Transcript: Nightly Business Report – July 21, 2016

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

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR:  It`s over.  The Dow`s
longest win streak in years has come to an end, and late-day earnings from
Visa (NYSE:V) could set the tone for tomorrow.

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR:  Mega-mergers blocked.  The
Justice Department says two big health insurance combinations would not
only increase costs but also threaten care.

MATHISEN:  Home sweet home.  Sales hit their highest pace in nine years and
one type of buyer in particular is showing up in force.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Thursday,
July 21st.

HERERA:  Good evening, everyone, and welcome.

A pause in the rally.  The Dow`s win streak, its longest in more than three
years, is over.  The blue chip index had climbed for nine straight
sessions; seven of them were record closes.  That was its longest winning
streak in some time.

But earnings came in mixed, and the European Central Bank`s decision not to
add stimulus to that region`s economy weighed on sentiment and pressured
stocks.  The Dow Jones Industrial Average lost 77 points to 18,517.  The
NASDAQ was off 16.  The S&P 500 fell 7.

MATHISEN:  Dow component Visa (NYSE:V) could set the tone for tomorrow.  The world`s
largest payments network operator reported a steep drop in quarterly profit
and added $5 billion to its stock buyback plan.

Visa (NYSE:V) did earn 69 cents a share.  That was three cents better than
estimates, but if you include charges related to an acquisition, profits
were actually 76 percent lower than a year ago.  Revenue at 3.6 billion,
slightly below expectations.

Shares volatile in after-hours trade, but the big news from the company
today wasn`t found in its quarterly results but rather in a partnership
with PayPal.

Kayla Tausche has more.

(BEGIN VIDEOTAPE)

KAYLA TAUSCHE, NIGHTLY BUSINESS REPORT CORRESPONDENT:  PayPal and Visa (NYSE:V) are
familiar foes in the payment industry, but today with a new deal, the two
companies became frenemies.  A new strategic partnership allows Visa (NYSE:V) to
capture more business from PayPal customers.  PayPal saying it will no
longer steer Visa (NYSE:V) customers toward using a bank account and instead will
try to encourage them to use Visa (NYSE:V), debit and credit card accounts.

But there`s something in it for PayPal, too.  They will get a cut of all
the volume they send Visa (NYSE:V)`s way.  But they also get access to millions of
points of sale for Visa (NYSE:V) contact list payments at brick and mortar
merchants.  That`s something PayPal has wanted for a long time.  Visa (NYSE:V)
customers also get the ability to move money through PayPal accounts from
their Visa (NYSE:V) accounts instantaneously.

For now, it looks like two companies that couldn`t agree much have come
together to make a deal that will hopefully be mutually beneficial.

For NIGHTLY BUSINESS REPORT, I`m Kayla Tausche in New York.

(END VIDEOTAPE)

MATHISEN:  Another Dow component Travelers saw quarterly profits fall to
their lowest level since 2012.  The property, casualty insurer said
catastrophes like the Fort McMurray wildfire in Alberta rose while income
from investments fell.  Higher catastrophe claim costs are expected to hurt
earnings across the industry.  Shares of the Dow component fell
fractionally in today`s session.

HERERA:  And now to a former Dow component, General Motors (NYSE:GM).  Shares of the
automaker accelerated after the automaker posted much better than expected
earnings for the second quarter.  The stock rose more than 1.5 percent, and
is now trading right around its IPO price.  The company is also raising its
earnings guidance for the rest of the year.

And as Phil LeBeau reports, it`s all because of trucks, SUVs and the
American consumer.

(BEGIN VIDEOTAPE)

PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Talk about zooming
profits.  GM set 19 financial records last quarter.  Many due to strong
sales in the U.S. where demand for new pickups and SUVs is not slowing
down.  Not only that, people are paying more for the models they are buying
at Chevy, Buick, GMC and Cadillac dealerships, personally because they are
asking for features to keep them connected behind the wheel, but also
because certain models, like GM`s mid-sized pickup trucks, are connecting
with buyers right now.

But GM is also profiting because of its decision to cut back on less
profitable fleet sales, vehicles that are sold as a lower price to rental
car companies, government agencies and corporations.  It`s a move that has
lowered GM`s dominance in market share, but GM would rather sell fewer
vehicles at a higher profit.  After six straight years of rising sales,
analysts worried consumers are running out of gas, but GM`s CFO doesn`t see
that happening.

CHUCK STEVENS, GENERAL MOTORS CFO:  We still expect to see strong industry
performance in the U.S. for the foreseeable future.  Clearly, the results
in June were a little bit less than what we expected, but the fundamentals
are there for continued strong performance, and that`s our baseline
assumption for the rest of the year.

LEBEAU:  Stevens did tell analysts that General Motors (NYSE:GM) is bracing for sales
in Europe to slow down, and that market adjusts to life after Brexit.  If
that happens, General Motors (NYSE:GM) could see a slight loss in Europe over the
next couple of quarters.

Phil LeBeau, NIGHTLY BUSINESS REPORT, Chicago.

(END VIDEOTAPE)

MATHISEN:  Now to more on today`s decision by the European Central Bank to
leave interest rates unchanged.  Well, that was mostly expected.  President
Mario Draghi also stopped short of pledging fresh stimulus in the future.

Julia Chatterley has more now from Frankfurt.

(BEGIN VIDEOTAPE)

JULIA CHATTERLEY, NIGHTLY BUSINESS REPORT CORRESPONDENT:  The assurance
provided by Mario Draghi, the head of the European Central Bank, today, but
not a lot else.  Standing pat on any future policy as far as the reaction
of the markets and the impact of the Brexit vote, he said we`re in the
dark.  We don`t know and we`ve got to wait for the data to feed through so
that`s a case of hanging on in there until September when they update their
forecasts.

In terms of some of the concerns about the bank running out of options to
buy the sovereign bonds of the likes of Germany in particular, the banks
said they didn`t even discuss what the options are in order to address
that, so despite analyst concerns out there, the ECB here are say, look,
we`re just not that concerned at this moment.

Then, on the banks he was quite interesting.  He made a point of suggesting
that for all the risks and the concerns that we saw in banking stocks in
the aftermath of the Brexit vote, he said the banks are in a far stronger
position today than they were even as back as far as 2012.

MARIO DRAGHI, ECB PRESIDENT:  I`m pretty confident that a strong
supervision and the robust regulation and better communication indeed by
the supervisory authorities, the EBAs and all this will still improve the
situation and the perception in — in the rest of the world`s eyes.

CHATTERLEY:  An interesting response from Mario Draghi there.  On the one,
he was supporting the banks and saying they are in a better condition.  But
on the other hand, he admitted to me, look, he doesn`t also want to
downplay the risks at this stage.  On that, we`ve got stress test results
coming out at the back end of next week, so that`s what you have to watch.

But as far as policy is concerned, guys, have you to pack your bags, go on
summer holidays and I`ll see you back here in September.

For NIGHTLY BUSINESS REPORT, I`m Julia Chatterley in Frankfurt.

(END VIDEOTAPE)

HERERA:  Thank you, Julia.

The number of Americans filing for first-time unemployment benefits fell
last week.  According to the Labor Department, jobless claims dropped by
1,000 to a seasonally adjusted 253,000.  The number has been below the
300,000 mark for the past 72 weeks.  That`s the longest such streak since
1973.

MATHISEN:  Home sales moved a little bit higher in June and hit the highest
pace in about nine years.  The National Association of Realtors says
existing home sales rose 1.1 percent last month.  A lack of supply is
keeping sales from being even stronger, but there is a bright side.

As Diana Olick reports, first time home buyers may finally be coming back
to the market.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Thirty-two-year-old
Jorge Alborta already owns a trendy restaurant in Arlington, Virginia, but
only recently could he afford to become a homeowner.

JORGE ALBORTA, FIRST-TIME HOME BUYER:  It was a little bit too pricey.  So
I thought I would look in different places, also in D.C., and it was a very
long process.

OLICK:  But Alborta came to the U.S. from Bolivia 12 years ago was willing
to put in the time.  He managed to find a townhouse in D.C. and qualified
for some assistance.

ALBORTA:  I always wanted to, you know, purchase a home and live the
American dream.

OLICK:  That dream is moving further out of reach for some.  The median
price of a home sold in June was nearly 5 percent higher than a year ago,
according to the National Association of Realtors.  That`s because supply
is down from a year ago and has been heading down now for over a year.
Tight supply means more competition.

WILL HIRZY, REDFIN AGENT:  In May, we saw the average stays on market in
D.C. at 12 days.  So, less than two weeks, things are moving pretty
quickly.

OLICK:  And nationally in June, days on market fell to the lowest in seven
years, according to Redfin.  Nearly one-quarter of homes sold in just two
weeks.

To meet the demand, builders are finally starting to put up cheaper homes
again, but buyers have to pay a higher price in terms of convenience.

BRAD HUNTER, HOME ADVISOR CHIEF ECONOMIST:  Builders are willing to go
farther out now than they were before, farther from the Urban Core, into
the more remote suburban areas and get lots and develop them, and then they
can offer homes in these affordable price ranges.

OLICK:  But millennial buyers seem to like the city life, waiting longer to
get married, have children and consider the suburbs.  For Alborta, there
would simply no appetite to leave town.

For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Washington.

(END VIDEOTAPE)

HERERA:  Still ahead, high stakes.  Why tonight`s speech by Donald Trump
may be the most important and most scrutinized in his entire career.

(MUSIC)

HERERA:  The Justice Department is taking a hard stance against two health
insurance mega-mergers.  Regulators are suing to block Anthem`s proposed
purchase of Cigna and Aetna (NYSE:AET)`s merger with Humana (NYSE:HUM).  Regulators say the
merger would harm competition.  We`ve been reporting that such a move was
likely, and today it became official.

And Bertha Coombs has the details.

(BEGIN VIDEOTAPE)

BERTHA COOMBS, NIGHTLY BUSINESS REPORT CORRESPONDENT:  The Justice
Department says when the nation`s five largest health insurers compete,
consumers benefit.  But Aetna (NYSE:AET)`s $37 billion deal to acquire Humana (NYSE:HUM) and
Anthem`s $54 billion deal for Cigna would reshape the health care landscape
for the worst.

LORETTA LYNCH, ATTORNEY GENERAL:  They would leave much of the multi-
trillion dollar health insurance industry in the hands of just three
mammoth insurance companies, drastically constricting competition.

COOMBS:  The DOJ`s antitrust chief praised the insurers even as he argued
the deals must be blocked, saying Aetna (NYSE:AET) and Humana (NYSE:HUM)`s competition of helped
rein in costs in the Medicare advantage market, as have Anthem and Cigna in
the large employer market.

BILL BAER, DEP. ASSOC. ATTORNEY GENERAL:  There is quality competition
going on, innovation going on.  You reduce the number of players in any
market from Medicare Advantage, for national employers looking for coverage
for their employees.  You run the risk that that innovation will be
stopped.  You run the risk that insurance premiums will go up.

COOMBS:  Aetna (NYSE:AET) and Humana (NYSE:HUM) vow to fight the DOJ`s lawsuit.  Aetna (NYSE:AET)`s chief
say they have secured strong insurers to buy plans in Medicare markets
where they overlap, and he contends working together, they will continue to
innovate for seniors.

MARK BERTOLINI, AETNA CEO:  Both of our plans have the second and third
highest star ratings in the United States because we`ve invested in the
quality of network we`ve put together for them, the quality of service and
seniors like our products.  We think we can do more of that.  So, we`re
willing to take this all the way to the very end.

COOMBS:  But it won`t be easy.  It has been 12 years since the DOJ has lost
an antitrust case in court.  Still, Anthem and Cigna also say they`ll
fight, calling the DOJ`s decision to block their merger misguided.  They
also argue together they can push for lower prices from increasingly large
hospitals and physician groups, but regulators worry consumers won`t see
the savings.

LYNCH:  Mergers may indeed increase the profits of Aetna (NYSE:AET) and Anthem, but
they would do so at the expense of consumers, employers and health
professionals across the country.

COOMBS:  Well, both Aetna (NYSE:AET) and Anthem say they will continue to pursue
settlement with the DOJ, officials here say right now the only way they see
these cases being settled is in court.

For NIGHTLY BUSINESS REPORT, I`m Bertha Coombs, Washington.

(END VIDEOTAPE)

MATHISEN:  To Cleveland now where Republican presidential nominee Donald
Trump will officially accept his party`s nomination for president tonight.
Trump will speak directly to the American people and make the case for why
he should be elected 45th president.

John Harwood joins us this evening from Cleveland.

John, welcome.  What is Trump`s job one tonight?

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Look, the speech he`s
giving tonight, Tyler, is on a whole different level from the exposure he`s
had on television before.  This is when a huge swath of the general
election electorate is going to be watching him and thinking about him as a
potential president.  So, job one is to come across to the American people
as someone that they can see behind the desk in the Oval Office, that they
can see as commander in chief.  Donald Trump hasn`t always looked that way
in his campaign, but he`s got a chance to do that tonight.

HERERA:  Ivanka Trump, his daughter, an accomplished businesswoman, both
with her own fashion line, but also within the Trump organization, is going
to be speaking before him and introducing her father.

What do we know about what she might say to humanize her father or put
forward some of those presidential qualities?

HARWOOD:  Well, I think like Donald Trump Jr. and Eric Trump before her,
she is a very poised young woman, somebody who will reflect well on her
father simply by delivering a good speech.

But in addition to that, she can give some texture and background about him
as a father, as a grandfather, as somebody who she has seen in all sorts of
situations different from what anyone in the public has seen.  That unique
testimony that they could give about their father could be very valuable if
she pulls it off.

MATHISEN:  John, an interesting night ahead.  It will have to go offer
peace (ph) to be more interesting than last night.

John Harwood —

HARWOOD:  That`s right.

MATHISEN:  John Harwood in Cleveland, thanks again.

HERERA:  Sales growth disappointed Starbucks (NASDAQ:SBUX) and that`s where we begin
tonight`s “Market Focus”.

The coffee chainsaw same-store sales rise 4 percent but analysts were
looking for a 6 percent gain.  Overall, revenue for the quarter also missed
estimates but profits were in line.  Shares initially fell in extended
hours following the report, but ended the regular session up six cents to
$57.60.

Chipotle returned to profitability in its latest quarter, but the results
still weren`t good enough.  Both profit and revenue came in shy of
expectations and burrito chain`s same-store sales fell 23 percent as the
company continues to try to recover after last year`s health scare.
Chipotle initially fell a bit after the earnings, while ending the day down
a fraction to $418.07.

Sales of AT&T (NYSE:T) rose in its latest quarter, thanks in part to the
telecommunications company`s merger with satellite TV provider DirecTV.
But despite that increase, results weren`t good enough to top revenue
targets.  The company also reported product in line with estimates and
reaffirmed its outlook for the year.  Shares of AT&T (NYSE:T) initially fell into
the extended session but finished the day down a fraction to $42.52.

MATHISEN:  Shares of Southwest Airlines (NYSE:LUV) fell their most in seven years.
Lower fuel costs helped drive profit higher, but that wasn`t enough to hit
targets and revenue was also shy of forecasts.  That news sent shares down
11 percent to 37.32.

Biogen topped profit and revenue forecasts, thanks to strong performance in
its multiple sclerosis and hemophilia business.  The biotech company also
announced a $5 billion share buyback program and raised its guidance.
Biogen also said its CEO would step down in the next few months.  Shares up
7 percent on the news to $282.45.

Profit fell nearly 20 percent at Union Pacific (NYSE:UNP) as weak demand for consumer
goods hit results but earnings still managed to match Wall Street targets.
Revenue at railroad operator didn`t fare as well, missing the mark.  The
company`s CEO said there are still challenges out there.

(BEGIN VIDEO CLIP)

LANCE FRITZ, UNION PACIFIC CHAIRMAN & CEO:  We`re still facing some of the
very same headwinds we`ve faced in last four or five quarters, natural gas
pricing, replacing coal for a source of electricity, a strong U.S. dollar,
getting in the way of exports, shale energy-related activity being pretty
depressed.  But we are seeing sequential improvement, and that`s
encouraging.

(END VIDEO CLIP)

MATHISEN:  Shares fell 3 percent to $90.93.

Domino`s hit a new high after the pizza chain posted results that topped
expectations.  The beat was largely attributed to robust store expansion
and a surge in revenue from the company`s supply chain business.  Domino`s
shares up more than 5.5 percent to $144.66.

HERERA:  FOX News chief Roger Ailes has resigned.  He stepped down today in
the wake of a sexual harassment scandal.  He denies the charges.  Ailes
built one of the most influential, profitable brands in news.  One
responsible for about a fifth of parent company`s 21st Century Fox`s
profits.  Ailes will get an exit package worth about $40 million.

Twenty-First Century Fox executive chairman Rupert Murdoch will become
chair and acting CEO of FOX News.

Senior analyst Tuna Amobi follows Fox for S&P global market intelligence
and he joins us now.

Tuna, welcome, as always.

Let`s start first of all with your reaction.  I mean this, developed and
came to a conclusion rapidly.

TUNA AMOBI, S&P GLOBAL MARKET INTELLIGENCE SR. MEDIA ANALYST:  Indeed, it
did.  You know, I think obviously if you`re a casual observer, this is
bombshell news.  However, I think from an investment perspective, if
history is anything to go by, you know, we expect investors to shake off
the news.

But clearly, Roger Ailes is a larger than life personality won FOX News
which is almost synonymous with his tenure.  Obviously, FOX News is an
extremely important asset for, you know, for 21st Century Fox, but I think
on the bright side, they have been successful in signing a lot of long-term
contracts which should keep them going until they can get steady hands to
replace Roger Ailes.

MATHISEN:  So you do not see this as a near or maybe even a long-term
threat to the stock price or to the profitability of FOX News?

AMOBI:  Well, near term, you`re likely to see, you know, some headline risk
around this.  There`s also potential issues with succession.  You know,
Rupert is taking over the — you know, the running of FOX News, obviously
kind of more like a band-aid.  So, all eyes are going to be on who is going
to step into those gigantic shoes.

You know, I can`t frankly think of any potential candidates, but there`s a
number of names that have been mentioned.  I wouldn`t expect the company to
focus solely internally.  So, there are big shoes to fill and I think from
an investment perspective, this is something that investors will be
watching very closely given the significance of FOX News

HERERA:  You know, given the fact that Rupert Murdoch is stepping in to
take over for Mr. Ailes rather than Rupert Murdoch`s two sons who have been
assuming the running of the company, does that say anything about Rupert`s
relationship with his sons as it pertains to the running the business?

AMOBI:  Well, you know, I think on the one hand, I think, you know, Rupert
needed to show, you know, as kind of — make sure that there`s an orderly
transition.  There`s been a history of the sons versus, you know, Roger
Ailes.  So I think they also wanted to manage the perception side of this.

So, all in all, there`s no question right now that this is a generational
change from Rupert to his sons.  The question becomes, you know, what
impact — how do they kind of manage the transition?  What impact does it
have within the newsroom?  There`s any number of things that can happen
here and we only hope that the company will be able to navigate this quite
successfully.

HERERA:  OK.  We`ll let you go, Tuna.  Thank you so much for your
perspective.  Tuna Amobi with S&P global market intelligence.

MATHISEN:  Coming up, why Warren Buffett, Jamie Dimon and Mary Berra and
others held a secret meeting about the future of corporate America.

(MUSIC)

MATHISEN:  CEOs of some of the nation`s most valuable companies held a
secret meeting to discuss the state of publicly trade companies.  As
reported by “The New York Times (NYSE:NYT),” a group of business leaders met over the
past year to address how to make the marketplace more attractive for
privately held companies.

Today, the group released a public letter with what they call common sense
principles that suggest how current executives should lead their
businesses.  Warren Buffett was a part of that group and this is what he
said today about Berkshire Hathaway (NYSE:BRK.A) becoming a public company.

(BEGIN VIDEO CLIP)

WARREN BUFFETT, BERKSHIRE HATHAWAY CEO:  I originally would have preferred
Berkshire Hathaway (NYSE:BRK.A) to be a private company, and over the years my view on
that has changed 180 degrees.  I enjoy having Berkshire being a public
company and I enjoy having — I don`t know whether we have a million
shareholders or even more, but I like the fact that people put their trust
in us and that we treat them like partners and they feel like partners.

(END VIDEO CLIP)

MATHISEN:  J.P. Eggers is a professor of management at New York University
Stern School of Business.  He`s here to discuss this with us.

You know, there`s a lot of things in this letter and in the reporting
surrounding it.

Why would a company want to go public today?  There`s so much more money in
the private markets than there used to be that one of the main reasons for
going public, to cash out, may not be as compelling.

J.P. EGGERS, NEW YORK UNIVERSITY`S STERN SCHOOL OF BUSINESS:  Well, for
many.  Startup firms that still is a very compelling reason because the
initial investors who have put their money in at the V.C. rounds and the
angels rounds early on are still looking for a way to cash out.  They can
cash out through kind of subsequent rounds and buy out early investors.

But it becomes a little more complicated, and certainly if you`re looking
for a way to get a major capital and fleet infusion for some sort of
infrastructure expansion or something like that, then there`s still an
appeal to be going public.

HERERA:  But at the same time administratively, it`s more difficult to be a
public company.  In addition to that, we`re increasingly seeing the board
have more power than the CEO.  So there`s less incentive for those who are
at the top tiers to run a public company versus a private company.

EGGERS:  I think this is absolutely true, right?  If you`re the CEO of a
company that`s privately held and you don`t need to cash out either for
yourself or for your investors or for a big capital expansion to go public,
then there`s no reason you should be wanting to do this, right?  Why would
you want to subject yourself to quarterly earnings reports and analyst
phone calls and earnings guidance and things like to when you can actually
just focus on running your business?  You got to deal with your board and
investors and keeping them happy.  It`s a lot easier to communicate with a
smaller group of people that are very well-informed about the business than
trying to communicate to a large body of people that may not really
understand what`s going on in your company.

MATHISEN:  And investors who are there basically by invitation only, right,
as opposed to public investors who may include an activist who doesn`t like
what you`re doing.

Let`s talk about the question of earnings guidance which seems to be a
grain of sand, maybe a big rock in the shoe of a lot of CEOs.  Where do
they come down on this, where do you come down on it?

EGGERS:  Well, certainly, the report that came out from Jamie Dimon, Warren
Buffett and others was definitely very much against the idea of CEOs
offering earnings guidance.  It`s good to have the information out there as
far as earnings quarterly from a transparency perspective.  But the
quarterly and even between quarterly attempts to try and get CEOs to give
guidance about where they are going and whether they are going to hit or
miss and by how much has turned this all into a game in many ways, where it
really just becomes about trying to massage these opinions in order to make
sure that you can actually match expectations every time.

That`s not good for investors.  It`s not good for the CEOs.  That`s not
really good for anyone in some ways, but it`s kind of the incentive system
we`ve designed by kind of forcing CEOs to do this, kind of gives them the
incentive do it.

MATHISEN:  J.P., nice to see you again.  Good to have you back.  We`ve
missed you.

EGGERS:  Thank you very much.

MATHISEN:  J.P. Eggers with New York University Stern School of Business.

HERERA:  Listen up, Ty, finally tonight the end of the line for the VCR.

MATHISEN:  No!

HERERA:  Yes, it is.  The last company making video cassette recorders —
yes, they are still being made, is reportedly ending production by the end
of the month.  The Japanese company says it`s having a hard time getting
the necessary parts to build the machines which were first launched about
40 years ago.

MATHISEN:  Remember when they were new.  My goodness.  Eight-track tapes.
Bring back the eight-track.

HERERA:  Stop it.

All right.  That does it for us tonight.  I`m Sue Herera.  Thanks for
joining us.

MATHISEN:  Have a great night, everybody.  I`m Tyler Mathisen.  Thanks for
watching.  We`ll see you tomorrow.

HERERA:  I don`t even think my kids even know what a VCR is.

END

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