Eager to buy or sell stocks ahead of next weeks feder reserve meeting, but they were eager to sell shares of gottenductors which hav themselves caught in the middle of the trade war with china. Add to that the rising geopolitical tensions in the gulf of oman which lifted oil prices for the second straight day and when all was said and done, the dow wasn just 17 points and were at 26,789. The nasdaq was down 40 and that was the Technology Stocks there and the s p was down four and for the week all of the major averages were up only fractionally. Mark thsantoli seems tha market is teetering. Its something of a crossroads. While the s p 500 held the gains with the 5 rebound from the start of june. Tradingdolume slond the indexes worked sideways ain investors re in suspense on a couple of crucial policy issues. The Federal Reserve meets next week as the bond market hasov in to price in high chances of a rate cut by july. The slowdown in Global Growth and decline in the inflation rating as th market essentially lobbies for easier policy to ward off further economic deterioration as trade frictions worsen and on that trade front, worldeaders meet at the end of june which could be a forum for the u. S. And chinao move towards some agreement which has the chance to avertdent trump applying tariffs on 300 million on chinese imports. At this point the market is unwilling to assume any particular outcome and is unwilling to assume if the two countrys leaders would o feed the economy and the u. S. Economy continues to hold up okay and the stock market has proved resilient thanks to sectors such as utilities and Consumer Staples and it has recovered all of the Fourth Quarter collapse, and now sits 2 from its record high. The s p at these levels is also merelybout where its at in late january of 2018,eaning it hassers effective andow much timnd energy is left in this decade long economic expansion. For nightly Business Report im mike santoli at the new york stock exchange. As we mentioned nductor stocks weighed down the market today and it all started with the weak earnings weort from broadcom that told you about last night. It was a company of the quarter of the coanys ceo called depressing. It dragged the other chip stocks down with it. It was anothereminder of the impact of the trade war with china. A country that the indusy relies a great deal on for business. Josh lipton has more. S shipping invest got a first look at what an extended trade war could mean for semiconductors and it snt pretty. Broadcom ceo hock tan laid o the challenges. With respect to semiconductors it is clear that the u. S. China trade conflict including thei hua export ban is creating economic and Political Uncertainty and reducing visibilit for global oem customers. As a result, demand volatility has increased and our customers are actively reducing inventory levels to manage risk. He noted that the company had 900 million in revenue from huawei last year and it isnt just broadcom. Microns ceo just said publicly that the huawei ban hasug broht uncertainy and some turbulence, t his wor the semiconductor industry. Semis sold off now down hard from their highs in april. These are issues that many chip compies could have to deal with in thert quas ahead and cause them to question whether there will be the secondhalf snap back for these companies that many had predicted. On the other hand, analysts say the recent pullback couldlso create opportunities for investors. Even broadcom, despite the generally poorly received results showed pockets of strength. One of the things we showed last night is strength exists in the networking business, and marvel has been active with them this year and that the name we really like at current valuation levels to put capital to work. In fact, ellis says many of the Chip Companies nowre more attractively valued giving them another reason to own some of these stocks, for itnightly Business Report, josh lipton, san francisco. Chief Investment Officer at boca capital partners. E you. Ood to welcome back. Thank you. One wall street firm said this week that this trade war is doin longterm damage to the semiconductor industry. Youre not so sure about that, are you . No, not really. I think this is wall street being at the center of the universe and the real manufacturinand the real world is probably not where they are, so lets try to reconle those two worlds. In other words, what youre a deal s once we get with china, you think that the orders come back for t semiconductors, right . Absolutely. Nd semitors are the things by which we conduct most of our lives, sad to say. Its not just the phone. Theres a whole lot more semiconductorshat surround us day in or day out and its our estimation that thats only going to continue in things lik Autonomous Cars and its not fully Autonomous Cars and tre will be systems that rely on semicondaftors to make us and just make our world work better. So its just semiconductors are taver the world and i think its a little short sighted to think otherwise. One of the goals of the Trump Administration is more assem blaj back to the United States and isnt it possible to put more on that industry what would that do. I think that would make electronics really expensive in the short term. The practical matter is none of this global trade can be unwound very easily or quickly or cheaply. You have to build the plants and train the people and you have to reroute your supply chain and i think that the desire to bring a lot of that back on the shore will never j happen andt because of the practical matter because of how the world now and its just cheaper and everyone is kind of used to how things work now. A little on the edges maybe, but practicely moving back all of that the manufacring that happens overseas is just probably not practical. So does that mean youre buying therocoms and the other chip stocks that were hit so hard by this trade well, i like them and i like th more athis time of year than two months okay. I think they have come back and inveakors should a look at this, which is a minimum ofm line can is three to five years. Alsoed if to see you. Thanks are for joining us again. By the way, the chinese economy feeling the trade tensions and new reports pointing to softening of the key eas of the second largest economy. Eunice yoon has more fro beijing. Chinese sales dropped by the biggest amount since october 2017 and factory output hit a 17year low. Fixed as investmentls c retail sales were the bright spot rising 8. 6 cpared to aprils 16year low. Analysts say the better figure is due to higher inflation andr gont incentive to boost n consumption. Chinese Officials Say the economy is facing increasing external uncertainty. I spoke with ae former v finance minister who currently advises the government on trade anaid that china wants to talk, but that the u. S. Needs to lift the tariffs it veryhe chinese make clear imports musthie reward. Still hasnt confirmed that president xi zinn ping wont meet with President Trump in the w bilateral tok out what many peoplebeelieve would worstcase scenario. Im eunice yshg oon in beijing. The economi news wasnt all bad. Industrial production rose the most in the six months in may. According to the Federal Reserve the gain was helped by an increase in the production of pup trucks and cars and the output of consumer good, siness equipment and Industrial Supplies and that was also hire. Retail sales were m solid in and aprils numbers were revised higher making it three straight months of gains. T worries abo trade war and concerns over the health of our economy apparently did not stop americans from spending and while thats good newsor the economy, it could complicate things for the fed. Steve liesman and on that story tonight. Amid stories of the weakening consumer and he just revised it by another half a point. Consumers showed up for health and personal care items and Sporting Goods and general Merchandise Stores and of course on the internet. It was then kind of discussio that consumers feel very comfortable about the outlook and whats in their pockets. Barclays wrote todays report paints a picture of strong momentum a Consumer Spending. This is consistent with an outlook for the Second Quarter when we expect Consumer Spending to hold thet. F theres still some slowing growth into the tax cutinduced spending spree. Economists believe it will any down from 2 , down from last year, and its a potential growth for the u. S. Economy and better than the earlier estimates of just 1 or less. We still have slowing consumption compared to last year and the consumer has been theon bac of this recovery in this expansion and we expect that to be maintained. The strength in Consumer Spending actually complicates policy making for the Federal Reserve. Concerns about slowing Global Growth and slowing Capital Spending and the negative impacts of trade wars and does it hold the line on rates that atter wag low unemployment would makumamerica co spending and ignoring the forecast and na they wont. For neatly Business Report, still liesman. There was more economic news. Consumerentiment fell in the early part of june. Much of that decline was due to tariff concerns and smaller gains in employment. At the time the survey was conducted there were possibilities of tariffs being levied i mexico. There are some early signs that the usually slow summerse housi on could start to heat up and for some homebuilders and some parts of the country, that would certainly be a Welcome Development after a soso spring. Diana olick has that story. Spring is usually the hottest season for the nions homebuilders, but that was not the case this year. There are, you ever, signs of summer strength. Mortgage applications to purchase a newly built home jumped 20 annually in may according to the Mortgage Bankers association. That coincided with falling Mortgage Rates throughout the month and rates continue to fall in junend are now at the lowest level in two years. These both signal strength ahead. But all real estate is local and some are will fare better than others. John burns real estate break out t public builders which are poised to do best this summer. Kaybee homes Market Conditions are because theyre concentrated in the southwest, where the market is outperforming and it buis in the northeast because its bouncing back a year ago. D. R. Hortoces cration in texas and entry level product also puts it i a good position and lennars footprint and its heavy in florida and the southeast. On the other hand, tripoint and william lns home are slowing permits because a third of their exposure is in southn california. Where demand is weak and costs to build are highest. The problem for all homebuilders continues to be shigh home pri and half the public home price is thera a sale price above 400,000 and their recovery will continue in fits and starts. For nightly Business Report imk diana oli in washington. Time to take a look at some of todays upgrades and downgrades. They were upgraded buy to hold at vertical research. The stock has fallen too faroo fast following the news of its proposed merger with raytheon. The price target now 145. That stock rose a fraction to 125. 30. Geral motors was downgraded to sell from hold at cfra. The analyst cited a belief that the automaker is likely to lower earnings guidance. He also noted a downbeat for auto sales overa and the companys operating margins and the pricet tarwn 32 and that stock fell 1 to 35. 66. Ill ahea why boeing has a lot at stake at the upcoming paris air show. Some major drugmakers have filed a lawsuit to stop a newul rule that require them to disclose prices in tv ads. The suit was filed by amgen, rck and eli lilly. This new regulation is scheduled to go into effect next mons. Art of the governments efforts to bring down drug costs consumer in the lawsuit the Drug Companies say that list prices do not accurately reflect the final price paid by patients because it excludesat r and discounts. The worlds biggest air shoi kicks o paris this weekend, but this time around its going to be a little different. Thats because boeing and rival airbus, the two biggest commercial airplane makers in the wod, theyre flying in two different directions. Phil lebeau has more. Paris loves a good air show, but its not whats up above that will turn heads this weekend. Its what will be said on the ground. The big story, an expected drop ig demand for new planes, after soaringr the last two years, orders cou fall to their lowest level since 2016,a mainly becse boeing is unlikely to ring up sales for its beleaered37 max. Its hard to imagine that anyone will be ordering 737s where the aircraft is grounded. Dennis mullenberg wil spend mitch of the show meeting with customers, reassuring themng boeias a plan to get the max back in the air. Meanwhile, boeings rival airbus is expected to launch awe new airplane. The latest in itsil f of narrow body jet, but this will have greater range that connect cities fartherpart. Theemand is there. In fact, a Record Number of people are flying thissier which is why air combus theyre airlines that order new planes this weekend will likely not see them flying until well into the next decade. Il lebeau, nightly Business Report chicago. It turns out chewys bite is as good as its bark and thats where we begin tonights mart focus, the online pet product retailer owned by petsmart soed in its wall street debut today and the company priced its ipo at 22 a share and that was above the expected price range and the companys ceo hoped to prove that the company was not like pets. Com which came to symbolize what was wrong with the dotcom bubble of the 90s. The company was 20 years ago and loo at the way ecommerce is changing andook at our sticky mess and the fact that were servicing greater than the 95 of u. S. Households and the fact that customers keep comin back to us. Chewy shares were up more than 80 for aime today and they settled up60 at 34. 99. Barnes nobleaid today it did not receive any other offers from prospectivee buyers bef Hedge Fund Elliott managements imposed deadline next week. Elliott offered 475 million to take the bookseller private and it built in an end of business thursday deadlin for barnes noble to field other possible bids. With that deadline now past, and if the deal does not go through elliott will receive a 17. 5 million breakup fee from barnes noble. Shares of the company 1ell more th today to 6. 74. Facebook reportedly h enlisted more than a Dozen Companies including visa, mastercard, paypal and u br tok a new currency. The wall street journal says eachre cy will invest 10 million in a consortium that will double the digital coin called libra. It expectsaunch that currency some Time Next Year and facebook shares were up 2 to 181. 33. Abercrombi fitch has authorized a new repurchase program for up to 5 million of its shares. It b allows back at its discretion while continuing to invest in Growth Opportunities and that brings the total buyback to more than 7. 5 million shares and abercrombies stock rose a fraction to 15. 49 today. And the Justice Department is close to approving tmobiles 26 billion merger with sprint, but only if the Companies Sell multiple assets to creat a new wireless competitor. The New York Times woet says a ttlement could be reached in nd next week or so complicating all of this is the judge who is goes to listen to the merger and that will open next week as well. It rose 3 to 7 and a penny while tmobile shares were a fracon at 78. 90 a fraction higher. Time for the weekly market a monitornd it will hold up in an escalating trade war and andy capper is o Director Research at region atlantic. Good to see you again. First on the list,anthem, an insurance company. Its been a steady riser for a few years andy its been ver volatile this year and you think it holds up in the trade war, wh first, lets get the 900pound gorilla out of the way. Health insurance inarticular s been in the sights of the white house ofli cs, generally and there are a number of things thats anthem doing that will help them catch up with other peers in the insurance and in particular the leader is the health care out of minnesota. Shey run a pharmacy benefit manager themselnd this is the way to get additional discounts and rebates out of thl pharmaceutrade which is a big and growing cost for health em is able ich anths emis n build them out is match prices with their peers that will omlow them tote better in commercial spaces and it will roll out new medicare plans that are in the industry. Lots of potential growth. They only do business here in america. Thats a good point. Royal dutch shell is the income one and why that one in particular . Super majors in the oil industry is a good bet and that where you dont know the direction will take you and you expect it to be volatile and take just two days ago and two tankers damaged in the persian gulf. T right. Y are sensitive to those events on the upsi and the down side and it is a european super major trade at its american peer, common andn chev instead of having a solid business. Finally, google, was there crosshairs and t stock suffered oodz a result. Two reasons. I employ the regulatory angle is overied a it will be more safe as aic braup and there isnt a cohesive gro other than ad sales that can be split off from the business and think about the google does that and google maps, all of that is designed to steer eyeballs back to google for the advertising. There isnt really a good way to split it up. As long as you look past that, you have a mature company, highly profitable that really has a lot o capacity to continue to grow thus with the high Profit Margins with almost no debt and does so with almost no revenue from chi and it was kicked out of china almost ten years ago. Well see what happens. Andy cap earn with region atlantic and if you t want read more head to our website at nbr. Com. Main street feels the pinch of escalating trade tensions. We have some new findings howmericans view china. More than half of those surveyed do not care how products are made in china and most dont view the country as an economic threat. Of the 800 people polled just 32 said yes, china is an economic threat compared to the 49 who said yes in 2007 and when asked if made in china labels mattered, 34 said they are less likely to buy a product with that label down from 52 when the question was last asked dmore than aade ago. And the trade war with china is turning into a big problem r some Small Business owners. Kate rogers talked to one who is trying to navate the growing sandra payne said she held out for as long as possible before raising prices and the president of denver concrete vibrator whichqu makesment for Infrastructure Project had no choice. A price hike was necessary when tariffs hit her vendors making pr aes volatil increasing costs. We waited a long time to increase prices ande finally did and had a small increase recently andll that s wont cover what we expect in the coming months or years. Sheo hasnt had cut any of her staff and hopes she never has to, but acknowledges mar bns wi squeezed. More than onethird of Small Business owners have awarded significant impaxsa a result of change wes mexico or canada to resolve the ongoing trade dispute and theyre hurting businesses and consumers alike. Payne says shes bracing for moty price instabind a recent notice from one of her vendors says prices and availability of medals are set to change daily making it a challenge. In many cases its increased by or 12 and weve been warned by some of our vendors that it will beeeg 20 or 25 increases with our next order. For payne, the message is clear. Tariffs are doing more harm than good for her Small Business. You know, for years ive been hearing that manufacturing is lost inamerica, and yet there are thousands of Manufacturing Companies just like this one out there in the country trying to make things for domestic or export, so i think its going to hurt us very badly. While the trade war continues on an option mean street will be watching. For nightly Business Report im katege. Not much of a movement and down semiconductors was down 40 and the s p was down four for the week and m allor afrpges were fractionally higher. That is nightly Business Report for tonight. Im bill griffith. Have a good weekend. Happy fathers day. See you monday. Woman this bbc world news america. Is made possible by. The freeman foundation; by judy and peter blumkovler foundation, pursuing solutions for americas neglected needs; and by contributions to this pbs station from viewers like you. K you. Jane this is bbc world news america. Reporting from washington, im jane obrien
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