Transcripts For KQED Nightly Business Report 20170404

It, investors want to see an evidence of an improving economy in order to rely less on government policies. Today the Dow Jones Industrial average was off 13 points to 20,650. The nasdaq dropped 17 and the s p 500 lost 3. And another key events over the next few days and weeks could determine direction of stocks. Dominic chu explains. One quarter down, three more to go in 2017. And one of the biggest questions for investors now is whether the market rally since the election can keep going. While there is a general optimism on wall street, maern experts feel as though there are reasons to be at least a little bit cautious in the coming weeks and months. To the extent with edid not have some sort of Corporate Tax reform, that would certainly be a difficulty of the markets. Anything on the political situation, with the elections, whether its upcoming in france or germany later in the year, that could be an issue. And finally, id say the markets, s p at 20 times earnings, thats the kind of environment that any modest nick can have an outside impact where the market goes and valuations go. You cant blame people for being more conservative with their investments. Theres a lot on the agenda to Pay Attention to this month. Youve got concerns over the train bombing in russia, as well as meetings President Trump has with egypt and china this week. Here at home theres the coming showdown in congress over the confirmation of Supreme Court Justice Neil Gorsuch and a possible Government Shutdown later this month. Of course, theres a big jobs report and a lot of fed speak. That being said, some are advising a more disciplined investing approach for individual investors. I think for the individual investors out there, one, Pay Attention to your 401 k statements. Its also important to stay the course. You know, most folks cannot be traders. Its better to be investors and focused on the long term, and continue to contribute to your retirement savings. According to the spoken investment group, over the past half century, april has been the strongest month for the stock market. But theres a lot on the horizon that could put a dent in that rally. For nightly Business Report, im do lets turn to Michael Jones for more on what the market will focus on and how it all might impact stocks in the days and weeks ahead. Hes chairman and chief Investment Officer at river front investment group. Welcome. Good to have you with us. You say there are three pillars in the rallies of stocks weve seen, higher earnings, accelerating Global Economy and the progress of the trump agenda. What happens if one of those three thenings gets stymied . I think were looking in april at probably the last point on the tripod, coming under some severe pressure. We should remember that one thing that trump is doing doesnt need congressional approval, and thats the deregulation push, we saw that with the epa pronouncements last week. And deregulation is going to continue. The market loves that. But we are going oh have a very important series of legislative events. The one that not enough people are talking about is the budget situation, the need for continuing resolutions to avoid a Government Shutdown, and the need for a debt ceiling increase. All of it is going to be controversial. All of its going to be hard to pass. And the markets not going to like it. So if you are a longer term investor, do you just put that, for lack of a better word, noise aside . Or do you try and maneuver around it . Well, i think that there are a lot of investors who have been caught on the sideline with this rally since the election. It just feels that way. Even look at todays trading action. We had a big down draft early in the day, and sure enough buyers came in. That suggests a market thats technically in good shape. Theres a lot of people waiting to buy. So i think some of the disappointment that we may see on the political front might create a little bit more of a pullback than weve seen thus far. Right now, if we go down 2 , buyers come running in. We should get a more normal 5 pullback this month, and if im an investor thats been frustrated and waiting to buy, i think it will be a very good opportunity. Of these events, thats interesting you point to the sort of end of month debt ceiling matter, and those are the folks hes going to need in the Freedom Caucus who did not negotiate terribly successfully with. And then went on to insult later on after that health care vote. Lets turn to trade for just a moment. There was some talk last week that it sounds like some of the rhetoric is softening just a bit there. Is that how you see it . Absolutel i think maybe this is wilbur ross influence. Maybe its some of the other people that trump has surrounded himself with since being elected. But theres no question that the nafta proposals were much more moderate, much more inkr emental than the Campaign Rhetoric might have suggested. The market likes that. We want to see nafta improved, not discarded. And that seems to be the direction the Trump Administration is going. That sets us up well for xis visit this week. You know, really harsh rhetoric is typically going to prompt a backlash from china, just as much as from the Freedom Caucus. So what we want to see is the president take a more moderate tone. And the nafta proposal seemed to be setting the stage for just that kind of successful summit with xi. Of course president xi and the president will be talking about north korea, a potential flash point. Thank you very much, Michael Jones, with river front investment group. To the economy now, where Construction Spending was not as strong as expected, though it did rebound from the prior months. According to the commerce department, Construction Spending rose. 8 thanks to the warmer weather in february. Manufacturing activity cooled a bit in march but still remains on an upward track, with a modest decline in new orders. The Manufacturing Industry hit the highest level since 2011. Auto sales were weaker than expected in march. It may be the latest sign that americas sevenyear auto boom might be coming to an end. Phil lebeau has more on the disappointing months. Make no mistake, americans are still buying plenty of new vehicles, especially trucks and suvs. But march shows u. S. Auto sales overall continue to slow down. Last month business was much lower than expected for gm, toyota, and fiat chrysler. While ford did slightly better than forecasted, but still had negative sales last month. So is the auto market thats been in overdrive finally stalling . Well, its too early to tell. But the warning lights are definitely flashing. For starters, inventories are rising. So new models are sitting on lots longer. And when they do sell, dealers are spending more to close the deals. Also, theres a glut of used cars and trucks hitting the market, pushing those prices down, and making some used models more attractive than some new cars and trucks. With the march sales pace falling under 17 million for the First Time Since last june, this could be an indication auto sales will not rise for the first time in seven years. But how much sales slow down depends in part on how automakers handle the drop in business. It gets kind of tricky now at this point in the cycle, how aggressive do automakers want to be on incentives. You could use volume and trade on sales every month. By the end of the day, its about profits, not market share. Thats the challenge. Can automakers remain disciplined and avoid an incentive war that cuts into profit margins. This is a cyclical industry, and historically, automakers have not done well when sales slow down. Phil lebeau, nightly Business Report, chicago. And heres a first. Tesla is speeding past ford in terms of market cap. After delivering a Record Number of cars for the quarter. In the first three months of the year, tesla delivered 25,000 cars, while ford sales dropped 7 in march. Tesla now has a market cap of roughly 48 billion. Ford stands at 45 billion. The Federal Reserve fattened up its Balance Sheet during the recession, and embarked on a bondbuying program in an evident to juice the economy and lower Interest Rates. The president of the fed hinted it might be time for the world bank to slim down a little bit. Not a lot of precedence here. It could lead investors vulnerable. For sale, trillions of dollars worth of treasuries and mortgages on the books of the feds Balance Sheet that it doesnt seem to need anymore. Now that the economy seemed to be recovered, so much so that the fed is now raising Interest Rates. Fed officials are starting to talk gently about reducing the size of its 4. 5 trillion Balance Sheet. There is interest among f1 c members to shrink that Balance Sheet in a gradual and predictable way. Increasing the size of the Balance Sheet during the financial crisis was an answer to a problem. The fed had already cut raise to zero, but the economy was still weak. So the fed purchased trillions of dollars of government bonds and mortgages to drive down Interest Rates and try to drive up the stock market. Now four times the size of whats normal, the Balance Sheet is a potential problem in itself. It was creating more inflation if not right size for a stronger economy. Lets say they have a fiveyear plan. They need to get the Balance Sheet down to about 1. 8 trillion. They need to get about 2. 5 trillion off the Balance Sheet. The plan is fraught with risk. The reason the fed is raising Interest Rates before reducing the Balance Sheet size is it doesnt know how to calibrate a decline in the Balance Sheet with the effects on Interest Rates and the econ we think its much easier in using that tool to communicate the stance of policy. We have much more experience with it. And have a better idea of its impact on the economy. Investors are going to be listening closely. Too aggressive a plan could be a major selling event so the best guess, the if ed announces a plan this year to gradually reduce the size of the Balance Sheet and doesnt actually do anything until later this year, or early in 2018. For nightly Business Report, im steve liesman. Still ahead, check your epipens. Its been extended to the United States. Theres an expanded recall of epipens, the lifesaving allergy medicine. The initial recall was issued last week that did not include the u. S. , but that has changed. Certain epipens sold in the United States are also affected. Mike tor rel has details. If you keep an epipen on hand for allergy emergencies, check the package for its lot number. Friday the manufacturer of epipen expanded a recall of the product to include 13 lots in the United States. This comes after a recall earlier in march of 81,000 units in other countries. The initial recall was due to two reports of the epipen failing to activate. In both cases patients were able to use a backup device on hand. The device is manufactured for mylan by pfizer. Testing has turned up no further cases of the defect and the recall is being extended voluntarily out of an abundance of caution. They will replace the devices at no cost. As for the financial impact, its estimated it may amount to about 3 of epipen sales or about 21 million. It includes both epipen and epipen junior between april and october of this year. The recall doesnt include the authorized generic version of the epipen, an identical product it recently introduced in response to an outcry over the price of the branded version. For nightly Business Report, im meg turrel. For more information and to check which lot numbers are involved in that recall, you can visit our website at nbr. Com. Panera might be for sale. Bloomberg news said the restaurant chain received takeover interest looking into socalled strategic options. Although a deal may not include, but it may include dominos pizza. It would involve a lot of dough. I had to. Bristolmyers squibb extended the lives of patients with advanced melanoma. The Biotech Company showed a trial of the combination of treatments proved more effective than when a patient just took one of the medicines. Shares were off a fraction at 54. 21. Novo said its treatment which uses electrical fields to kill cancer cells improved the overall survival rate in patients newly diagnosed with a common form of brain cancer when used in conjunction with chemotherapy. The shares surged 37 to 11. 10. And Biotech Company united therapeutic said regulatory delays caused it to postpone a drug to treat high blood pressure. It expects to launch in 2018. Shares were punished following that news, falling about 8 to 123. 96. The government is issuing new guidelines on visas used heavily by Tech Companies to hire foreign engineering workers. The visa program is called h 1 b. The Justice Department and the department of Homeland Security say you want to make sure the visas are not being misused at the expense of u. S. Workers. The filing period starts today. Gupta came to the u. S. In 2013 from india. She arrived on a spouse visa with her husband who was on an h 1 b visa. But she had her own dream of starting a company. For that, she, too, needed an h 1 b. That was easier said than done. The more difficult part is that its a lottery. Its a gamble. Last year dual citizenship received more than 236,000 h 1 b applications for 85,000 spots. The government has a lottery to select the visa holders. Critics of the system, which include President Trump, argue it favors outsourcing companies that flood the program with applicants that clinch the majority of these visas for cheaper workers. Unfortunately there are loopholes in the program, that actually allow employers to bring in workers at much lower wage rates than americans. Howard University Professor ron hera is an expert on the issue and has testified to congress about the need for reform. He says another problem with the Current System is that theres no requirement for companies to recruit American Workers first. So whats happened is the program is dominated by employers who are really making profits over replacing or substituting for american works with the h 1 b workers. While the Trump Administration has signaled it will reform the system, so far no changes have been issued. Tech Companies Like google, microsoft and amazon rely heavily on immigrant workers. And many in Silicon Valley say these companies could be hurt by change. Still, some believe some changes are necessary. Im not convinced that the current policy is not only serving the american person, its also not serving the best immigrant talent either. Shes the founder of unshackled, a Venture Capital firm that invests in startups by immigrant founders to help them navigation the immigration process. He hopes those who would benefit under the h 1 b process would be entrepreneurs, not outsourcing companies. Imagine if the 35,000 of the 85,000 a year that go to i. T. Companies, went to entrepreneurs instead and created ten jobs each, we wouldnt be having this discussion today. I dont think we would. Hes sponsored by unshackled said she didnt make the lottery the first time she tried but was able to remain in the country with her spouse visa and received her h 1 b on her second try. Another unshackled entrepreneur just submitted his application and worries about what will happen if he doesnt win this lottery. If that happens, i couldnt continue my business here. I talked to some immigration attorneys, while they were preparing applications last week. They say theyre handling fewer applications this year, partly because the fees have been getting higher, even under the obama administration, and also because of uneasiness over the current political climate. For nightly Business Report, dee dee roy, san francisco. Google is trying to figure out an issue of its own, monitoring content. Advertisers have pulled out of Googles Youtube because they dont want their brand next to objectionable videos. Gloria is at a conference in los angeles. Chief marketing officers and ad agencies here are talking about what google has to do for their brands to stay safe on ult. What were hearing from the members is its time for a lot of these platforms to grow up. Theyre still fairly young platforms. Unlike the other platforms we have, television, radio, print thats been around forever, they havent really grown up into a place where you can measure and understand whats really being delivered. Taco bells chief marketing officer tells us that while she considers google an important partner, theyre taking a break until google makes more changes. We are on pause, however. Thats how we see it. Because at the end of the day, context matters. Mobile ad Company Cargo that has ads with premium content, and at t moving ad dollars to what is seen as safer content. The world of advertising in gem is at this point of change. What were seeing finally is the marketers are waking up and saying, just doing audience targeting at mass scale is not enough for us. We need to be guaranteed were going to be running in safe places. The head of the upfront and new front ad sales period when brands commit a big chunk of their annual ad dollars, the head of ipt michael roth tells us, brands and agencies are using this to push for more transparency. The best way to keep organizations accountable is to do it with your pocketbook. So i think that part of it, frankly, works. Roth tells us that some of ipgs clients are starting to come back to google, because google is pulling out all the stops to show brands its taking steps to fix this problem. Google tells us, quote, many advertisers never left and many decided to come back. While they know that no system can be perfect, this eappreciate the actions weve taken and know we are taking this seriously, and are committed to Getting Better and better. For nightly Business Report, im Julia Boorstin in los angeles. Coming up, schools in session. Training workers for the manufacturing jobs of the futu. U. P. S. Is expanding its operations. The Worlds Largest Package Delivery company will add saturday ground deliveries to keep up with the increasing online shopping. Rival fedex already delivers items on that day. And the Postal Service makes sunday deliveries in some markets for amazon. Com. The Tech Industry is expanding along with the number of jobs its creating, according to a new report employment in the field grew about 3 last year to 7 million workers. Now, most of the gains came from the Software Cybersecurity and Cloud Computing industries, and the pay in the tech sector, more than doubled the national average. Nearly 109,000 a year. According to the same report, its not just california and new york that are seeing high rates of tech sector employment. Michigan and pennsylvania are in the top ten. And thats partly because factory floors are going hightech. That modernization means new skills are required to operate that machinery. Morgan brennan looks at how companies are training workers for the factories of the future. Shes in gross city, pennsylvania. Reporter technology, the adoption of automation, 3d printing and digitization, transforming factory floors. And with them, job descriptions. Take general electric, ges been on the forefront of the trend. Sensors, and robotics. Ge workers here at this pennsylvania facility use data to access locomotive engines coming in for repair. Thats a process that allows them to target specific parts, rather than do full teardown, which is what used to happen. This shift involves transitioning from paper to the cloud. As employees scan bar codes to create a Digital Thread of a machine. Get acquainted with algorithms and use devices to complete tasks once done by hand. The Ge Transportation chief and architect behind the new factory model said its creating a demand for skills that you may least associate with all this tech. Traditionally where it may have been how people can do the actual work, thats really been supplemented by deeper look at the skills, and how this ework in a bigger environment. Reporter as productivity increases in the manual labor part of the job decreases, workers must be more interactive since long time machinists are being teamed with analytic experts. To do all of this, ge plans to retrain 150,000 employees, and its revised its recruitment protocol as well. Less than ten passed the screening to make the cut. Ge certainly isnt alone. More Companies Including Lockheed Martin and john deere are investing in their work forces. To retrain longtime employees, also to develop and attract the next generation who tend to be more comfortable with tech already. Experts say the opportunities are crucial to bridging the skills gap. Public policy or other employer policies that stimulate that kind of ongoing learning is ultimately going to help this adaptation to the change in the manufacturing sector. Reporter its estimated 3. 5 million new manufacturing jobs likely to be created by 2025. As many as 2 million could go unfilled. Due to the skills mismatch. Making training a necessary component to the factories of the future. For nightly Business Report, im Morgan Brennan in pennsylvania. Finally tonight, ronco brands for the roundtheclock commercials, it filed to go public. Theyre looking to raise 30 million through a mini ipo by selling 5 million shares. About you wait, theres more the company is offering discounts, for example, buy more than 5,000 in shares, then get a one Time Discount of 20 off ronco products, plus a rotisserie worth hundreds of dollars if sold separately. You could be the veg emattic guy. There you go. Excellent. Well, wait, theres no more. Weve got to say goodbye. Thats nightly Business Report for tonight. Im sue herera. Thanks for joining us. Im tyler matheson. Plus shipping and handling. Have a great night, everybody. Well see you tomorrow. This is bbc world news america. Funding of this presentation is made possible by the freeman foundation, newmans own foundation, giving all profits from newmans own to charity and pursuing the common good, kovler foundation, pursuing solutions for americas neglected needs, and aruba tourism authority. Planning a vacation escape that is relaxing, inviting, and exciting is a lot easier than you think. You can find it here in aruba. Families, couples, and friends can all find their escape on the island with warm, sunny days,