ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Bill Griffeth and Sue Herera.
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DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We`re going to be issuing an emergency order of prohibition to ground all flights of the 737 MAX 8 and the 737 MAX 9.
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SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: The U.S. grounds Boeing`s popular plane, a major blow to the world`s largest aerospace company.
BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Banner star. 2019 has been good to Wall Street and new milestones are within reach.
HERERA: Big business. Tonight, we`ll take a closer look at the fast-growing college consulting sector, an industry getting a lot of attention.
Those stories and more tonight on NIGHTLY BUSINESS REPORT for Wednesday, March 13th.
GRIFFETH: And we do bid you a good evening, everybody, and welcome.
The Federal Aviation Administration today issued an emergency order grounding all Boeing (NYSE:BA) 737 MAX 8 and 9 planes in the United States. It`s an action that doesn`t happen very often, and it marked a turn-around for the U.S., which had to this point supported the aircraft even as countries around the world were suspending its operations. Shares of Boeing (NYSE:BA), which had lost billions in market value this week managed to close higher in today`s trade. The MAX jets are the company`s best-selling aircraft. They account for almost one-third of Boeing`s operating profit.
Contessa Brewer is covering the story for us tonight and she joins us now — Contessa.
CONTESSA BREWER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Nice to see you, Bill and Sue.
Yes, the FAA says it got newly refined satellite data that led to the decision to ground these Boeing (NYSE:BA) MAX aircraft. The grounding is temporary while the investigation continues, but, boy, is it a dramatic reversal from the support the FAA was voicing even late yesterday about the safety of this particular aircraft.
The acting FAA administrator talked about how this new information led them to see similarities in the two deadly crashes. A likeness in the aircraft movement of the Ethiopian Airlines crash and the Lion Air crash.
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DANIEL ELWELL, ACTING FAA ADMINISTRATOR: The full track of the flight, Ethiopian flight was very close to Lion Air. The initial track we got on Sunday and Monday morning was only three minutes long, the first three minutes of the flight. The new track data we looked at was almost the entire length of the flight. Also, the evidence that we discovered on the ground actually was even further evidence that the flight was very similar to lion air.
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BREWER: And the order actually says that an emergency exists in Air (INAUDIBLE). The data recorder and cockpit voice recorder were damaged in this crash. So, now, special equipment is needed to extract that information from them. They`ll go to France.
Ethiopia leads the investigation with assistance from the FAA and NTSB. And interestingly, Flight Aware (NASDAQ:AWRE) sent out a statement saying it and its partners at Aerion provided data on Flight 302. It`s part of the information they use to monitor planes globally. It was given to the FAA Monday and to Canadian officials Tuesday night. By Wednesday morning, Canadian officials have reversed course and grounded the planes. And then the U.S. authority said once they refined the data, they followed suit today.
In reaction to the grounding of these planes, Boeing (NYSE:BA) says: We`re supporting this proactive step out of an abundance of caution. Safety is a core value at Boeing (NYSE:BA) for as long as we`ve been building airplanes, it always will be. There`s no greater priority for our company and our industry.
And after plummeting some 3.5 percent on the news, Boeing`s share price rebounded and closed up half a percent. The airlines, Bill and Sue, United, Southwest and American all say they are going to work to get these passengers rebooked on other flights so it causes as little headache as possible.
GRIFFETH: And interestingly, all those airline stocks finished higher today as well.
Contessa Brewer, thank you, as always.
HERERA: Turning to Wall Street, the S&P 500 hit a new high for 2019, thanks to a rise in technology shares and economic data that shows stability in the manufacturing sector and muted inflation. The Dow Jones Industrial Average rose 148 points to 25,702. The Nasdaq added 52 and the S&P 500 was up 19.
We`re almost midway through March, and if things continue to hum along, the market could ending the quarter marking some new milestones.
Dominic Chu takes a look.
DOMINIC CHU, NIGHTLY BUSINESS REPORT CORRESPONDENT: It`s been a banner start to 2019 for the stock market. If the S&P 500 can stay above a gain of 12 percent, we will be on pace for the best first quarter performance for that large cap index since the start of 1998. Now, during that quarter, the S&P gained nearly 14 percent. But it`s not the only part of the market that`s moving up at a break-neck pace, after, of course, getting beaten down during the final weeks and months of 2018. The Nasdaq Composite is up around 15 percent so far this year, meaning it`s on pace to have its best quarter to start a year since the year 2012.
Drilling down into a couple of key industry groups to watch, transportation stocks, often a focus for traders and investors, as a possible signal for overall economic activity. Well, the Dow Jones Transportation Index is up around 13 percent so far this first quarter, meaning it is on pace for its best quarter to start a year since 2013. And computer chip stocks also on a tear, with the VanEck Vectors Semiconductor ETF, ticker SMH, up around 19 percent quarter to date.
If things stay this way, it will be the best Q1 since the inception of the fund going all the way back to the year 2000. Something to keep an eye on as well is the current level of the S&P 500. We`ve seen a stalling out here over the course of the past last few weeks. It will be a key hurdle if stocks are going to resume their run to reclaim record highs.
And, of course, the coming weeks will be busy with everything from Brexit to China trade talks to Federal Reserve interest rate meetings and, of course, commentary, offering plenty of opportunity for momentum to continue or to shift.
For NIGHTLY BUSINESS REPORT, I`m Dominic Chu.
GRIFFETH: Inflation at the wholesale level rose slightly last month, but overall, it still remains in check. The producer price index which, of course, measures the wholesale cost of goods and services rose just 0.1 percent in the last month, mostly because of higher gasoline prices. The index was actually negative the three previous months. And year over year, wholesale inflation is up less than 2 percent.
HERERA: Orders for durable goods, those that are expected to last at least three years, rose in January and the important business investment component rose by the most since last summer. Orders were up nearly half a percent driven by gains in commercial aircraft. That is the third straight month orders have been higher. The core or the measure of business investment rose almost 1 percent, the most since July.
GRIFFETH: And oil inventories fell by nearly 4 million barrels last week. That decline in stockpiles sent the price of domestic crude higher today. West Texas rose about 2.5 percent to roughly $58 a barrel.
And if there`s an industry that can be rattled by geopolitics, it`s energy. Which is why Brian Sullivan asked the secretary of state today about a number of global hot spots at the CERA Conference in Houston.
BRIAN SULLIVAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: It was a rare and exclusive opportunity to sit down with cabinet level secretaries about foreign policy, energy and where they meet. And we began by discussing China, because most of the conversation around China is the United States selling liquefied natural gas.
But China has its own energy ambitions, particularly in the South China Sea. And we began by asking Secretary of State Pompeo what the U.S. is willing to do, how far we are willing to go to blunt China`s energy ambition.
MIKE POMPEO, SECRETARY OF STATE: So President Trump`s made clear what we want is a fair shot. We want tariffs that are even, non tariff barriers to be shut out. We want the rule of law transparency and contracts. When we get those things I am very confident that American companies will prevail. We can always outcompete.
SULLIVAN: We then turned the attention to Iran and I asked Secretary of State Pompeo if the U.S. was willing to extend the sanctions against Iran selling exported oil.
Should we keep up or extend the oil sanctions on Iran?
SULLIVAN: For how long?
POMPEO: Until we get the change in behavior that the people in the Middle East and the rest of the world so desperately need.
SULLIVAN: Well you said you`d like to bring down the zero barrels of export. Do you think that`s possible?
POMPEO: Not going to get ahead of myself or ahead of the President, but make no mistake, about it, that`s the direction of travel. We want to deny Iran the resources to continue to underwrite Hezbollah, the Houthis in Yemen, a whole list of terrorists around the world. We want to deny them those resources when their behavior changes we`d be happy to invite them back into the community of nations.
SULLIVAN: The conversation obviously then turned to Venezuela. Humanitarian, economic and political disaster there. Secretary of State Pompeo saying the U.S. government is willing really to do as much as it takes to get the Maduro regime out and make sure that that country returns to some form of stability.
For NIGHTLY BUSINESS REPORT, Brian Sullivan, Houston, Texas.
HERERA: U.K. lawmakers rejected the idea of leaving the European Union without a deal in place. That means a so-called hard Brexit is becoming increasingly unlikely, in part because of the economic uncertainty and trade disruptions that it could cause. But leading up to today`s vote, some in Britain were preparing for an uncertain future.
And Willem Marx talked to them.
WILLEM MARX, NIGHTLY BUSINESS REPORT CORRESPONDENT: Brexit`s uncertainty has been bad news for most British businesses, but not all.
JAMES BLAKE, EMERGENCY FOOD STORAGE MANAGER: Having a no deal that`s looming in the next couple of weeks is a factor as to why the business has grown significantly.
MARX: James Blake is a co-founder of an emergency food supply firm. He says this branded box has helped attract many new customers.
BLAKE: People have accused us of profiteering and fear mongering, but we are a preparedness company.
MARX: Jo Elgarf has planned extensively for Brexit.
JO ELGARF, U.K. CITIZEN: We`ve got retailers telling us you`re not going to get fresh fruit and veg. You`ve got suppliers stockpiling. Actually why don`t we do that too?
MARX: For months, she spent a little extra to stock up on essentials and avoid any shortages. But for her family, Brexit threatens more than just the food supply.
ELGARF: The biggest concern for me is my medicine for my daughter. My daughter has severe epilepsy. Without medicine, the consequences could be catastrophic. You know, she could die.
MARX: The government is working to protect the flow of drugs and other medical supplies with new ferry routes, contingency six weeks of stockpiles and a measure known as a serious shortage protocol.
GORDON HOCKEY, PSNC DIR. OF OPERATIONS & SUPPORT: It could be used to change the quantity on a prescription so that everybody has enough.
MARX: Gordon Hockey runs operations at PSNC which negotiates government drug prices on behalf of Britain`s pharmacies.
HOCKEY: We don`t know quite what will happen at the end of this month.
MARX: But for worried parents, Brexit is bringing very unbelievable policies.
ELGARF: How can a country that`s one of the wealthiest countries in the world be talking protocols and what medicine comes through?
MARX: For NIGHTLY BUSINESS REPORT, I`m Willem Marx in London.
GRIFFETH: Time to take a look now at some of today`s “Upgrades and Downgrades”. Carnival (NYSE:CCL) was upgraded to buy from neutral at Goldman Sachs (NYSE:GS) today. The analyst there cited upbeat growth figures for the cruise line operator. The price target now is $65 a share. Carnival (NYSE:CCL) shares closed at $56.09.
Sanderson Farms (NASDAQ:SAFM) was upgraded to neutral from underperform at JPMorgan (NYSE:JPM) Chase. The analyst cited higher chicken prices and the prospect of China opening its markets to U.S. poultry products. The price target now $127. Sanderson closed today at $126.89, that was up more than 2 percent.
And coming up, new guidelines that regulators move to tighten sales of e-cigarettes in an effort to combat youth vaping.
HERERA: In an effort to curb teen vaping, the FDA has released draft rules which could remove some flavored e-cigarettes and cigars from store shelves.
Aditi Roy has the details.
ADITI ROY, NIGHTLY BUSINESS REPORT CORRESPONDENT: After months of tough talk on e-cigarettes and the skyrocketing use of tobacco products among youth, the FDA is out with its highly anticipated policy to curb vaping among teens. Under the proposed policy, retailers would have to keep flavored e-cigarettes in a separate area off limits to anyone under 18.
It also requires store owners to impose online age verification tools and impose a quantity restriction for most flavored e-cigarettes purchased on the web. The agency also moved up an application deadline for e-cigarette manufacturers to seek permission to have their products remain on the market from the year 2022 to 2021. The draft rules don`t apply to mint, menthol or tobacco flavored e-cigarettes because the agency says those flavors are also available in conventional cigarettes and help adult smokers quit those products.
But the guidance would ban most flavored cigars. Last week, outgoing FDA commissioner Scott Gottlieb spoke about the agency`s crackdown on retailers who sell to minors.
SCOTT GOTTLIEB, OUTGOING FDA COMMISSIONER: We`re now going to hold them accountable at a corporate level for those policies and look at their culture of compliance. And some of these stores have substantial violations. In the case of Walgreens, 22 percent of the stores we inspected, over 6,000 stores, had violative stores to minors, and many with repeat violations.
ROY: Gottlieb, who is expected to leave hi position in a few weeks, has been outspoken about teen vaping, pointing to a CDC survey which shows the number of high school students using e-cigarettes increased 78 percent between 2017 and 2018.
Ned Sharpless who will take over for Gottlieb as acting director applauded the agency`s e-cigarette crackdown in a tweet back in the fall. In response to the new guidelines, Altria-backed Juul, which owns more than 70 percent of the e-cigarette market, noted that it`s already restricted sales of its flavored products to youth, adding, we support category-wide action.
But some players are more outspoken against the proposed new rules, including store owners. A spokesman for the National Association of Retail Stores says the group believes the FDA doesn`t have the authority to impose some of the rules.
Now that a proposed policy is out, a 30-day public comment period begins and the FDA says it will finalize its policy shortly thereafter.
For NIGHTLY BUSINESS REPORT, I`m Aditi Roy, San Francisco.
GRIFFETH: A pot company adds a billionaire hedge fund investor and that`s where we begin tonight`s “Market Focus”.
Aurora Cannabis has hired Trian`s Nelson Peltz as a strategic adviser to help explore partnerships that would advance the company`s market strategy. In return Mr. Peltz gets options for nearly 20 million shares that vest over four years. Wall Street seemed to like the news today, sending aurora shares 14 percent higher to $9.07.
Meanwhile, Spotify has filed a European Union complaint against Apple (NASDAQ:AAPL), claiming that Apple (NASDAQ:AAPL) unfairly abused the dominance of its App Store to favor Apple (NASDAQ:AAPL) Music over Spotify. Apple (NASDAQ:AAPL) charges content providers a 30 percent fee for all subscriptions made through the App Store. Apple (NASDAQ:AAPL) Music does not pay that fee and Spotify says that creates a competitive disadvantage.
Spotify fell 1 percent to $143.49 while Apple (NASDAQ:AAPL) rose a fraction to $181.71.
HERERA: Verizon (NYSE:VZ) said its first 5G network will launch April 11th in Chicago and Minneapolis. This will make Verizon (NYSE:VZ) the first U.S. carrier to roll out a 5G mobile network. Verizon (NYSE:VZ) says it will launch 5G in 30 more markets this year. The shares rose nearly half a percent to $57.66.
And Kraft (NYSE:KFT) Heinz is reportedly considering a sale of its Breakstone brand best known for its cottage cheese and sour cream products. CNBC says the unit is said to be worth roughly $400 million. The potential sale is part of the company`s review of its operations as it looks to pay down debt. The shares gained 1 percent today to $32.30.
GRIFFETH: The college counseling industry has found itself in the national spotlight following the largest college admission scam ever prosecuted by the Department of Justice. Yesterday, as you know, we told you about the rich and famous who allegedly paid large sums of money and bribes to fake charities and for college test cheating scams, all to get their children in prestigious colleges into those colleges.
Well, tonight we take a look at the fast-growing college counseling industry. According to one estimate, there are tens of thousands of these counselors who serve both students and schools. The sector`s annual revenue last year was estimated to be just under $2 billion.
And joining us tonight is one of those counselors. Anna Ivey has been a college and law school admission`s consultant for the past 15 years. Before that, she was dean of admissions at the University of Chicago`s law school.
Anna, thank you for joining us tonight.
ANNA IVEY, COLLEGE ADMISSION CONSULTANT: My pleasure.
GRIFFETH: You say that the college admissions system is broken. What do you mean?
IVEY: It is. You know, we take the system as it is and try to help people navigate it, but I don`t love the system. I don`t go to great lengths to defend it. It has gotten very complicated and competitive and a bit cutthroat as we all woke up to yesterday.
I will say that there are lots of totally legitimate, highly ethical admissions consultants out there who are horrified, as I am, by what we learned yesterday. So when I say it`s broken, I find it broken because we saw this perfect storm with this case. We see the crazy influence of coaches and athletics on the admissions process with very little oversight or governance from the admission side.
At the same time, we also see the abuse of the accommodations process for people with disabilities, which is extra frustrating because, of course, there are applicants out there who are absolutely entitled to those accommodations, but it is a system that is ripe for abuse and, boy, those transcripts really were a playbook for how to do that.
HERERA: Yes. So how do we change it then? Because it is such a large system.
HERERA: Bill went through it with his kids, I`m almost in the process of doing it with mine. So if the system lacks transparency, there`s too much influence from sports and coaches, how do you go about changing that?
IVEY: Well, you know, I should start off by saying that schools are entitled to have certain preferences and prioritize certain things. So, it`s not really my job to say, oh, you should stop caring about sports or stop caring about athletes, but I do hope that schools take a good, long look at their oversight procedures and think about what they might want to change internally to make sure that these recruited athletes that they`re bringing into their freshman classes are the real deal.
IVEY: And, you know, on the accommodations side and the abuse of the accommodations system, you know, fraud happened on multiple tracks. One of them was test taking. Unfortunately, of course, cheating on tests is as old as the hills. In a conventional setting for taking the SAT or the ACT, that kind of fraud is harder to get away with. But if you kind of work the system for accommodations, then you can be alone in a room with a proctor that you bribed.
So, there`s some — I`m sure the college board and the ACT are revisiting some of the security procedures they have.
GRIFFETH: No doubt.
IVEY: For those testing situations.
GRIFFETH: All right.
IVEY: So there`s certainly tweaks that can be made that would have a big effect.
GRIFFETH: Anna Ivey, admissions consultant joining us tonight. Anna, thanks for joining us.
IVEY: My pleasure.
HERERA: Coming up, it`s not your grandfather`s RV.
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FRANK HOLLAND, NIGHTLY BUSINESS REPORT CORRESPONDENT: Right now, we`re offroad in Winnebago`s newest model. We`ll also take you inside the biggest RV show in the U.S. and show you how manufacturers are trying to rev up sales.
I`m Frank Holland for NIGHTLY BUSINESS REPORT. That story is coming up.
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HERERA: And finally tonight, after eight years of gains, sales of recreational vehicles fell in 2018. They`re expected to fall again this year. In order to stem this sales slump, some in the industry are turning to technology to attract new customers.
Frank Holland is at the country`s largest RV show in Salt Lake City.
UNIDENTIFIED MALE: There we go. And brake. Brake. And hello, Mother Earth.
HOLLAND: The RV industry is expected to face an uphill climb in 2019, and that has manufacturers like Winnebago pushing innovation.
CHRIS BEINERT, WINNEBAGO PRODUCT PLANNER: They`re luxurious but not as large or cumbersome as your typical RV.
HOLLAND: Here in Salt Lake City, Utah, at the biggest RV show in the U.S., Winnebago was releasing its off-road RV. The company also introducing an all-electric model aimed at business customers, think mobile clinics. This after sales of its iconic motor home sales fell by more than 3-1/2 percent last quarter.
Shipments of towables are forecasted to drop more than 4 percent this year. The more profitable motor homes by more than 9 percent according to the RV industry association. Industry leader Thor saw sales decline by more than a third last quarter. The company is hanging its hopes on tech.
BOB WHEELER, AIRSTREAM CEO: The technology isn`t as much about stealing market share from the rest of the industry, but it`s about attracting a new customer.
HOLLAND: New Airstream will have smart technology and connectivity built in. Owners of vintage models can retrofit a trailer into a hot spot and let users control everything from the awning to the lights to the air conditioning with an app.
WHEELER: The technology is just an enabler. Our younger buyers expect the tech. What they`re really looking for is a more convenient, comfortable camping experience. They don`t want a lot of questions and uncertainty when the RV, is it hitched up right, are the systems running properly? When am I going to run out of water or LP?
HOLLAND: Analysts say technology is the key to attracting younger buyers, also catering to older buyers and retirees. RV makers hope that all this renovation will rev up growth.
For NIGHTLY BUSINESS REPORT, I`m Frank Holland in Salt Lake City.
GRIFFETH: And before we go, one final look at the day on Wall Street. Actually a pretty good rally. When all was said and done, the industrial average gained 148 points. Nasdaq continued the streak we`re seeing this week with technology issues still doing well. And the S&P was up 19 today. Actually, that is its highest level of 2019.
HERERA: Pretty good day. That does it for us tonight. I`m Sue Herera. Thanks for watching.
And we`d like to remind you, this is the time of year your public television station seeks your support.
GRIFFETH: I`m Bill Griffeth. Thank you very much for that support. Have a great evening, everybody. We`ll see you tomorrow.