This is nightly Business Report. Funded by all it takes is one farc, the courage to seek the unknown, innovate, disrupt, move us all forward, explore a different perspective. At nasdaq, we connect the world. Its ideas much its capital. Its businesses. The people that drive global economy. Future isnt tomorrow tshgsz right now. All it takes is a spark. Nasdaq. New priorities. President trump wants more money for defense and less for other departments and programs. As he tries to reshape the federal government. Political heat, why health cares middle men are at the center of the debate of drug prices. Paying you back. Can your dividend stocks thrive as Interest Rates rise . Those stories and more tonight on nightly Business Report for thursday, march 16th. Good evening, everyone. Welcome. President trump released a more thanned 1dz trillion budget blueprint today. The proposal reflects the administrations stroigs remake the federal government. It includes a 54 billion increase in defense spending. It cuts funding to the Environmental Protection agency by 31 . The state department by 28 , the departments of labor and agriculture by 21 . It also completely eliminates funding for smaller departments and programs, among them, the National Endowment for the arts, the corporation for public broadcasting, the Global Climate change initiative and others. The proposal is a partial plan and does not touch entitlements like Social Security and medicare. The full budget is expected to be released in may. But the white house budget chief says this blueprint broadly outlines the president s priority. He wants more money for defense, more money for border enforcement, more money for Law Enforcement generally, more money for the vets, more money for School Choice and then to offset that money with savings elsewhere so that all that is done without an additional dollar added to the deficit as i mentioned before. This budget does not balance the budget. This budget simply reallocates and reprioritizes spending as any family or business would do. John harwood is following the story from washington. This feels to me like a businessmans way of attacking a political budgets. It reflects his campaign promises. What about the border wall . Well, he does include money both about a billion and a half dollars in the current fiscal year about, 2. 5 billion in the second fiscal year in the 2018 fiscal year for that border wall. So that will go for engineering in the beginning of design phases, assuming that republicans in congress go along with. This i expect that they will. John, what is the reaction been from fellow republicans so far . Well, heres the issue with this budget. It seeks to shift 54 billion from defense im sorry, o to defense from domestic programs. To accomplish that, hes going to have to pass a law adjusting caps that have been in place since the secretary term of the obama administration. That law would have to clear a filibuster. He would have to hold all the republicans and get some democrats. That is not likely to happen because even republicans agree with democrats that they have cut an awful lot out of discretionary programs. They want to turn to the big entitlement programs like medicare and Social Security. Donald trump promised not to do that. We often hear that a budget is dead on arrival, is that true of this one . I think that big trade, 594 billion in either direction, i think that will not happen. Theyll not get 60 votes in order to accomplish that. Some of these cuts will happen on the domestic side. I think one potential outcome is there will be defense increases as well as Many Democrats as well as republicans favor those. But as a price of agreeing to the defense increase, democrats are going to insist on higher numbers for some of the domestic spending programs. Thats a potential deal here. Yeah. What about the rest of the republican agenda as it pertains to or is impacted by this budget . It does not this budget does not reflect anything for an infrastructure program. That is the to come after tax reform and after obama care. N. The president s priorities. But they do have to have congress agree on a budgets after they deal with obama care in order to get the expedited socalled reconciliation bill that would allow them to do tax reform, cut the Corporate Tax rate later this year. So some agreement between the house and senate on a budget is vital in the middle of this year to getting to tax reform. All right, john, thank you very much. John harwood in washington. The department of transportation faces a funding cut of about 2. 5 billion under President Trumps proposed budget plan and the change koimz pact the nations travelers. Morgan brennan has the details. Reporter President Trump budget blueprint includes sweep changes to transportation. Both on the ground and beyond. He cuts the department of transportation by 13 including no more subti diz for commercial air travel service to rural areas and no more support for amtraks unprofitable Long Distance service. Amtraks ceo warning these trains connect our major regions, provide Vital Transportation to residents and Rural Communities and generate passengers and revenue for the northeast corridor. The railroads Long Distance lines comprise the only Amtrak Service in half of the 46 states it serves. The cuts are drier ire of democratic lawmakers. The president wants continue to crease infrastructure but slashes the department of transportation. So its somewhat hypocritical and contradictory budgets in many respects. Perhaps biggest change is privatization of air traffic control. A plan has been to transfer them to an organization. You and everyone else, plus the airline. So wasted time and run direct technology is there. They just have to implement it. And they cant on the current budgets. The privatization in the past. As well as operators and prokt providers. If the upgrades which involve gps rather than radar are deployed even faster. Potential losers, regional and Cargo Airlines which previously warn this could give the big kaerng carriers too much power. Liftoff. As for nass yashgs the proposal shaves nearly 1 offer the space agencys budget. The actsing administrator does call it a positive for the core mission of exploration. Its a win for commercial Space Companies as well as the journey to mars remains on track and more government launches will be outsourced. Stellar news for lockheed martin, boeing, or bittal etk and, of course, elan musks privately held space ex. For nightly Business Report, im morgan brennan. Spending proposal cuts the budget of the National Institutes of health by 20 . The departure from the recent funding increase which came with bipartisan support. The Administration Says that the new funneleding proposal will help focus resources on the highest priority research. The agency zrbdistributes fundi to 300,000 scientists worldwide. The president is focused on hk. President trump took on a lesser known part of the health care system, the middle men. This is this group that plays a really big role in how much we pay for prescription drugs. We explain. Reporter President Donald Trump made no secret of his thought on the price of medicine. Theyre get ago way with murder. Pharma. We should implement legal reforms that protect patients and doctors from unnecessary cost that drive up the price of insurance and work to bring down the artificially high price of drugs and bring them down immediately. Reporter since he was lekted, trump reiterated that he plans to bring drug prices down. The president gets criticized sometimes for inconsistencies. But hes been absolutely consistent about for over a year now, about wanting to do something about drug pricing. Typically the comments focused on drug makers themselves. But last night in an interview on fox news, the president brought another party into the conversation. Saying, we have a middleman system. Were going to get drug prices so far lower than they are now, your head will spin. So who are these middle men . Theres three elements. You have the distributors which are the box movers. They deliver the drugs around the system to pharmacies from the pharmaceutical companies. You have the pharmacy benefit manager who essentially decides, you know, based on your coverage what you have to pay in terms a copay or out of pocket. You know, what drug youre supposed to get based on the formula your employer nasdaq chosen and then what form or area, you know, you can pick the drug up whether its in the mail or in a retail setting. And then lastly the Retail Pharmacy which is the store front. Of those pharmacy benefits managers or pbms have been taking the most political heat in the drug pricing debate. Major pbms are express scripts, cbs care mark and United Health care. Theyre thrust into the National Spotlight during the outcry over the price of the epipen. Congress was told that more than half the price of that drug went to others in the supply chain, particularly pbms. Its narrative the pbm industry rejects. Theres no question that a lot of Drug Companies would rather pbms go away. We negotiate big discounts from. They without us they get k. Charge whatever they want. The people that hire us to health plans, unions, want lower drug costs. Were going to negotiate lower drug costs. The president said he plans to tackle the issue of drug prices in upcoming legislation. Who knew as he said recently health care could be so complicated . For nightly Business Report, im meg text rell. And Health Care Stocks pulled the market lower on uncertainty over the fate of the republican backed health care bill. Energy stocks were also down offsetting the gains and financials. The Dow Jones Industrial average lost 15 points to 20,934. The nasdaq was up fractionally and the s p 500 was off three. And with the Federal Reserve meeting now in the rearview mirror, investors are asking whats next for stocks . Its a simple question but as bob pisani explains, the answer is a bit more complicated. Stocks cleared two of three hurdles but the final hurdle may be most difficult one of all much we saw market friendly joum h. Jut come from the dutch election. The dutch appeared to turn back a populous tide and the fed calm rate hike jitters by implying they will be gradual which means three hikes this year and three next year. The market convinced itself it can keep doing even though the fed is changing the stance from being data dependent to keep raci raising rates for a while. That is because of the trump rally, tax cuts and lower regulations and Infrastructure Spending that has arguably been the main driver of the rally. The question is has the market already discounted the full infect of trumps proposed policy plan . My opinion, not at all. Theres still plenty of room for stocks to rally. Its one day for the markets to move on big hopes for pro growth plan. But another when you actually see real numbers. We dont have those numbers yet. And what that happens, i think we will likely get a second boost. They estimate that cutting the effective tax rate to 20 from 26 now would boost earnings 8. 7 . Thats a huge jump after several years where earnings have been declining. The market hadz rallied on the expectations but dont kid yourself Number Company has changed their guidance. And few analysts boosted numbers so far. When it happens and they change guide anz, thats when the second boost can occur. The down side is that if we get a smaller load than expected, the market will be disappointed. Following the feds from tr rate increase, banks were dwoik rahe raise the prime rate. In other words, how much they charge to borrow money. M t bank was the first major bank to say its prime rate was going up 4 from 3. 75 . City bank quickly followed as did others. Get trod pay more. Yep. Especially for a home loan. Rates for home loans have hit the highs for the year. According to freddie mac, the average rate on the 30year fixed rate climbed to 4. 3 . It was 3. 7 a year ago. The move higher was last week was in anticipation of that rate increase by the Federal Reserve. Higher Mortgage Rates did not hurt Home Construction last month. New Residential Construction climbed 3 to a four month high led by the strongest pace of Single FamilyHome Building since 2007. And its the lack of Single Family homes on the market that have helped keep prices high. In the increase in home build kog help alleviate housings supply issues. Still ahead, a hot wall street debut for an apparel maker. Even as the broader Retail Industry struggles. New evidence today that labor market remains taught. The number of job openings rose 3 in january from the prior month. The Labor Department report also showed that more than three Million People quit their jobs in january. Most in nearly 16 years. A rise in quitting tends to push up wages and its usually sign of confidence in the job market since workers quit if they think they can find another job quickly. And in another sign of a tightening labor market, the number of americans filing for Unemployment Benefits fell last week. Jobless claims dropped by 2,000. Claims have been under the key 3 300 hundred,000 level for six straight weeks. The second longest streak since the mid 1960s. The president wants to rework trade deals and today treasury secretary took that message to the world stage where he pushed for free and fair trade agreements at a meegt ting of Global Finance ministers. The suits not interested in a trade war. Our focus is creating Economic Growth that is good for the United States and good for the rest of the world. And it is not our desire to get into trade wars. It is our desire to deal with where there is imbalance and certain trading relationships that we have a means to address that. The secretary said he thinks the u. S. Economy can get to a Sustainable Growth rate 3 or more. He also told lawmakers he started using different bookkeeping measures to avoid breeching the new debt ceiling limit. At a level near 20 trillion. The process will buy five months or so for congress to raise the limit. A 25 20 15 bill marked to day as the date that debt limit goes back into effect at whatever debt level existed yesterday. Goose shares go up. The maker of high end jackets opened trading at 18 a share on the New York Stock Exchange today. That was higher than the companys ipo filing price of 12. 78. In total, the Company Raised 2 255 million and the ceo says theyre just getting started. We feel we have geographic spangs opportunities. I met with a lot of people and a lot have been on the road for the last two weeks. A lot of the ambassadors agree we can grow. And in the United States, for sure. Internationally, europe and asia and new products and we are committed to making these products. Shares finished up 26 to 16. 08. Despite seeing lower foot traffic, Dollar General benefited from customer spending more per transaction in the latest quarter. The discount retailer reported higher samestore sales and revenue, both coming in ahead of estimates. Profit also up. Dollar general up 39 cents to 73. 20. And the Biotech CompanyPtc Therapeutics will buy Marathon Pharmaceuticals for about 140 million. The treatment won government approval last month and gained attention when marathon gave it a list price of 89,000 a year. Ptc said it would reexamine the price of the drug. Shares fell 19 to 8. 84. 3m is buying Johnson Control safety gear unit for 2 billion. That deal will add various protective products for firefighters, police, and industrial workers. The 3m personal safety division. Shares of 3m were off a fraction to 190. 31. Johnson controls were down 16 cents to 41. 77. Aerospace and Defense Company received a letter from activist investor and shareholder elliott manager asking for an explanation regarding a questionable transaction that was recently disclosed. Elliott manage ment has had a rocky relationship with the company. Earlier this year it wanted to replace ar conics ce oechlt and nominate new board members. The shares rup six cents to 27. 32. Tennessee state Officials Say that they found a deadly form of bird flu for the second time this month in a u. S. Farm that tyson foods gets the chickens from. Earlier this month the disease was identified at a nearby location which also supplies tyson with poultry. The Tennessee Department of agriculture said that they are working to contain the newly found flu. Shares of tyson fell nearly 2 to 62 even. And the Software CompanyAdobe Systems posted the 12th straight quarter of higher revenue. This topped analyst expectations and the companys ceo said business was strong. As it relates to create of cloud specifically, resource trends aacross the street board. We talked about how International Representatives are a Good Opportunity that did well in q1. Small and Medium Business which is our teams offering did well as well in europe. And we continue to do a really good job with focusing on delivering value for our existing customers. So retension also had a great quarter. Shares close at 132. 25. Looking for income . Invest flg dividend stocks still be profitable as Interest Rates rise . Dividend stocks have been on a terror since low Interest Rates made them more attractive. Now that fed has hiked rates and is expected to do so several more times this year, will dividend stocks get hurt . Jeremy schwartz joins us now to discuss that. And you make the point, jeremy, first of all, welcome. There are really two different types of dividend stocks. Investors have to know the difference between the two. Thanks for having me. Certainly there is i call it the two baskets of stocks. One is there is a ones that are slower growing, high yielding, utility stocks. There is what you call bond proxies when Interest Rates go up. They face more pressure. More competition from higher Interest Rates. You have stocks that can grow dividends faster over time. There are smaller current yields. I think that is really where i think valuation becomes everyone looking for yield, users still historically low. I think the valuations are actually more attractive today on the stocks that can grow dividends faster over time. So not the sort of bond proxy thats you might find in telecom maybe energy, maybe utilities, correct . Yes. Everybody is flocking to the stocks. I think the Dividend Growth stocks, maybe technology stocks, health care, some consumer oriented stocks, theyre lower occurring yields. I they they have more growth prospect. You gave us three names you might want to consider, apple, microsoft, and j j. Why . I believe that we create etfs and very diversified baskets. Theyre three of the top holdings in our quality Dividend Growth etf. They just represent the characteristics, high profitability. Theret Warren Buffett type factors that people look at as a factor that can grow dividends over tichlt because theyre very profitable, they have that potential to grow that dividend faster over time. So there are three Largest Holdings that we use. Sometimes a big juicy fat dividend can signal that the underlying stock is not healthy. How do you avoid getting trapped in a situation where the company may cut the dividend or have the stock price just collapse . Thats absolutely why i advocate for broad diversified basket. The risk of any single stock, yes, they can cut the dividend. You look at the market as a whole, there are few times when the markets dividends have fallen more than a few percent. Its been five years in the last 60 years where it fell. The financial crisis in 08 and o 9. Certainly that was a big part. Energy last year. The Energy Sector cut the dividends 10 to 11 on average. Everything else in general has been growing dividends 5 a year on average. So that is why i advocate for diversified baskets rather than single names. Jeremy, we leave it. There thank you. Jeremy schwartz with wisdom tree. And that will do it for nightly Business Report tonight. Thank you for joining us. We want to remind you, this is the time of the year your Public Television station seeks for your support. We thank you for your support v a great evening, everybody. We hope to see you back here tomorrow night. Nightly Business Report has been fund bid all it takes is a spark. One idea to take flight. The courage to seek the unknown. To innovate, disrupt, to move us all forward. To explore a different perspective. At nasdaq, we connect the world. Its ideas, its capitals, its businesses, the people that drive global economies. Future isnt tomorrow. Its right now. All it takes is a spark. Nasdaq. Steves st. Wenceslas, commemorated by this statue, is the good king of Christmas Carol fame. The statue is a popular meeting point. Locals says, ill see ya under the horses tail. The good king was actually an exceptionally educated and highly cultured 10thcentury czech duke. Stories of his enlightened reign caused europeans to see czechs as civilized rather than barbarian. To this day, wenceslas is a symbol of czech nationalism. Wenceslas square is the main square of the country and a Natural Assembly point when the czech people need to raise their collective voice for change. In the 19th century, the age of divine kings and ruling families was coming to an end. Here as in much of europe, nationalism was on the rise. By the end of world war i, the habsburgs were history, and the birth of independent czechoslovakia was celebrated on this square. But independence lasted barely 20 years. In 1939, the nazis marched in. While prague escaped the bombs of world war ii, it couldnt avoid the communists who came next and stayed for 40 years. But with this square as the stage, people power ultimately prevailed. Man in the 20th century, my family lived history in this square. In 1918, my grandma watched the habsburg eagles being pulled down from the buildings. In 1939, my aunt saw the nazis pulling in. In 1968, my dad stood here with his bare hands against the soviet tanks. In 1989, it was my generations turn. Steves so you were here. Tell me what happened. In november 89, a student march headed for this square, kicked off two weeks of demonstrations. For 14 nights, this square filled with 300,000 people. Each night, 300,000 people here. And on the last night, vaclav havel, the playwright, who would become our next president , announced from that balcony the resignation of the communist government. Wow. Suddenly, we were free. Steves and without a shot, the communist era had ended for the czech people