Transcript: Nightly Business Report- November 30, 2015

NBR-ThumANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Sue Herera.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Combating climate change. Business executives commit billions of dollars to clean energy projects as leaders from across the globe begin two weeks of high-stakes talks.

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Critical week. Why the events of the next few days could say a lot about the direction of the economy.

MATHISEN: And skip the malls. More Americans go online for Black Friday, and that could mean big changes for traditional retail.

All that and more tonight on NIGHTLY BUSINESS REPORT for Monday, November 30th.

Good evening, everyone.

A hundred and fifty world leaders, the largest to ever stand together, are meeting in Paris for historic talks on climate change. The goal — to draw up new plans to reduce carbon emissions. And the outcome could have implications for both U.S. and global business.

At the same time, a coalition of private investors led by Microsoft (NASDAQ:MSFT) co-founder Bill Gates is launching a research initiative that will put billions of dollars into clean energy. Gates’ breakthrough energy coalition is made up of tech CEOs like Facebook’s Mark Zuckerberg, HP’s Meg Whitman, and Alibaba’s Jack Ma, along with investment fund managers, philanthropists and national governments.

Steve Sedgwick reports tonight from the U.N. Conference on Climate Change in Paris.

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STEVE SEDGWICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Here in Paris at the COP21 key climate change talks, there was a very determined mood on Monday as world leaders gathered, 150-plus world leaders gathered in Paris to discuss what has been seen as a make or break set of climate change talks.

There were questions about whether leaders would be in somber mood, in distracted mood after those devastating terrorist attacks on the 13th of November that left 130 people in the city of Paris dead. But actually perhaps they’d come here with a more determined mood, to get a deal because of the aftermath of those attacks.

Very interesting that President Obama, President Xi, President Putin were all here talking about the need to get some form of deal and to find some form of pragmatism. There are very big issues, though, about getting a deal, who will finance a deal, whether the likes of the Indians and other developing nations will be able to wean themselves off coal and other hydrocarbons and adopt a cleaner future as well, verification, and who will pay for this as well. The kind of money we’re talking about, $100 billion a year needed for developing nations from developed nations from 2020 onward.

So, some big questions remaining here in Paris at the cop21 talks. But a lot of people seem very optimistic at this early stage of getting a deal.

This is Steve Sedgwick for NIGHTLY BUSINESS REPORT in Paris.

(END VIDEOTAPE)

HERERA: And with Bill Gates and a number of tech CEOs pledging to take on climate change, what role does the private sector play?

John Harwood has been following the story for us from Washington.

And, John, it’s kind of an intersection of the private sector and the government.

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT: Absolutely, it is. And there are a couple of different tracks that they’re moving on. One is the U.S. government is agreeing to double its research into clean energy from $5 billion a year to $10 billion a year. And it is encouraging other nations to agree to do the same. They’re looking for a total global investment of $20 billion a year.

At the same time, private businesses are committing to reduce their own energy use and look for ways to use alternative energy, emit less carbon. Now, parallel to that, you’ve got this effort led by Bill Gates, Mark Zuckerberg, Kleiner Perkins, the investment firm out in California to try to put private capital into applications of clean energy research.

You know, the government does basic research. But how you can apply that and turn it into scalable business models is what they’re looking for from the private sector and the administration’s hoping that the momentum internationally with the private sector and with investors is going to produce the results they’re seeking.

MATHISEN: We have a dozen, scores of international leaders on the scene, but usually what happens is they’re there for show but the real dough gets delivered later on when the talks go back behind the curtain.

What can we expect to happen and who is going to bear the brunt of whatever reductions in carbon emissions might be called for coming out of these talks?

HARWOOD: Well, certainly the traditional fossil fuels industries, oil and the coal industry, are going to be the most adversely affected by this shift to alternative energy. And that’s reflected in our political debate here and the lobbying by affected interests. But what they’re — the hope is that once they catalyze the kind of investment and alternative technological innovations that would speed the use of clean energy, they can — that would create a virtuous cycle of companies having an interest in switching to cleaner-burning fuel that will also be less expensive and financially competitive.

What we’ve seen over time is we have gotten some advantage from natural gas, which is cleaner than coal and which has been injected in a major way to the U.S. energy supply. But you’ve also seen technologies like solar and wind become more financially competitive. This is a more hopeful atmosphere at these Paris talks than we’ve seen in the past.

I was there in 2009 in Copenhagen where they failed to get a global deal. The real breakthrough was when the U.S. and China came to an agreement, and once those two economic world powers joined together, that sent a signal you may be able to knit together the interests of companies at all different stages of economic development.

HERERA: All right, John, thank you so much. John Harwood in Washington.

MATHISEN: Well, the head of the world’s second largest economy, China’s President Xi Jinping, was also in attendance at the climate conference, and today, the International Monetary Fund underscored that country’s growing role in the global economy. The agency gave China’s yuan the elite status of reserve currency.

Sara Eisen explains what that means and why it is such an important step.

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SARA EISEN, NIGHTLY BUSINESS REPORT CORRESPONDENT: China’s currency is now officially on the world stage. IMF Chief Christine Lagarde saying China’s currency, the yuan, or renminbi, will be added to the FCR, its basket of reserve currencies, next October, handing the world’s second largest economy a major vote of confidence and acknowledging its growing power and influence.

The IMF reserve isn’t a currency itself and doesn’t serve any practical purpose but it is used in lending to crisis-ridden countries and can be exchanged for the currencies that make up its basket. That’s why this is more of a symbolic move. There be any near-term economic or financial impact but it is a nod to the many reforms China’s made to open its markets and its economy. So the IMF did acknowledge there’s a lot more work to be done there.

Here’s how the new lending reserve will look. The dollar is still king, making up 42 percent of IMF reserves, 31 percent is the euro, about 11 percent will now be the Chinese yuan. And the Japanese yen and British pound will make up about 8 percent each.

Basically, China’s taking the number three spot in terms of the world’s most important currencies. The political reaction here could be key. China will celebrate and the U.S. is a voting member in the IMF, so the administration is officially on board.

But China and its currency tend to be a political punching bag on U.S. presidential campaign trails. So watch for some backlash.

For NIGHTLY BUSINESS REPORT, I’m Sara Eisen.

(END VIDEOTAPE)

HERERA: Stocks closed lower on this last trading day of the month. Retail stocks weighed on the major averages as brick and mortar stores faced some difficulties during the thanksgiving shopping weekend. We’ll have more on that shortly.

Here’s the roundup for you. The Dow Jones industrial average fell 78 points to close at 17,719. The NASDAQ closed 18 points lower, and the S&P 500 slipped 9. The major averages posted their second straight month of gains for the first time since May.

MATHISEN: To the economy now. A report on manufacturing and overall business activity in the Chicago area. It fell in November. The Chicago PMI barometer dropped into contraction territory for the sixth time this year. New orders fell to their lowest level since March, pressured by weak oil prices and a stronger dollar.

HERERA: Pending home sales or contracts to buy existing homes rose just 0.2 percent in October. High prices and low inventory kept potential home buyers on the fence last month. According to the National Association of Realtors, pending home sales rose the most in the northeast and saw gains of 1.7 percent in the west. In the Midwest and the south, those pending sales fell.

MATHISEN: Today kicked off a very eventful week for economic news and comment. Mid-week, Fed Chair Janet Yellen testifies on Capitol Hill. The European Central Bank meets Thursday and could decide to pump more juice into the euro zone. And on Friday, the November employment report will be released by the Labor Department.

Steve Liesman reports on the big week ahead for the economy.

(BEGIN VIDEOTAPE)

STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Here’s the good news. By the end of this week, which teems with Fed speeches and critical economic data, we should have a very solid idea about whether the Central Bank will hike rates later this month. The bad news — it’s only Monday.

Tomorrow, we’ll hear from Fed Governor Lael Brainard whose dovish speech in October argued against prematurely hiking interest rates. The question is whether she remains more dovish than the rest of the committee who appear ready to support a December rate hike. That same day a much followed survey should show the manufacturing sector just barely growing in November while auto sales remain strong, on an 18 million annual sales pace.

Wednesday brings the private payroll company ADP’s estimate of what the Friday jobs report should look like. The Fed will release its so-called “Beige Book”, the collection of economic anecdotes are from around the country. The highlight of the day will be Fed Chair Janet Yellen’s speech offering her economic outlook, where she could make clear the Fed is ready to act later this month.

JOSEPH TANIOUS, BESSEMER TRUST PRINCIPAL & INVESTMENT STRATEGIST: This has been the most anticipated Fed rate hike in history, and to some extent, I think investors around the world are just wanting the Fed to just rip off the band-aid. And you may very well get some type of relief rally after that.

LIESMAN: Yellen testifies on Thursday in front of the Joint Economic Committee and Fed Vice Chair Stanley Fischer will offer his thoughts on financial stability.

The big event of the day happens in the morning. The European Central Bank will make its monetary policy decision. There’s strong expectations in the market for some further easing.

Cue the trumpets for Friday and the November jobs report. Wall Street economists are looking for the unemployment rate to come in unchanged at 5 percent but for strong job growth of 205,000. It’s the most important piece of data for the Fed’s decision, and many economists think only a very weak report, below 125,000 or 150,000 could derail that quarter-point rate hike. So, it’s a great week if you’re a data geek or a Fed head — which is to say I’m plenty excited.

For NIGHTLY BUSINESS REPORT, I’m Steve Liesman.

(END VIDEOTAPE)

HERERA: Well, speaking of the Federal Reserve, today, the Fed Reserve board approved a rule that would end emergency loans to failing companies. Any future lending in emergency situations will address larger market problems and not specific banks. The change was demanded by Congress after the Central Bank bailed out AIG, Citigroup (NYSE:C), and others.

MATHISEN: Still ahead, clicks versus bricks. As more people shop online, what will happen to all those malls? What does the future of retail look like?

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MATHISEN: Sales numbers from the weekend are starting to come in and so far, one thing is very clear — more people are shopping online.

MasterCard (NYSE:MA) says Internet sales grew double digits and above the forecast. Shoppertrak says consumers spent about a billion less in brick and mortar stores this Black Friday than just a year ago. And the National Retail Federation says 103 million people had or had planned to shop online this weekend and that was more than the number who shopped in stores. Those reports sent a number of traditional retailers lower today.

HERERA: With online sales strong heading into what’s become known as Cyber Monday, Amazon (NASDAQ:AMZN), a leading Internet retailer, is making sure the company is ready.

Courtney Reagan reports from its fulfillment center in Robbinsville, New Jersey.

(BEGIN VIDEOTAPE)

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: In years past, Cyber Monday was the day the online retailers offered web busters to draw shopper excitement like store retailers do on Black Friday. But in today’s retail world, shopping event days like Black Friday and Cyber Monday have become blurry, with many retailers offering Black Friday-like discounts in the days and weeks before Thanksgiving.

Plus, consumers no longer need to wait to get back to work for high-speed Internet connection.

GERALD STORCH, HUDSON’S BAY CEO: What we’re seeing is that Black Friday is becoming more cyber. Meanwhile, Cyber Monday is becoming more physical. As we look at Cyber Monday, most retailers including us at Saks (NYSE:SKS) on 5th or Lord & Taylor, we ran ads in the newspaper, physical ads, saying come to our stores and get Cyber Monday deals or go to online, of course.

REAGAN: The National Retail Federation says retailers have been successful when it comes to pulling holiday sales forward, which may have accounted for a muted Black Friday weekend. A record number of consumers began their holiday shopping before November 10th.

Still, the group estimates 121 million people will shop online today. Though that’s down slightly from last Cyber Monday and below the 151 million Americans who shopped in store, online, or both over the Thanksgiving weekend.

Amazon (NASDAQ:AMZN) is counting on fulfillment centers like this one to be busy today. The online behemoth says total units sold for Black Friday surpassed last year and while last Cyber Monday was its peak shopping day of the year with 43 million units shipped worldwide, Amazon (NASDAQ:AMZN) says it can beat it this year.

DAVE CLARK, AMAZON SVP WORLDWIDE OPERATIONS: For us, it continues to be a season of deals and Black Friday and Cyber Monday are the two park peak day of that season of deals. And Cyber Monday still is our record day of the year.

REAGAN: And while final holiday sales numbers won’t be known for some time, IBM’s early online sales data shows record growth over last year, making Amazon’s goal of booking yet another record more than just a possibility.

For NIGHTLY BUSINESS REPORT, I’m Courtney Reagan in Robbinsville, New Jersey.

(END VIDEOTAPE)

MATHISEN: So what does the strong pickup in online shopping mean for the future of traditional retailers and mall operators?

Jan Kniffen is CEO of J. Rogers (NYSE:ROG) Kniffen Worldwide Enterprises and he joins us now.

Jan, always great to see you.

You know, as I look around my parts of the country it seems I think of two things. We’ve got too many stores. And if more and more people are shopping online, what is going to happen to the big malls and big mall operators? How many more malls do we have than we need?

JAN KNIFFEN, J. ROGERS KNIFFEN WORLDWIDE ENTERPRISES CEO: A lot. You know, we have about 1,100 enclosed malls in the United States and I assume we need somewhere between 550 and 700 of them depending on how well they can adapt to this new world. And that new world basically means people are coming there for experiential events, not necessarily to shop.

A mall operator said to me just the other day, you know, they used to come here to shop and then they’d get something to eat. Now they come here to eat and then they do a little shopping. And I think that’s a big change in the consumers’ attitude. We’re seeing especially the millennial consumer really more concerned about going out to eat with their friends than they are about buying apparel or other kinds of products.

So, it’s just a big change in the mindset and that’s probably not going to change given the ability to buy whatever it is you do need online to get it delivered to your house and to be able to get the very best price because pricing’s so transparent on the Internet.

HERERA: It certainly is.

You also point out the fact that Amazon (NASDAQ:AMZN) seems to be firing on all cylinders. Courtney Reagan just did her report for us. But you liken Amazon (NASDAQ:AMZN) to some of the other retailers that you like at this point.

What is it that Amazon (NASDAQ:AMZN) is doing so effectively that is addressing some of these issues that you just raised with the millennials, with the experience of shopping?

KNIFFEN: Well, I compare Amazon (NASDAQ:AMZN) to Walmart all the time, and I basically say when Walmart was 20 years old, they had about a 3 percent market share in retailing and they were getting half of the growth in retailing. Well, Amazon’s about 20 years old and they’re getting about a 3 percent market share of total retail but they’re getting about half of the growth.

So they look a lot like Walmart looked in 1985. I believe that’s mostly driven by price and having one of the best Web sites in the world that is very sticky especially once you’ve signed up for Amazon (NASDAQ:AMZN) prime.

So, it’s not that I think the experience on Amazon (NASDAQ:AMZN) is so great. I think what people go to Amazon (NASDAQ:AMZN) for is complete wide choice. They’ve got everything you might want. And they’ll give you the best price.

They go other places for the experiences. And I think that’s what the mall operators are going to have to capitalize on, those that are left.

You know, there’s 300 great malls in America. There’s 100 a-plus malls. There’s 50 fabulous malls. And there’s 10 that just knock your socks off.

One, for instance, would be Garden State Plaza in New Jersey. One would be Roosevelt Field on Long Island. One would be King of Prussia in Philadelphia. Those are the kind of malls I’m talking about that can knock your socks off, continue to afford to — continue to be able to afford to expend money on them and build experiential parts of the mall that you can go do something besides just shop.

MATHISEN: All right Jan, thanks. Always great to see you. Jan Kniffen with J. Rogers (NYSE:ROG) Kniffen Worldwide Enterprises.

HERERA: VTech, the maker of children’s gadgets, says 5 million accounts were impacted by a data breach. The data that was breached contains names, e-mails, passwords, and also included information on kids including birth dates. The company says, though, the data base did not have credit card information or social security numbers.

MATHISEN: And, Sue, ITC surges on reports of a potential sale and that is where we begin tonight’s “Market Focus”.

The electricity transmission company is looking into selling itself, according to Bloomberg. The firm is reportedly working with advisers. Shares rose more than 9 percent. They finished at $36.88.

Regulators reportedly preparing to block the planned merger between Staples (NASDAQ:SPLS) and Office Depot (NYSE:ODP). According to “The New York Post,” the Federal Trade Commission may delay its decision on the deal once again because it is seeking more concessions from Staples (NASDAQ:SPLS). Staples (NASDAQ:SPLS) down nearly 2 percent today to $12.07. Office Depot (NYSE:ODP) 2 percent lower at $6.59.

And the Brazilian mining company Vale said toxic materials were found in river water after a dam burst at a mine it co-owns with BHP Billiton (NYSE:BHP). The Brazilian government says it will plan a multimillion-dollar lawsuit against those companies. BHP off 1 percent to $26.68. Vale off more than 5 1/2 percent to $3.37.

HERERA: Ford will book a $600 million charge in the fourth quarter because of signing bonuses paid to union workers under its new contract. Still, the automaker says the deal limits labor cost increases to 1.5 percent. Shares were off by more than 1 percent to $14.33.

Morgan Stanley (NYSE:MS) announcing that it will cut up to 25 percent of its fixed income jobs. That’s according to a report from Bloomberg. The cuts will be across all regions and will come in the next few weeks. Shares rose 1 1/2 percent to $34.30.

And a mattress merger to tell you about. Mattress Firm is buying the owner of Sleepys, which is privately held, in a deal worth about $780 million. The combination will give Mattress Firm over 1,000 stores. Shares rose initially after the close. During the regular session, the stock was off almost 3 percent to $49.36.

Coming up: a lawsuit, an aging media mogul, and the future of two storied companies, CBS (NYSE:CBS) and Viacom (NYSE:VIA).

(MUSIC)

MATHISEN: A lawsuit against Sumner Redstone is raising questions about the future of his media empire. He’s the controlling shareholder of both CBS (NYSE:CBS) and Viacom (NYSE:VIA).

As we reported last week, a former girlfriend has filed a lawsuit challenging his mental competence, saying the 92-year-old can no longer make decisions for himself.

Julia Boorstin has more on what’s at stake for the media companies Redstone controls.

(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Sumner Redstone’s ex Manuela Herzer alleges he’s incompetent. If her suit is found to have merit, that could open up Viacom (NYSE:VIA) and CBS (NYSE:CBS) to lawsuits for failing to disclose material information. And with Viacom (NYSE:VIA) shares down 34 percent in the past year, it’s under the microscope.

BARTON CROCKETT, FBR CAPITAL ANALYST: Anytime you’re sitting with losses on a stock leek we’ve seen with Viacom (NYSE:VIA) over the past year, there’s a lot of room for people to be angry, for people to be litigious.

BOORSTIN: Herzer alleges Redstone is unable to speak other than brief grunts and responses and is fixated on having sex and eating steak, despite doctors telling him not to.

Redstone’s attorney rejects her claims as riddled with lies, submitting a response to the filing that quotes Viacom (NYSE:VIA) Philippe Dauman, calling Redstone engaged and attentive.

Now there are questions of what happens if Herzer’s suit is found to have merit. Not only is Redstone chairman of Viacom (NYSE:VIA) and CBS (NYSE:CBS), he controls both companies through national amusements. He owns 80 percent of the holding company, which owns 79.6 percent of both CBS (NYSE:CBS) and Viacom’s voting shares.

If Redstone steps aside or passes away, seven trustees will take control of his shares. His daughter Shari, her son Tyler, Dauman, along with a CBS (NYSE:CBS) director, and three long-time lawyers for the family are trustees.

And analysts say without Redstone at the helm, those two media giants’ assets, Viacom (NYSE:VIA) in particular, could be up for grabs.

ANTHONY DICLEMENTE, NOMURA ANALYST: Previously, we had a situation where Sumner wouldn’t sell or wouldn’t be able to engage, and now, you might have somebody like a Liberty or like a Time Warner (NYSE:TWX) go in and try to start to engage for these assets.

CROCKETT: There’s a lot of people who are in the network business that would look at what Viacom (NYSE:VIA) has and think that they could program it better and operate it more profitably.

BOORSTIN: At Viacom (NYSE:VIA), we could see a battle for the chairman role between Dauman and Redstone’s daughter Shari. At CBS (NYSE:CBS), we expect CEO Les Moonves to take on the role of chairman.

For NIGHTLY BUSINESS REPORT, I’m Julia Boorstin in Los Angeles.

(END VIDEOTAPE)

MATHISEN: And late today, a judge called the legal complaint not urgent and scheduled a January hearing.

HERERA: And finally tonight, here’s a festive way to track inflation. PNC Wealth Management released its annual Christmas price index, which calculates how much it would cost to buy the gifts in the Christmas Carol “The 12 Days of Christmas.”

So, here are the items that are more expensive than last year. A partridge in a pear tree costs about $215. That’s a 3 1/2 percent increase. Two turtle doves, $290, a nearly 12 percent price hike. Ten lords a-leaping costs just over 5,500 bucks, an increase of 3 percent. And the total of all gifts comes in at $34,130.99. The most expensive item, seven swans a swimming total cost $13,125, unchanged from last year, but I’m not getting you seven swans.

MATHISEN: Go on Amazon (NASDAQ:AMZN), buy it. All righty.

HERERA: That’s it for NIGHTLY BUSINESS REPORT, I’m Sue Herera.

We want to remind you, this is the time of year your public television station seeks your support.

MATHISEN: I’m Tyler Mathisen and we thank you for your support. We’ll see you back here tomorrow.

END

Nightly Business Report transcripts and video are available on-line post broadcast at http://nbr.com. The program is transcribed by CQRC Transcriptions, LLC. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Nightly Business Report, or CNBC, Inc. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c) 2015 CNBC, Inc.

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