ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Bill Griffeth and Sue Herera.
SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Stocks slide. Concerns mount
that the global economy is slowing, and the major indexes have one of their
worst days of the year.
BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Spring has sprung in
housing. Sales register one of their largest monthly gains ever, and
there`s one thing that`s driving demand.
HERERA: Digital divide. Retailers in some cities want to ban cash. But
lawmakers say it`s still king.
Those stories and more tonight on NIGHTLY BUSINESS REPORT for Friday, March
GRIFFETH: And we do bid you a good evening, everybody, and welcome.
Wall Street connected some economic dots today, and the result was an ugly
end to the week. Stocks fell hard because of weak data both here and
abroad with one report suggesting that Germany may be in recession. And
for the first time in years, the three-month T-bill is now yielding more
than the 10-year note. That is the definition of an inverted yield curve
which sometimes foreshadows a recession.
At the close, the Dow Industrial Average was down by 460 points, closed at
25,502. The Nasdaq was down 196. The S&P fell by 54.
And, for the week, all of them were down a fraction at least.
Bob Pisani starts us off tonight from the New York Stock Exchange.
BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: What happened to our
rally? Yesterday at the high point, the S&P 500 was just about 2 percent
away from its record high. But global growth fears have swooped right back
in. And remember the bold narrative, the Federal Reserve and the central
banks around the world, they got our backs. The tariffs are going to go
away. The Chinese are going to stimulate their way out of the slowdown.
And the Europeans, well, the data is not going to get any worse.
Well, here`s what actually is going on. We do have a much more patient Fed
and central banks around the world, but that`s not priced in. The
president has made it clear, though, maybe immediate reduction in tariffs,
that`s a problem. And overnight, we got dismal European manufacturing
data, particularly Germany where the yield on the 10-year over there went
to zero. Here in the U.S., we`re continuing to see our own bond yields move
to the downside.
Now, keep in mind, most big questions in the S&P 500 get about 40 percent
of their revenues from businesses overseas and that`s why this global
growth equation is such a big deal. So, this weak global economic growth
narrative stays with us.
At this level, it means stocks are very pricey. Couple that with lower
interest rates. That`s taking a toll on the banks. The regional bank this
week like SunTrust and Zions, they`re getting clobbered, they`re all down 9
percent or 10 percent.
Meanwhile, we`ve seen a number of these defensive interest rate sensitive
sectors hit new highs. So real estate investment trusts, historic high
today. Utilities, historic high today. They tend to do well when rates
Defensive names like Verizon (NYSE:VZ), and Pepsi, Coke, they were doing
well today. But the more volatile names, particularly tech names, so AMD
and Micron, or Netflix (NASDAQ:NFLX), Nvidia, they`re on the downside.
So, the bottom line is this, the bull narrative is sort of running up
against economic reality.
For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock Exchange.
HERERA: So, if the global economy is slowing and interest rates are on
hold, you`re probably on the hunt for field, looking for the best places
that will give you a little bit of income.
Dave Nadig joins us. He`s managing director of ETF.com. He is here with
some ideas. Good to see you, Dave, welcome.
DAVE NADIG, ETF.COM MANAGING DIRECTOR: Thanks for having me.
HERERA: You say the way investors should think about this is yield versus
risk. So we divided your different picks into low risk to high risk.
So let`s start with the first one, which would be low risk. That`s the
Vanguard S&P 500, VOO. Why do you like that?
NADIG: Yes. So, I think a lot of people look to traditional dividend-
paying stocks as a kind of safe haven when you`ve got a low interest rate
environment like this. The S&P 500 pays about a 2 percent dividend right
now. So, for every $1,000 you invest, you`re getting about $20 a year back
in dividend. That`s been a consistent rate of return for many investors.
It`s a good thing to think about when you`re looking at low interest rates,
particularly in the long bond.
GRIFFETH: In our moderate risk category you`ve got the super dividend U.S.
ETF DIV. You`re going to get a better yield but pay for it as well, right?
NADIG: Yes. So where something like VOO, that S&P fund might charge four
basis points or 0.4 percent a year, DIV is in the 48 percent basis range,
about half a percent a year. You`re also getting a much more risky
portfolio. It`s holding small cap stocks, it`s holding midcap stocks and
it`s only holding 40 or 50 stocks at a time.
So it`s a more concentrated portfolio. But what you get, a yield of about
7 percent. That`s a huge uptick just from the regular old S&P 500.
HERERA: And if you want to be even more aggressive and you can sleep at
night, you also picked for the higher risks iShares Mortgage Real Estate,
REM. And that includes like limited partnerships, REITs, malls, things
NADIG: Yes. So real estate has always been a place people go to get
consistent income. It`s a time-honored tradition. You`re going to get
yields of close to 10 percent there. But again, you`re investing in a very
narrow corner of the market.
Similarly, Master Limited Partnerships which tends to own things like
natural gas pipelines, they yield about 10 percent too. But again, you`re
taking much more risk and you`ll be paying more in that half a percent
range for fees.
GRIFFETH: What`s the yield on that, very quick?
NADIG: Right about 10 percent.
HERERA: There you go.
Dave, thanks so much. Dave Nadig with ETF.com.
GRIFFETH: Late today an item in the news that Wall Street will be watching
very carefully, Justice Department special counsel Robert Mueller closed
his Russia investigation into possible interference in the 2016 election
and related matters. The report is now with Attorney General William Barr,
who according to Dow Jones said that he may send Congress a summary of
those findings by this weekend.
The White House says the president has not been briefed on the document.
The investigation took two years. It resulted in felony charges against 34
people, including six who served on Mr. Trump`s campaign.
HERERA: To the economy now, and the housing market. Sales of existing
homes recorded one of their largest monthly gains ever in February.
Diana Olick explains what was behind that jump and whether it can continue.
DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Home buyers came back
in force in February, responding to a sharp drop in mortgage interest
rates. Sales of existing homes jumped nearly 12 percent compared with
January, but we`re still about 2 percent lower annually.
LAWRENCE YUN, NAR CHIEF ECONOMIST: As the mortgage rate began to drop,
there was evidently a strong pent-up demand. People wanted to take a
second-chance opportunity. There are also more choices, more inventory
choices, prices moderating — still good economic fundamentals of job
OLICK: The average rate on the 30-year fixed started last year pretty low,
boosting sales. But as that rate rose, sales weakened. And by November,
when it went over 5 percent, sales collapsed. Then rates began falling
again and buyers reacted.
The supply of homes for sale has also been rising for several months,
although builders are still not putting up enough intro entry-level homes.
And then there are those overheated home prices, still up over 3 percent in
February but gains have been shrinking and sellers are slowly coming down
to earth as their homes sit on the market longer. The question now is, can
this higher sales pace hold on?
YUN: It is sustainable provided the home price growth moderates, and that
is dependent upon increased supply. So, builders need to get active in
building moderately priced homes because there is a sufficient demand for
moderately priced homes.
OLICK: If supply does not increase, home prices could start heating up
again. And even today`s lower mortgage rates would not be enough to
counter those gains.
For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Washington.
HERERA: Te U.S. posted its biggest monthly budget deficit on record last
month. This as stock revenue fell and federal spending for things like
agriculture and transportation programs increased. The budget gap widened
to $234 billion in February, pushing the deficit for the first five months
of the government`s fiscal year up almost 40 percent from a year ago.
GRIFFETH: One day after the Treasury Department imposed new sanctions on
North Korea, President Trump reversed them. The White House press
secretary said today the decision — explained the decision by saying the
president likes Chairman Kim Jong-un and does not think the sanctions are
Yesterday, Treasury targeted two Chinese shipping companies accused of
helping Pyongyang evade existing economic sanctions. This latest policy
directive comes about one month after the second summit between the United
States and North Korea.
HERERA: Taxpayers may be getting some relief. The Treasury Department
today said that it would waive some penalties for those who did not have
enough taxes withheld from their paychecks last year. It will apply to
those who paid at least 80 percent of their liability during the year. As
we reported, many were surprised by their tax bills because they failed to
adjust that withholding amount.
GRIFFETH: And President Trump said today that he plans to nominate
economist Stephen Moore to fill one of the two vacancies on the Federal
Reserve`s board. Moore is currently a visiting fellow at the Heritage
Foundation. He also served as an economic advisor to Mr. Trump during the
2016 presidential campaign. He is a defender of tax cuts and has been
critical of policy moves made by Fed Chair Jerome Powell, just as the
HERERA: Time to take a look at some of today`s “Upgrades and Downgrades”.
Best Buy (NYSE:BBY) was upgraded to outperform from perform at Oppenheimer.
The analyst cites improved sales and earnings power. The price target is
$86. Despite the upgrade, the stock fell a fraction to $70.11.
Chipotle was upgraded to neutral from underperform at Wedbush Securities.
The analyst cites channel checks that suggest a more than 6 percent
increase in same-store sales in the first quarter. The price target is
$640, which is below today`s closing price of $671.46.
GRIFFETH: Lululemon was downgraded to neutral from outperform also at
Wedbush Securities. The analyst cited a tougher economic environment for
retail and the potential for lower margins as a result. Price target now
$155. That stock fell more than 3-1/2 percent today to $143.21.
And Biogen was downgraded by a number of firms today, including Morgan
Stanley (NYSE:MS), which lowered its rating on the stock to underweight
from overweight. The analyst cited the failure of those two Alzheimer`s
drug trials that we told you about yesterday. The price target now $210.
That stock fell more than 4-1/2 percent today to $216.71.
HERERA: Still ahead, GM`s new road map.
(BEGIN VIDEO CLIP)
PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT: GM is boosting
production in North America, adding 700 new jobs. I`m Phil LeBeau in Lake
Orion, Michigan. We`ll have the numbers and why GM is building more in the
U.S. That story coming up on NIGHTLY BUSINESS REPORT.
(END VIDEO CLIP)
HERERA: Pinterest has filed to go public. The company released its IPO
prospectus which shows the tech company generated more than $750 million in
revenue last year, losing about $63 million. It had roughly 265 million
monthly active users and it plans to trade on the New York Stock Exchange
under the ticker symbol PINS.
GRIFFETH: Indonesia`s national airline says it wants to cancel its order
for Boeing (NYSE:BA) 737 MAX jet. It had ordered 49 planes, of which just
one had been delivered. The total order was worth nearly $5 billion. The
airline says that it`s difficult to cancel agreements once they have been
signed, but that it will continue to talk with Boeing (NYSE:BA).
HERERA: General Motors (NYSE:GM) is planning to hire hundreds of workers
and expand production. This after the automaker idled plants in the U.S.
and became a target of President Trump for doing so.
Phil LeBeau reports tonight from Lake Orion, Michigan.
UNIDENTIFIED MALE: Our chairman and CEO, Mary Barra.
LEBEAU: GM`s CEO Mary Barra calls it a major investment, and it is. GM
will spend $1.8 billion, hire 700 workers and build a new electric car here
in the U.S.
MARY BARRA, GM CHAIRMAN & CEO: It`s going to come out in a year or two.
We haven`t released a specific date yet. And there will be a lot more to
follow on the specifics of the product. And today, we`re really focused on
the workforce at Lake Orion.
LEBEAU: Unfortunately for Barra, President Trump continues to focus on
gm`s decision to end production at its plant in Lordstown, Ohio. While
many, but not all of those workers have transferred to jobs at other GM
facilities, the Lordstown plant remains idled.
And that`s what bothers the president, recently tweeting: Just spoke to
Mary Barra, CEO of General Motors (NYSE:GM), about the Lordstown, Ohio,
plant. I am not happy that it is closed when everything else in our
country is booming. I asked her to sell it or do something quickly. She
blamed the UAW union. I don`t care, I just want it open.
BARRA: You`re all focused on that relationship. I mean, he has an agenda,
it`s about job creation. I think — I very much want the company to
continue to grow, to continue to invest in the United States. We are
LEBEAU: Ultimately, GM wants more efficient plants, something it struggled
to do compared to Ford and Fiat Chrysler. That means GM having fewer
plants, being more productive but more profitable. For GM workers at the
Lake Orion plant, today`s news is welcome.
UNIDENTIFIED MALE: That`s exciting. We had some doom and gloom there for
a while, didn`t know what was happening with our plant.
UNIDENTIFIED FEMALE: I think it`s a blessing. You know, I thank God that
we have it. It`s been looking pretty gloom for the automotive companies,
so we need this big time.
LEBEAU: With the UAW contract expiring this fall, GM`s decision to end
production in Lordstown, Ohio, and at other plants in the U.S. is likely to
be a point of contention in those negotiations. And that`s separate from
any tweets the president may send out pushing GM to reopen plants.
Phil LeBeau, NIGHTLY BUSINESS REPORT, Lake Orion, Michigan.
GRIFFETH: Tiffany`s CEO says the future looks bright. And that`s where we
begin tonight`s “Market Focus”.
The luxury jeweler expects growth to resume in the second half of this year
helped by a rebound in its e-commerce business. And that forecast helped
offset slightly disappointing quarterly sales. The company also stuck to
its 2019 revenue and profit targets. Stocks were up 3 percent at the
close. They had been down about 5-1/2 percent at one time, but they
finished today at $103.21.
Elsewhere, sporting goods retailer Hibbett Sports (NASDAQ:HIBB) easily
surpassed Wall Street earnings estimates and issued an upbeat outlook.
Same-store sales were also better than expected. The company cited its e-
commerce strategy and plans to close about 95 brick-and-mortar stores. The
stock soared by 20 percent today to $21.70.
HERERA: Nokia (NYSE:NOK) warns of possible compliance issues. The network
equipment maker revealed it is investigating transactions at Alcatel Lucent
(NYSE:ALU), which Nokia (NYSE:NOK) acquire in 2016. Nokia (NYSE:NOK) says
investigators have been made aware and it`s conducting an internal
investigation. The shares fell 6 percent to $5.88.
Former basketball star Shaquille O`Neal is joining Papa John`s board of
directors. O`Neal is also its brand ambassador and an investor in nine of
its restaurants in Atlanta.
(BEGIN VIDEO CLIP)
SHAQUILLE O`NEAL, INCOMING PAPA JOHN`S BOARD MEMBER: It was a great
opportunity. We want to create a culture there now where people are loved,
welcome and accepted. We don`t want to have any problems.
Listen, pizza is fun. Everyone knows Shaquille O`Neal and they know that
I`m in a fun business. And we want to get this thing back on track.
(END VIDEO CLIP)
HERERA: The appointment comes as the pizza chain attempts to fix its image
after its founder reportedly used a racial slur on a media training call
last year. The stock price was up 6 percent to $49.80.
GRIFFETH: This week`s market monitor likes stocks that he says will
benefit from a slowing economy. Now, last time he was with us was a year
ago in April of 2018. At that time, he liked Amazon (NASDAQ:AMZN), which
is up 22 percent since then. He liked KeyCorp (NYSE:KEY) which is down 24
percent and Microsoft (NASDAQ:MSFT) which is up 25 percent since then.
John Traynor is back with us. He`s chief investment officer with Peoples
John, good to see you again. Welcome back.
JOHN TRAYNOR, PEOPLE`S UNITED ADVISORS CIO: Good to see you. Thank you.
GRIFFETH: And you still like Microsoft (NASDAQ:MSFT). How does that
benefit from a slowing economy?
TRAYNOR: Well, you know, we had what I believe to be a good appreciation
for where the economy was last year. We never bought into, you know, the
permanent 4 percent, 3 percent growth. We thought we`d be slowing.
So, we erred on the side of owning good companies like Microsoft
(NASDAQ:MSFT) that can really take control of their earnings. They don`t
need a strong economy to grow. And that`s the bias we had last year and
we`re actually very happy with that bias in portfolios right now — only
good companies that are growing their earnings because of good, core,
GRIFFETH: And your second pick is Johnson & Johnson (NYSE:JNJ). It is a
strong growth stock you say but it doesn`t necessarily need a strong
economy to continue to succeed because there are people talking about our
TRAYNOR: Exactly. And I was very pleased to see, even though Johnson &
Johnson (NYSE:JNJ) was down today, it was down fractionally. It actually
held up fairly well.
One of the things you want to look for in a market like this are what are
the stocks that really are not going down. That tends to give you a sense
of where things are going. We think investors will really appreciate that
good, strong Johnson and Johnson cash flow, and they`ll be rewarded owning
that stock going forward.
GRIFFETH: And finally, Home Depot (NYSE:HD), clearly, they have done well
as the housing market continues to bump along here. Is this necessarily a
bet on a better housing market?
TRAYNOR: Well, it`s a bet on the fact that we didn`t think interest rates
were going to go through the roof. So you saw rates come down today. That
should be good for mortgage rates. And home depot, you saw the good
housing numbers today. Home Depot (NYSE:HD) is a beneficiary of new
housing starts, but then also individuals that are staying in their home
and the home repair.
So we see them at the crossroads of two very good trends that we see going
forward for a while.
GRIFFETH: All right. We will see what happens. John, again, thanks for
joining us. John Traynor with People`s United Advisers.
TRAYNOR: Thank you.
HERERA: When CEO Dan Schulman spun off PayPal from eBay (NASDAQ:EBAY) four
years ago, he made diversity, inclusion and equal pay a priority.
But as Julia Boorstin reports, his HR team couldn`t tell him if they were
paying fairly across gender and race.
(BEGIN VIDEO CLIP)
DAN SCHULMAN, PAYPAL CEO: I said rate away to that, that`s ridiculous. We
should know right away if we`re paying equally or not. I wanted an outside
study to go and look at this. We want to address this gap, if there is
JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: That first year,
the company found and fixed a $3 million pay gap. Since then, PayPal has
reviewed its 20,000 employees` pay and performance three times a year, with
audits by two outside companies.
Here`s how it works. HR sets a pay range for each job category and
location, looking at demand for certain skills as well as experience. Then
managers evaluate employees` performance across 12 categories, including
communication and collaboration and whether they have hit specific targets.
MJ AUSTIN, PAYPAL TECHNICAL PRODUCT SR. DIR.: I am being as fair as
possible and as equitable as possible by using this very objective
BOORSTIN: But bias still creeps in, so HR works with consultants to
compare pay across the whole company to ensure there`s no gender or racial
LOUISE PENTLAND PAYPAL EVP & BUSINESS AFFAIRS CHIEF: So we don`t leave it
to chance and we don`t leave it to individual managers to pick their
BOORSTIN: Three years after fixing that original $3 million pay gap, the
company found and fixed a pay gap just a tenth that size, roughly $300,000.
Fixing the pay gap was a first step. Now comes the harder part of closing
the gender gap in top-paid management and engineering roles.
SCHULMAN: Equal pay seemed like the easiest thing to address right away,
because if you look at like what percent of women were in leadership roles
or active minorities were in leadership roles, that takes longer to
BOORSTIN: Now the company is focused on hiring and promoting more women
and minorities into those jobs.
SCHULMAN: We`ve spent all this time hiring people. But if you don`t have
processes and thoughts about how welcome somebody feels when they come to a
company, they churn out.
BOORSTIN: PayPal trains employees to be aware of unconscious bias. For
positions at the director level and above, last year the company introduced
a policy to interview at least one diverse candidate. Schulman says these
aren`t just better for employees, they`re also better for shareholders.
SCHULMAN: Companies that are more diverse perform better. I thought if we
were going to be successful and build a great enduring company, we had to
BOORSTIN: Schulman says the advantages of this focus on diversity are not
just bringing in a range of perspectives, but also the ability to attract
For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin.
GRIFFETH: And coming up, why cold, hard cash may never go out of style,
even in our digital world.
GRIFFETH: Here`s what we`re watching for next week.
This is highly anticipated on Monday. Apple (NASDAQ:AAPL) expected to
unveil that new streaming video service and a paid subscription news
Then on Wednesday, as Senate panel holds a hearing on airline safety
following the deadly crashes of those two Boeing (NYSE:BA) 737 MAX
And on Thursday, the final read on economic growth for the fourth quarter
is due, and that`s what we`re watching for next week.
HERERA: And ahead of that Apple (NASDAQ:AAPL) Monday announcement, “The
Wall Street Journal” has reportedly agreed to join Apple`s new paid
subscription news service. But other publishers have opted out joining,
including “The New York Times (NYSE:NYT)” and “The Washington Post
(NYSE:WPO).” “The New York Times (NYSE:NYT)” CEO told Reuters last night
that relying on third-party distribution can be dangerous for publishers
who risk losing control of their own product.
GRIFFETH: Retailers are also going digital with some merchants preferring
to accept mobile payments only, no cash. But lawmakers are saying not so
Frank Holland is in Philadelphia tonight with a look at the digital divide.
FRANK HOLLAND, NIGHTLY BUSINESS REPORT CORRESPONDENT: Philadelphia, the
birth place of the American Revolution, appears to be starting a new
revolution against a cashless economy.
BILL GREENLEE, PHILADELPHIA COUNCILMAN AT LARGE: There`s a certain group
of people just, for example, in Philadelphia that when these few businesses
had gone cashless, they couldn`t go in there. They`re just — that`s not
HOLLAND: Councilman Bill Greenlee pushed for the law that will force most
stores to continue taking cash. Businesses that have gone cashless say it
speeds up transactions and makes bookkeeping more efficient. But Greenlee
says it discriminates against consumers who are unbanked, meaning they
don`t have checking or savings accounts. About 6-1/2 percent of the
households in the U.S. are unbanked according to the FDIC.
Philadelphia is not alone. New Jersey passed a cashless ban this week and
New York City and Washington, D.C., are considering similar laws. Even in
the heart of Silicon Valley, San Francisco lawmakers are proposing an even
stricter cashless ban that would include Amazon (NASDAQ:AMZN) Go stores.
Here at Philadelphia`s Reading Terminal Market, consumers and merchants
have strong feelings about this new law.
SAMANTHA KELLER, PHILADELPHIA MERCHANT: I feel like the cashless stores
are exclusionary, and Philadelphia has a pretty high poverty rate. So I
think it`s good for Philadelphia in particular so that everybody has an
option to shop where they want.
ROGER BASSETT, PHILADELPHIA BUSINESS OWNER: That`s a business decision.
As more and more regulations are put on the small business owner, it`s
harder and harder to operate in the city.
HEIDI ARTURI, PHILADELPHIA CONSUMER: They don`t like running a business in
Philadelphia, move somewhere else.
HOLLAND: Councilman Greenlee says he doesn`t believe this law will hurt
existing business or discourage new companies from coming to Philly.
GREENLEE: I really don`t want to make it sound like it`s an anti-business
thing. I don`t think it is. I think it`s just a pro person, pro consumer.
HOLLAND: Thirty percent of all transactions in the U.S. are made with
cash, 27 percent with debit cards and 21 percent with credit cards. While
a digital future may be inevitable, cash is still king.
For NIGHTLY BUSINESS REPORT, I`m Frank Holland in Philadelphia.
HERERA: And before we go, here`s a look at the final numbers from Wall
Street on this Friday. It was a negative day. The Dow dropped 460 points.
The Nasdaq was down 196. And the S&P 500 fell 54.
And that pushed the stock market lower for the week as a whole.
That will do it for NIGHTLY BUSINESS REPORT tonight. I`m Sue Herera.
Thanks for joining us.
GRIFFETH: I`m Bill Griffeth. Have a great weekend. See you on Monday.
About NBR“Nightly Business Report produced by CNBC” (NBR) is an award-winning and highly-respected nightly business news program that airs on public television. Television’s longest-running evening business news broadcast, “NBR” features in-depth coverage and analysis of the biggest financial news stories of the day and access to some of the world’s top business leaders and policy makers.
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