TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: What a week — drama in Greece, volatility in China, big swings in our market. So, what should investors inspect when the corporate earnings parade starts to roll?
SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: On track. The head of the Federal Reserve says the central bank remains ready to hike rates this year.
MATHISEN: New rules. How the change in our nation`s hostage policy alters the game for people in the frontlines in the fight against terror.
The final part of our series “Held Hostage: The Big Business of Ransom” — tonight on NIGHTLY BUSINESS REPORT for this Friday, July 10th.
HERERA: Good evening everyone, and welcome.
Hope in Greece, a rally in China resulting in big gains on Wall Street. Investors were in a buying mood heading into the weekend as Athens appears to be one step closer to securing a bailout deal with its creditors. We`ll have more on that in just a moment.
And the continued rebound in Chinese stocks added to the positive tone. By the closing bell, the Dow Jones Industrial Average rose 211 points to 17,760. The NASDAQ gained 75 points and the S&P 500 added 25.
For the week, which saw trading stop at the NYSE, big gains and losses in China and Greece comes face to face with bankruptcy, the major averages finished just about where they started.
Should investors inspect much more turbulence next week?
Bob Pisani has the outlook from the New York Stock Exchange.
BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: This has been one wild week in the markets in the U.S. and Europe, and especially in China.
Now, here in the U.S., the Dow Industrial has moved in 250 to 300- point range, from the high to low every day since Tuesday. That`s twice the usual volatility, and China, forget about it. The main China ETF in the U.S. moved down 20 percent in two days earlier in the week, then rallied all the way back. This EFT represents 300 of the largest stocks on the Shenzhen and Shanghai stock exchanges. It`s like the Dow moving down almost 4,000 points in two days, then rallying all the way back, it`s crazy.
It`s been volatile in Europe, too, Germany swung in a 6 percent range from the lows on Wednesday when it looked like there would be no deal in Greece, the closed on Friday when it closed at the highs for the month.
Now it`s going to be another busy news week coming up.
All the leaders of Europe meet on Sunday to give thumbs up or down on the latest proposals for a Greek bailout. This would be the third one, by the way. The big fight will be over the level of debt relief that might be granted to them and Janet Yellen will also giving her semi-annual two-day testimony to Congress beginning on Wednesday. She`ll be grilled on when she expects to begin raising interest rates.
Other central bankers will be busy, as well. The European Central Bank and Bank of Japan will both be meeting. No one is expecting any changes in interest rates, but everyone will want to know what Mario Draghi has to say about many deals with Greece.
And, finally, earning season begins with big banks like JPMorgan
(NYSE:JPM) and Bank of America (NYSE:BAC) reporting. Get set for another wild week.
For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock Exchange.
MATHISEN: Well, the big focus this week really was in China with the U.S. market very closely following the ups and downs of the Shanghai Composite. Overnight, that index rose by 4.5 percent. That added to yesterday`s gains, following the extraordinary measures the government took to stem the market`s step losses over the past month.
HERERA: And now to Greece, where that country`s debt crisis may be nearing a resolution. Later tonight parliament is expected to vote on a reform package that Greece`s leadership submitted last night, one that is much closer to what its creditors are looking for.
Michelle Caruso-Cabrera reports from Athens.
MICHELLE CARUSO-CABRERA, NIGHTLY BUSINESS REPORT CORRESPONDENT: The new Greek finance minister, Euclid Tsakalotos, stood before the Greek parliament today and told the members to support the bailout proposal he gave to creditors late last night. It is nearly identical to the proposal his boss, Prime Minister Alexis Tsipras, told voters to reject less than a week ago in a controversial referendum.
The new proposal includes billions in tax hikes and pension cuts. The parliament is expected to vote yes, leading to another round of protests from no voters tonight.
Still, the business community is relieved. After two weeks without a working banking system, the Greek economy has pretty much ground to a halt.
The CEO of Greece`s largest electronic retail chain says the climate needs to improve fast.
UNIDENTIFIED MALE: This is the worst crisis I have seen.
CARUSO-CABRERA: And he`s seen a lot. Elektroniki retail chain is 60 years old, started by his father. When this crisis started, he says sales fell to practically zero. Then, Greeks fearing a departure from the euro went on a panic buying binge to convert their euros into hard assets.
JOHN STROUTSIS, ELEKTRONIKI: There`s an uncertainty of tomorrow, prepare to have value on the house, instead of having money that they cannot know if this money can have the buying power like before.
CARUSO-CABRERA: Even if Greece`s creditors accept this proposal and they get a deal done over the weekend, a huge amount of damage has been inflicted on businesses both large and small.
Antonis Tzelalis is a jewelry wholesaler, servicing hundreds of shops across Greece. Despite the crisis, he still has lots of demand because it`s high tourist season, but with the banks closed, there is little cash in the financial system.
ANTONIS TZELALIS, JEWELRY WHOLESALER: We don`t have cash from our customers, so we cannot take pure gold to make producing.
CARUSO-CABRERA: But electronic banking system is working, why can`t you use that?
TZELALIS: Yes. But the (INAUDIBLE) sell gold, they want it cash by hand, not by bank.
CARUSO-CABRERA: Aggeliki Spanou was publisher of a small free weekly newspaper. In January of this year, she was getting 50,000 euros worth of advertising every week. A month ago, that fell to 30,000. Last week, zero.
AGGELIKI SPANOU, PUBLISHER: Because the private sector is very much pressed from the condition in the banks. Nobody pays nobody.
CARUSO-CABRERA: She shut down the newspaper, 15 freelance writers will be receiving one less check per week.
For NIGHTLY BUSINESS REPORT, Michelle Caruso-Cabrera, Athens.
MATHISEN: European leaders plan to meet in Brussels on Sunday to consider the fate of Greece and the bailout proposal, but ultimately any deal to give Greece a third bailout runs through Germany and the politics there couldn`t be more complicated.
Steve Liesman reports tonight from Frankfurt.
STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Center stage is German Chancellor Angela Merkel, who faces pressure from the United States, France, and the International Monetary Fund to make concessions to keep the European Union intact and she also faces a public opposed to any more Greek giveaways.
UDO STEFFENS: They finally let Merkel and the European, let`s say, policymakers will give in. This would also finally conclude that Mr.
Tsipras will finally leave the stadium as a winner, and this, certainly, is really complicated and a big problem to digest for the normal people.
LIESMAN: After Greece submitted an 11th hour proposal for a bailout, leaders throughout Europe offered their opinions, but Merkel`s government was glaringly silent. The unknown question as if the chancellor, who`s guided her country for the past 10 years, would accept another round of promises from Greece and concede on the most critical point, giving the Greeks debt relief.
Merkel`s finance minister, Wolfgang Schauble, known to be more hard- line than his boss for the first time on Thursday said the Greek economy need debt relief, but he said such relief was against European Union rules.
The mystery over the German position should be revealed tomorrow.
That`s when finance ministers meet in Brussels to decide whether to accept Greece`s proposal, then on Sunday E.U. leaders meet formally to decide on the bailout. If it`s turned down, it could be the ultimate exit of Greece from the currency union.
For Merkel, it`s a choice between siding with her foreign allies or siding with her public.
For NIGHTLY BUSINESS REPORT, I`m Steve Liesman in Frankfurt.
HERERA: To the U.S. economy now where another report reinforced the view that economic growth rebounded in a second quarter after a weak first.
Wholesale inventories rose to their fastest pace in six months in May. The Commerce Department said inventories increased 0.8 percent, which was better than forecast.
MATHISEN: Federal Reserve Chair Janet Yellen gave no indication that the drama abroad in Greece or in China will delay the central bank`s plan to hike interest rates in the U.S. later this year. In a speech in Cleveland today, she said the Fed was on track for its first rate raise in nearly a decade.
Hampton Pearson untangles the Fed speak for us tonight.
HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: In a speech to the City Club of Cleveland, Fed Chair Janet Yellen would not say whether she anticipates one or more rate hikes at the four remaining meetings of the central bank this year. It all depends she said on more workers coming back into the labor market and more signs of stronger economic growth, including improvements in what she described as an underperforming housing market.
JANET YELLEN, FEDERAL RESERVE CHAIR: I expect it will be appropriate at some point this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy.
PEARSON: In an effort to ease market anxiety over interest rate liftoff, the first rate hike in nearly a decade, Yellen said both Wall Street and Main Street should focus on the gradual path of interest increases after that.
YELLEN: I currently anticipate that the appropriate pace of normalization will be gradual. And that monetary policy will need to be highly supportive of economic activity for quite some time.
PEARSON: Earlier this week, minutes from the mid-June Fed meeting showed monetary policymakers concerned about the Greek debt crisis and the economic slowdown in China, not so today.
Yellen said calls by IMF director Christine Lagarde for the Fed to hold off on raising interest rates until 2016 is part of the interest rate policy debate inside the FOMC.
YELLEN: The members of the Federal Open Market Committee publish their own individual forecasts of the appropriate path of policy, conditional, of course, on their economic forecasts. You`ll also see a range of opinion there. And so, it is part of the spectrum of opinion.
PEARSON: Today was in many ways a preview of the Fed chair`s semiannual report to Congress on monetary policy and the economy. That happens next week during two days of hearings here on Capitol Hill.
For NIGHTLY BUSINESS REPORT, I`m Hampton Pearson in Washington.
HERERA: Still ahead, the FDA strengthens the warning on well known pain relievers, but will it impact the big money behind those popular pills?
HERERA: What do you reach for when you have a headache or some muscle pain?
Well, like millions of Americans, you probably head to the medicine cabinet for some Advil, Aleve, or maybe Motrin.
Now, the FDA is strengthening the warnings on this class of painkillers and there`s a lot of money on the line for a lot of well known companies.
Meg Tirrell has the numbers.
MEG TIRRELL, NIGHTLY BUSINESS REPORT CORRESPONDENT: The FDA`s stronger warnings will appear in the coming months on popular over-the-counter medicines like Motrin, Advil, and Aleve, as well as prescription drugs like Celebrex. They are in a class of painkillers known as called NSAIDs, nonsteroidal anti-inflammatory drugs. They already carried information on heart attacks and stroke rest.
The new warnings are more specific, saying those serious side effects can occur as early as the first few weeks of use.
DR. DEVI NAMPIAPARAMPIL, NYU SCHOOL OF MEDICINE: Your risk goes up the longer that you`re on it and the higher the dose. So, for most people, you know, if they`re not getting any benefit, they don`t need to take these medications to begin with. But they`re getting a benefit, then you have to weigh that against the risk.
TIRRELL: NSAIDs are big business for drug companies. Pfizer`s prescription medicine Celebrex with $2.5 billion in sales last year, according researcher IMS Health.
In total, more than 100 million prescriptions for NSAIDs were dispensed. For over the counter drugs, the numbers are higher. Americans bought more than 275 million boxes of over the counter NSAIDs in 2013, amounting to $1.7 billion in sales, according to retail tracker IRI.
Major makers include Johnson and Johnson, Pfizer (NYSE:PFE), and Bayer. Analysts say the warnings are unlikely to affect the stock, though the FDA hopes it does affect consumer behavior.
UNIDENTIFIED FEMALE: I know some people if they have little pain will go ahead and use Advil. That probably might change a little bit.
UNIDENTIFIED FEMALE: Probably use it less or find an alternative.
UNIDENTIFIED MALE: That may change the way I use it like on a normal day maybe.
TIRRELL: The FDA says those with highest risk are people who have had a heart attack already, though it notes the risks exist for anyone. It doesn`t say these drugs shouldn`t be used. Its advice is to use the medicine only as directed and take the lowest effective dose for the shortest amount of time possible.
For NIGHTLY BUSINESS REPORT, I`m Meg Tirrell.
HERERA: Aspirin and Tylenol aren`t included in the warnings. The FDA says people who take low dose aspirin for protection against heart attack and stroke should know some NSAIDs can interfere with aspirin`s protective effective. Tylenol has known risks as well, overused can lead to liver damage.
MATHISEN: Well, Cablevision rallies on buyout interest and that`s where we begin tonight`s “Market Focus”.
The cable operator was the best performer in the S&P 500 today. This following a “Wall Street Journal” report that the French telecommunications company Altice is interested in buying it. Shares popped more than 7 percent to $26.67.
American Airlines also rose on June results. Traffic last month jumped, outpacing a rise in capacity, which is a key industry metric.
Shares rose nearly four percent to $41.21.
United Continental also reported an increase in June traffic, but the airline lowered its second quarter outlook, saying it expects its pretax profit margins for the second quarter will be at the low range of guidance.
The company blames a strong dollar. Shares were 4 percent higher to $55.51.
HERERA: General Motors (NYSE:GM) is recalling nearly 800,000 crossovers. This after it discovered a defect with its power lift-gate that had caused at least 56 injuries. The company saying that the lift gate may wear down prematurely, causing it to fall too quickly. Shares were more than 1 percent higher at $31.40.
And Lockheed Martin (NYSE:LMT) is reportedly in advanced talks to acquire the Sikorsky helicopter unit from United Technologies (NYSE:UTX).
A deal between the two companies could be worth more than $8 billion.
Shares rose 1 percent to $194.19.
MATHISEN: Believe it or not, it was the biggest week of inflows into U.S.-based mutual funds this year. Investors poured more than $14 billion into the U.S. stock funds in the week ended July 8th. This according to Thompson Reuters service, funds that specialize in U.S. shares attracted most of that new cash.
HERERA: And now to our market monitor, who like stocks she says is changing the way the world works. This is her first time joining us on the program. She is Cathie Wood, CEO of Ark Investment Management.
Welcome, Cathie. Nice to have you with us.
CATHIE WOOD, ARK INVESTMENT MANAGEMENT CEO: Thank you, Sue. Happy to be here.
HERERA: It sounds like what they typically call disrupter companies, is that a correct read?
WOOD: Yes, we focus on disruptive innovation, that`s our starting point, and we`re looking for companies that are going to change the way the world works, so we spend a lot of time with technologically enabled companies and we`re looking for the key enablers, the size of the market, and where the economics will lie.
MATHISEN: And yet some, Cathie, of your choices tonight are companies with which many of us would be familiar, so you don`t really say that these disrupters have to be found at the infant or guppy stage.
Let`s start with Amazon (NASDAQ:AMZN).
WOOD: Yes. We think Amazon (NASDAQ:AMZN) is a much bigger idea than people understand today. It is now market cap approaching that of Walmart`s. We think it`s going to surpass Walmart, because we think online sales, which are now less than 10 percent of sales, are going to grow much larger. Amazon (NASDAQ:AMZN) is leading the charge.
And then they also have their technology business. Amazon
(NASDAQ:AMZN) Web Services, which is infrastructure as a service, is changing the way companies are using technology. Infrastructure is a service taking care of a lot of corporate needs.
HERERA: Next on the list is LinkedIn (NYSE:LNKD), why do you like it?
WOOD: We love LinkedIn (NYSE:LNKD), because they are helping to solve a lot of problems. First of all, all of us use LinkedIn (NYSE:LNKD) in our personal networks. We don`t know what we`d do without LinkedIn (NYSE:LNKD). HR managers, human resource managers, are also very dependent on LinkedIn (NYSE:LNKD).
We think with the trend towards robotics and the need for education and retraining that LinkedIn (NYSE:LNKD) is going to become even more important. They`ve just bought a company called Lynda.com, which helps to retrain people and we think with all of the big data that LinkedIn
(NYSE:LNKD) has, that they are actually going to help people improve their opportunities for careers, and step up to the next level faster than they might otherwise.
MATHISEN: And your third choice is another stock sort of in a way like Amazon (NASDAQ:AMZN) in that I guess you believe it is underestimated, misunderstood, and not common known as well as it should be. It`s Nvidia.
WOOD: It`s Nvidia. It`s painted with the PC brush. Everybody assumes that it`s hostage to the PC cycle, which is an actual, not just a cycle, it`s in secular decline now.
Nvidia is so much more than that. It`s the leader for chips for parallel processing, which is used in all of our themes, so anything having to do with the Cloud, parallel processing is critical. Anything having to do with genomic research, DNA sequencing, parallel processing is critical.
It`s becoming much more involved in automobiles, and as we move towards shared autonomous electric vehicles, it`s really going to be the chip that helps the car see when there`s no physical driver.
HERERA: Very interesting, Cathie. Thanks so much for spending time with us. Come back soon.
WOOD: Pleasure. Thank you so much.
HERERA: Cathie Wood with Ark Investments.
MATHISEN: Coming up, what the nation`s changing hostage policy can mean for trying to keep Americans safe overseas. The final part of our series, “Held Hostage: The Big Business of Ransom”, is next.
HERERA: And here`s what to watch for next week:
Earning season will be in full swing with major corporations reporting, including Dow components JPMorgan (NYSE:JPM), Intel (NASDAQ:INTC), and General Electric (NYSE:GE), among others.
Janet Yellen as we told you heads to Capitol Hill, where she`ll deliver her semiannual testimony on monetary policy.
And a ton of important data, including two indicators of inflation are due out — a read on the health of housing, industrial production, and more. It`s the busy week, that`s what to watch for next week.
MATHISEN: The drought-stricken state of California is seeing a 50 percent jump in the number of fires this year. This is happening with less water to fight them.
Water levels have fallen and some sources may be now too low to tap for firefighting — as Jane Wells tells us — that is prompting firefighters to get creative as the cost to fight fires soars.
JANE WELLS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Here`s how weird it`s getting in California. A famous actor is accused of stealing water in a drought from a fire hydrant for his avocado trees.
Then, Caltrans tweets this photo showing it suddenly snowed in the Sierra going into the Yosemite Valley in July.
And the state has seen far more fires starting earlier and burning faster than firefighters expected.
CHIEF TOM PORTER, CAL FIRE SOUTHERN REGION: We`re over 53 percent higher than we were even last year.
WELLS: So far in 2015 there have been well over 3,000 fires in California, and the cost to fight them is soaring.
This time last year Cal Fire had already spent $240 million fighting fires. This year, it`s $286 million, almost 20 percent more and the hottest, driest months are still ahead.
PORTER: We`re finding that we have to travel further to find water.
We`re finding reservoirs that boat ramps aren`t even long enough to get to where the water actually is that we need to pump out for filling our engines.
WELLS: Super scoopers, which need a long runway of water, are settling for the ocean, assuming the Pacific is close enough to get to.
And while new technology is helping firefighters find and fight the flames, they are also finding new ways to do it with less water.
PORTER: There will be more what we call dry mop-up type of activities, meaning we`ll use very little water, use mostly dirt and hand tools to scrape away hot spots.
WELLS: Maybe Mother Nature will finally help. El Nino weather pattern could bring rain and finally give firefighters a rest.
For NIGHTLY BUSINESS REPORT, Jane Wells, Los Angeles.
HERERA: An update now on the massive Office of Personal Management data breach. The director of that agency resigned today in the wake of the theft. As we told you last night, the personal information of more than 22 million people was stolen from the agency. The deputy director of the management at the office of management and budget will temporarily fill the top spot until a replacement is found.
MATHISEN: The biggest discount broker by trade executions experienced a technical issue today. TD Ameritrade (NASDAQ:AMTD) said trading was interrupted for some investors using its platform for a short period. The company said the problems were caused by a software update done overnight and were resolved a short time later. This comes two days after the New York Stock Exchange shut down for more than two hours because of complications with its own software.
HERERA: What would you do if a loved one was ever taken hostage in a foreign country? You`d probably want to pay the ransom. Well, until recently families didn`t have many choices, but the White House has since made changes to the nation`s hostage policy.
Eamon Javers has the final part of our series, “Held Hostage: The Big Business of Ransom.”
EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: It`s one of the most dangerous countries in the world.
MARK HARRIS, OLIVE GROUP: Mexico is really a major problem for us, both in the kidnapping crisis response and the extortion side.
JAVERS: But for Americans —
HARRIS: American citizens in my opinion are in most danger in areas where there`s Islamic military and terrorist.
JAVERS: And the president recently had a change of heart and policy when it comes to hostage negotiation.
President Obama`s new executive order means that the United States government is no longer going to be in position of threatening the families of people who have been taken hostage. The U.S. government says its position hasn`t changed at all. The U.S. government is not going to negotiate with terrorists or hostage takers.
Still, this development is seen as a potential benefit for the kidnap, ransom, and extortion firms that are already out there helping victims.
Critics say the opportunity for ransom payments could make hostage- taking more profitable for the bad guys.
MICHAL GNATEK, HOSTAGE INSURANCE BROKER: It`s good for their business.
JAVERS: Who`s it bad for?
GNATEK: Bad for the Americans who are traveling. The government wasn`t prosecuting to begin with, and it didn`t necessarily have to be publicized they were going to be doing this.
JAVERS: So, these kind of headlines make you nervous?
JAVERS: That could mean more business for insurers like Travelers.
ROB SCHUELER, TRAVELERS INSURANCE: We get a lot of international countries that are conglomerates, mining organizations that might have assets or properties overseas, oil and gas exploration companies, as well.
JAVERS: And companies like Olive Group, one of the leading providers of kidnapping response.
HARRIS: I think one of the most important things is that they`ve got to have international experience, either ex-military or ex-government service, some law enforcement, police or FBI.
JAVERS: The longer the negotiations take, the more money hostage negotiating companies make.
GNATEK: The most important expense is to bring on a crisis consultant.
JAVERS: As far as the payout?
Give me a range.
GNATEK: Roughly 50 grand.
JAVERS: Where`s the most expensive place in the world to get taken hostage?
GNATEK: Those areas that are most difficult to get to. It comes down to, you know, what is the motivation for the kidnapping and what is the ultimate end game.
JAVERS: For NIGHTLY BUSINESS REPORT, I`m Eamon Javers in Washington.
MATHISEN: And finally tonight, a happier story to tell you about. A parade down the Canyon of Heroes in Manhattan`s financial district. The women of the U.S. national soccer team made history again today with the first ever New York City ticker tape parade celebrating a women`s team.
Since the women`s soccer team won its third World Cup title on Sunday, there has been, by the way, a 3,000 percent increase in sale of U.S.
women`s national team merchandise at the sports apparel site Fanatics.com.
Congratulations to them. If anybody deserves the parade, they did.
HERERA: Yes, very proud of them.
That`s it for NIGHTLY BUSINESS REPORT tonight. I`m Sue Herera, thanks for watching.
MATHISEN: And I`m Tyler Mathisen. Have a great weekend, everybody.
We`ll see you back here Monday.
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