half of the year was downas about 30 from the same period last year. Ouch. The stock began trading in 2011. It hit an historic low today. It was down 40 since the slide began in june of this year and june is when the slide in china began. It is all related, of course. Elsewhere, a small Finnish Company that manufactures Mining Equipment announced overnight it was closing. It has been operating since the early 1900s. The company. There were permanent changes during in the mining business. Then the crude showed a large rise, a big surge in imports. The commodity stock complex fell apart again taking Broader Market down with it. Forfo nightly Business Reportt the new york stock exchange. Oil and the industry that make up a large part for canada. Canada is our largest trading partner. 300 billion a year flows north of the border. If canada slows, American Companies doing business there will slacken as well. A major Global Economy on the edge of recession. Canada was once the darling of advanced economies but the slowdown has put the resource dependent country on the verge of a recession at a time when the u. S. Is recovering. A 24pack of beer is now more expensive than a barrel of oil here in canada. The canadian bench mark fell below 40 a barrel. Its lowest price since 2008. Analysts say that is heaping more pain on to the economy. It is starting to sink in and i think affecting other areas of the country. Trade data is following and a recent survey found many canadians feel less financially secure than a year ago. Many say they are scaling back on big purchases and trips to the u. S. I would say the salary is almost the same. The prices of food and everything going up. My daughters who work in the industry of the restaurant, they see less people coming in. I have cut back on a number of items that i thought were necessary. Now i have to cut back. Home prices have plunged 25 in calgary 25 years to date. A lot of my high end buyers were instantly on hold. My First Quarter sales were down 86 , an unprecedented amount. Ive been selling real estate for 20 years. There are fears that chinas slowdown could hurt investment and real estate markets and other parts of the country like vancouver. Canadas next gdp read will be released september 1 and will show whether the economy is officially in a recession. For nightly Business Report. Vancouver, canada. Still ahead, the billions at stake for california. The worlds eighth largest economy as wildfires rage and the record drought persists. The worst fire season in years is plaguing the west and nowhere has it been worse than the golden state. Now blackened by blazes and browned by drought. The pictures are breath taking but the Economic Cost will truly take your breath away. Yeah, i had a lot of stuff. The stuff wasnt that important. 7 million acres have burned so far this year. An area larger than the state of vermont. Almost double the amount for all of last year. For the first time in almost a decade, active military are joining the National Guard to fight wildfires. The cost to government, state, local, and mostly federal, not to mention the economic loss, easily tops more than 2 billion so far this year. The u. S. Forest service which bears the brunnel of firefighting responsibility now devotes more than half the total budget to fighting fires. Up from 16 just 20 years ago. Smoke from those fires clouds the skies hundreds of miles away. But even where there is no smoke, theres another kind of fire. Now four years running, californias drought will cause almost 2 billion in agricultural losses this year. Including more than 10,000 seasonal farm jobs that have literally dried up. Each year the drought becomes a little bit worse for the same hydrology. The amount of water this year is a little less than last year. The ground levels are a little bit lower. When that happens, land can be fallowed. This year the amount of fallowed ground is 20 higher than last year. To make up for the lack of rain, farmers are pumping more water out of the underground aquifers. But thosequifers shown in green in 2002 have been drying up. Even if wet weather comes from a growing el nino this year, the runoff could cause flooding. Droughts are nothing new to california but maybe what is new, the mindset of californians. Normally peoples behavior gradually reverts back to type over time. The question is, will that change this time . And there are now indications that that is a yes. It will change. Water has been so close to being free for almost everybody in the state that nobody really thinks of it as a scarce resource. Thats changing. In california, the drought is hitting livestock, corn, cotton and wheat the hardest. Farmers looking to preserve higher margin fruits and nuts that california is better known for seem to be adapting a little better. Southern California Home to hollywood and the Entertainment Industry. And there, they are voting on the future of the union as more and more viewing shifts from traditional well paid tv to streaming. Julia boriston has the latest on the hollywood labor fight. Over 160,000 actors and other professionals represented by sag are voting on leadership as the Entertainment Industry faces a digital transformation. If you pay 40 a month for your cable or skinny bundle, rather than 100, thats less money ultimately that goes to the actors, the writers, the directors and others. It is a battle between the white shadow, actor ken howard, and the Home Improvement mom, kim richardson. He says he delivered tangible results. Over 800 million in contract gains. Gabrielle is his executive Vice President. All of us, the focus is how do we attack the future . We see this landscape coming upon us and were not prepared. So he has done an incredible job about really dealing with where we are now in the industry and how it is changing. Richardson says hell take higher payment for actors for lower budget for digital shows. Threatening mainstay of actors paychecks called residuals. Hollywood writers have seen it exceed from the tv network. Theres no measure for how it is split but the digital slice of the future. The question for actors is, even as the money grows, are the moneys being distributed among so many more people and more jobs that for each given job, an actor might not be seeing as much. He said beside the scale it does not have as much power as it should. Saying theyll play hard ball, particularly for digital pay. They said the union has left a lot of money on the table. Quote, in the tend studios made billions while sag actor members were left with pennies. We hope toop avoid repeating th mistakes of the past. We really brought stability. I think whats happening, it is very important for negotiations. If our employers see stability, they see the power of who we are. Ballots are due thursday morning with a count expected thursday night. For nightly Business Report in los angeles. Lowes reported earnings that were, well, low. Thats where we begin the focus. Be profits were weaker than expected. Revenues were strong as customers bought big ticket items. Lopez finished the day nearly 2 higher at 7437. Target raised its full year guidance. Topped estimates for profit and revenue. The retail cited stronger demand. The company benefited from cost cutting. It ended at 80. 87. Meanwhile, staples regarded what was roughly in line. They saw a decrease and the line of sales. Shares of staples down a bit. Hormel foods raised its full year guidance. This come as it deals with the avian food outbreak affecting the turkey business. Other segments such as turkey meats help. American eagle outfitters is forecasting a slowdown despite reporting better than expected earnings and revenue. Investors didnt like the Sales Forecast when the stock fell more than 7 to 16. 90. The biggest oneday stock decline in almost nine months. Cocacola taking a stake. The terms notisclosed but it is part of the strategy to diversify products as consumers turn away from soda to healthier alternatives. Shares fell. Consumers arent justment onning for healthier beverages, they are making fundamental shifts in their spending. Since the great recession, priorities have changed. Because Consumer Spending is what drives growth, investors are taking note. From housing to health care, automobiles and apparel. How much consumers spend and where they choose to spend it makes a difference. And post recession, Consumer Spending habits have changed. The consumer is back and she is spending like no tomorrow. The unique thing is she is spending experientially. What i mean by that, she is spending on hotels, on restaurants, on taking holidays. Retail sales are growing. But not at the same rate across categories. According to mastercard spending, spending at restaurants is off the charts. Thats not all. It is up at travel. They tend to accumulate memories than accumulating stuff. But consumers are making large purchases. Home sales and Home Improvement sales have been outpacing other sales. Home goods also currently a strong catory for macys and jc penny. Auto makers are seeing the best level since before the recession. The shift in spending has been during slowly over time making analysts question whether it is the blitz in the data. But Government Data shows Savings Rates continue to hold up. Perhaps making them feel better about the amount of spending theyre willing to do while still taking into careful consideration the value they place on every purchase. What were really seeing, things that people prize. Dining out, et cetera, we see huge value for money purchases where people are willing to increase what theyre willing to pay for the same goods. In other areas, where theyre not feeling the value as much is apparel. Theyre not wanting it as much. Therefore you see continue creased discounting. Sometimes even discounts arent enough. Government data shows the consumer has fallen out of love with buying new clothes. That shift has hit Department Stores hard. There was sale growth in the last five years is negative. One bit of hope is Small Businesses where consumers are willing to spend more on unique items. Pushing growth up a surprising 6 in the last two years. For nightly Business Report, im courtney reagan. Flying can be a headache but there is a solution for overcrowded airports. Our series continues next. Heres a look at what to watch for tomorrow. Existing home sales will tell us whether the Housing Market momentum continued in july. Jobless claims will give us another read on the labor market and well also hear from two Federal Reserve officials. Thats some of what to watch for thursday. This little factoid, air fares have dropped 4. 6 . A major reason, the lag time in the way airlines factor in lower fuel prices. Also, as passenger traffic has risen, airlines have been adding more capacity. That is expected to continue pushing air prices down even more. Well, airfares may have dropped but the crowds at the airports havent. Theyre growing. Youre likely familiar with long lines and inconveniences. Getting new airport built or even upgraded doesnt happen very often. As phil reports in our series, the big fix, the need for new terminals is growing along with the crowds. Who says flying is fun . And many airports, there are rundown terminals and seemingly constant delays due to congestion. No wonder many agreed with Vice President joe biden when he blasted the condition of new Yorks Laguardia airport. If i took you blind folded to laguardia airport, you would think i must be in some third world country. Im not joking. Some airports like jfk in new york, are upgrading with brighter, refurbished terminals. Ft. Lauderdale built a new concourse so the airport can handle even more flights. And last month, the Vice President and new York Governor Andrew Cuomo announced plans to tear down laguardia and completely rebuild it. Best of all, it is not a plan, not a sketch, not a dream, not a vision. It is actually happening. It has already happened in denver where the city built a new airport 20 years ago. Since then, people flying through denver has increased 72 . More importantly, d. A. Has the space to double in size and add up to six more runways in the future if needed. There is no question that 53 square miles gives us an advantage over laguardia, l. A. X. , were fighting over all the gateways. So were arent more cities rebuilding . First, it is expensive. Either raising new taxes or spending billions of new dollars. Second, many existing airports are land locked. They have little room for expansion and adding new runways. And critics say, money shouldnt be spent refurbishing terminals. It should go to traffic flow so there are fewer delays and less congestion. We need airports where people are going to go. That means we have to have efficient airports. If we make them efficient, well have a better system. Taking the headache out of flying by getting planes in the air. Nightly Business Report, denver. Our series, the big fix, continues tomorrow with a look at our crumbling water structure from im thats to dams and what is being done to make sure homes and businesses get what they need. That does it for nightly Business Report. Thank you for watching. Im tyler mathisen. Have a good evening, everybody. We hope to see you back here tomorrow night. Tonight on quest cell biologists have a new tool in their toolbox. See how this powerful xray microscope generates amazingly detailed, 3d images of cellsimages which are leading to advances in Disease Treatment and biofuels research. And meet the bay area scientists whose collaboration is pushing the boundaries of bioinspired design and generating some pretty cool creatures. Support for quest is provided by the s. D. Bechtel jr. Foundation the david b. Gold foundation