Transcript: Nightly Business Report – November 7, 2016

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

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Global rally. A letter from the FBI prompts stocks to rally worldwide, as investors pour money into equities the day before Election Day.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Action plan. What investors should ponder and overlook as Americans head to polls.

HERERA: It`s the economy. From Arizona to Florida to North Carolina, the issues are different but the stakes are high for investors across the country.

Those stories and more tonight on NIGHTLY BUSINESS REPORT, for Monday, November 7th.

MATHISEN: Good evening, everyone, and welcome.

Well, now, we`ve heard everything. Stocks rose today, because of the FBI.
Yes, the FBI. Its director, James Comey, yesterday sent a letter to 18 members of Congress. It said the bureau`s investigation into a new trove of e-mails found on a computer co-owned by a Clinton aide and her estranged former congressman husband turned up no new evidence to warrant charges against the Democratic nominee, Hillary Clinton.

And with that, stocks took off — in Asia, first, then Europe, then on Wall Street. The thesis a Clinton win spells less market rattling uncertainty and a divided government with the GOP, presumably in control of at least the House of Representatives means diminished chances of major policy changes.

In fact, stocks staged their biggest rally since March, and the move higher into the longest losing streak for the S&P 500 since 1980. Today, the Dow Jones Industrial Average soared 371 points to 18,259. The NASDAQ added 119, and the S&P 500 rose 46.

Bob Pisani has more on today`s rally.

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: Stocks held on to strong gains all day long. Now, it was no surprise that market leaders like banks led the way today, so, JPMorgan (NYSE:JPM), Regions Financial, KeyCorp (NYSE:KEY) all hit new 52-week highs as bond yields continued to climb.

It was the same with tech stocks. They also have been market leaders as Intel (NASDAQ:INTC), for example and Microsoft (NASDAQ:MSFT), both up roughly 3 percent, helping to power the Dow. But even beaten up names rallied. So, retailers have had a horrible quarter with many complaining that the election was keeping shoppers out of stores.

But all the department stores and the apparel makers were up roughly 2 percent as well. Bigger question mark was pharmaceutical stocks like Bristol-Myers and Abbott. They also rallied. They have been terrible performers on concerns that Clinton would heavily regulate the industry.
But some argued today that the House remaining Republican would make any excessive attempts to control pharmaceutical companies and prices a bit less likely.

For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock Exchange.

(END VIDEOTAPE)

HERERA: So the key question is, where does the race for the White House stand on the eve of Election Day?

John Harwood is with us in studio tonight.

Good to see you, as always, John.

That is the key question. Where do we stand?

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, take a look at the polls. We`ve got a series of national polls, five of them out today, all showing either a four-point margin for Hillary Clinton or a three-point margin. That is very consistent, and they`re converging around that reality.

So, Hillary Clinton clearly has an advantage, but, of course, you have to win this in the Electoral College.

MATHISEN: What does that four-point margin potentially translate into, in the Electoral College, and how do these numbers today compare with where we were on election eve four years ago?

HARWOOD: Well, it`s really interesting. Four years ago, Barack Obama in the average polls was ahead by less than 1 percentage point over Mitt Romney. Looked like a very tight race. He ended up winning by four, he over-performed his final polls.

Hillary Clinton is doing better. However, the — some of the odds-makers say her chances of winning are not as great. Why is that? Because she`s throwing away some votes in traditionally blue states, running up the score in places like California, which gives her a higher popular vote total.
It`s not always the most efficient using of your votes in those battleground states.

She still is leading in enough states to get over 270. But we`ll see what happens when they count them tomorrow.

HERERA: All right. John Harwood, on that note, thank you so much.

MATHISEN: Well, Wall Street`s major banks have been making their own election predictions. JPMorgan (NYSE:JPM) says if Clinton wins, the S&P should recover about 3 percent. Barclays agrees that a Clinton victory could result in a 2 to 3 percent gain for the S&P. But it thinks a Trump win could mean an 11 to 13 percent decline. Goldman Sachs (NYSE:GS) believes that Clinton will win the White House, and Democrats will gain a slim majority in the Senate.

So, what do other economists and money managers think?

Steve Liesman has the results of a new survey.

(BEGIN VIDEOTAPE)

STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: After trading every twist and turn in this long and most bizarre of elections, Wall Street was making final bets on Monday on the outcome. A powerful rally in equities underscored results of a new CNBC election survey. Seventy-eight percent think Democrat Hillary Clinton will win the White House and 46 percent want her to win. Just 23 percent favor Donald Trump winning the White House.

While the 36 respondent who include fund managers, economists and strategists are divided on whose policies are best for the economy, 69 percent say Clinton is best for the stock market. Nearly half say they will lower their outlook for stocks if Trump wins. That group would cut their outlook for stocks by as much as 10 percent, but some believe the sentiment may be too extreme.

JAMES PAULSEN, WELLS CAPITAL MANAGEMENT: Anything that leans Trump ward, we get downside risk in the markets. But the question is, does it persist or is it just immediately leading up to and immediately after the election.
And I — I kind of lean that way. I think we move on, whoever wins the White House.

LIESMAN: The survey shows a plurality believe it will be divided government, with a Democrat in the White House and the Republicans in charge of one or both houses of Congress.

ANTHONY CHAN, CHASE CHIEF ECONOMIST: Right now, when you look at the breakdown of what the votes are suggesting, that the House and Senate will stay. And by the way, the financial markets actually want that.

LIESMAN: A reminder that markets are anything but infallible, they badly misprice the chance of Brexit. And it`s — while they remember the margin of error is calculated for a reason. Most recent polls show Clinton with a lead inside that margin of error.

But for now, a Clinton victory looks to be well-priced into stocks, and a Trump victory would catch the markets off guard.

For NIGHTLY BUSINESS REPORT, I`m Steve Liesman.

(END VIDEOTAPE)

MATHISEN: So, which party is historically better for investors? And now that the election is here, how should you think about your investment decisions?

Dominic Chu takes a look.

(BEGIN VIDEOTAPE)

DOMINIC CHU, NIGHTLY BUSINESS REPORT CORRESPONDENT: Since the beginning of the Dow Jones Industrial Average back in the late 1800s, there have been 20 distinct presidential terms in office — 12 Republican and 8 Democrat.
During that time, the good news is, the average Republican and Democrat stock performance is positive.

But the Dems have a larger average gain at 82 percent versus 47 percent for the average Republican administration. Of course, there are always caveats. Some of the biggest gains and losses came in times of crisis and the subsequent rebound like the Great Depression, where the Internet stock bubble in the late 1990s. Now, there are those who argue that government policies take time to yield fruit and that prior administrations lay the ground work for future gains.

Regardless of your view, many experts believe that it`s a very difficult scenario to create a long-term investment strategy based on who our commander-in-chief is.

GABRIELA SANTOS, J.P. MORGAN FUNDS: We would not allow how you feel about politics influence how you feel about investing. Looking historically, the equity market and the economy tends to do well, no matter who is in the White House, or what the configuration is in Congress. It is much more about the economic cycle and about valuations.

CHU: The biggest variables on how you should treat your investment philosophy are still time left before retirement and how much risk you want to take in exchange for possibly higher returns. Depending on your answers, your strategy should change.

KARIN KIMBROUGH, MERRILL LYNCH WEALTH MGMT: I think when you`re younger, you obviously have more room to run in terms of your investable horizon, and so you probably can afford to take on more risk and that, of course, typically lies in the equity space or in the credit and high yield space.
And, of course, in older investor would be more cautious and probably more sensitive to things around episodic volatility, which is one of the events we think is more likely to increase going forward.

CHU: In the end, as important as this election cycle is, it may just be a blip on the longer-term market radar.

KIMBROUGH: Really, our belief is that when cash pays you nothing, we should get invested in something.

CHU: There is no doubt, this has been the most heated presidential election in recent memory. But should you make wholesale changes to your long-term investing because of it? That remains to be seen.

For NIGHTLY BUSINESS REPORT, I`m Dominic Chu.

(END VIDEOTAPE)

HERERA: Tonight, we have reporters across the country in a number of battleground states where economic issues are top of mind. On immigration and business, Contessa Brewer is Nogales, Arizona. On housing, Diana Olick is in Port St. Lucie, Florida.

But we begin with Scott Cohn in Raleigh, North Carolina, where more than just the presidency is at stake in the Tar Heel State.

(BEGIN VIDEOTAPE)

SCOTT COHN, NIGHTLY BUSINESS REPORT CORRESPONDENT: All roads to the White House go through Raleigh. Donald Trump with an afternoon rally.

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: We are going to win the great state of North Carolina, and we are going to win back the White House.

COHN: While Hillary Clinton plans a midnight rally, her running mate and her husband, crisscrossing the state before hand. It`s not just the 15 electoral votes at stake or a potentially pivotal U.S. Senate race. The North Carolina governor`s race, the closest in the country, is a referendum on the state`s controversial law signed by Governor Pat McCrory, restricting transgender people`s use of public bathrooms.

AD ANNOUNCER: HB-2, the controversial law has been blamed for close to
$500 million.

COHN: Opponents say the law, which also bars local anti-discrimination ordinances, is costing the state billions in business.

STATE REP. CHRIS SGRO (D), NORTH CAROLINA: Putting such a negative brand on the state is going to turn young professionals, events, performers away for not just this year, but years to come.

COHN: Democratic challenger, Roy Cooper, wants to overturn the law. But proponents say there are more important things than alleged lost business.

AD ANNOUNCER: Roy Cooper`s bathroom plan. What does it mean to you?

TAMI FITZGERALD, NC VALUES COALITION EXECUTIVE DIRECTOR: There`s no way you can put a price on the safety of one little girl in a bathroom who is sexually assaulted by a man who gains entrance to that bathroom by dressing as a woman. And that`s what`s at stake here.

COHN: North Carolina is one of 12 states choosing governors on Tuesday, and in each one, business competitiveness is front and center. The Democratic candidate in Missouri promising to make it a top ten state for business by cutting taxes, while his Republican challenger vows to fight corruption.

The Republican in West Virginia promising to cut red tape, while the Democrat vows to recruit business in person.

COHN: Of course, no matter whom the voters choose in any of those states, they`ll find themselves in the mercy of what happens in Washington and the race for the White House and what happens there may depend on what happens here.

Scott Cohn, NIGHTLY BUSINESS REPORT, Raleigh, North Carolina.

(END VIDEOTAPE)

HERERA: Now to Diana Olick in Port St. Lucie, Florida.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: In the tradition community in Port St. Lucie, Florida, the local economy is still recovering from the great recession. Homes here sell for half of what they did a decade ago. One in five homeowners are still under water on their mortgages today, and memories are very short.

UNIDENTIFIED FEMALE: My parents went through it. I watched them go through all of it. And I was here.

OLICK: Nicole, who didn`t want to give her last name, is a new mother, who is sitting out this election.

UNIDENTIFIED FEMALE: There`s just so much — I guess controversy on both sides of it. I just — I don`t know who I would vote for this year, to be honest.

OLICK: But sitting at a bench nearby, preparing for a job interview, MJ said she already voted for Donald Trump.

UNIDENTIFIED FEMALE: The Clintons seem to be interested in their own financial future. And Mr. Trump seems to be interested in the country`s financial future.

OLICK: Early voting ended Sunday night in Florida, and a record 6 million ballots were cast. Thirty-nine percent were by registered Republicans, 40 percent by Democrats. That does not, however, mean those voters chose along party lines.

What we do know is that Hispanic voters who make up an outside 17 percent of Florida`s electorate, voted early with a vengeance.

Juan Dyer (ph) already cast his vote.

UNIDENTIFIED MALE: Donald Trump hasn`t been a favorite for Latin voters and I think they just wanted to prove it. So they wanted to prove it in the numbers.

OLICK: So did this couple, who did not want to be named.

UNIDENTIFIED FEMALE: What`s going to happen if Trump gets in?

UNIDENTIFIED MALE: Wow.

UNIDENTIFIED FEMALE: Get it?

UNIDENTIFIED MALE: I don`t want to say nothing about him, but I have bad words for him.

UNIDENTIFIED FEMALE: Understand? I don`t like to trash anybody. But that`s how I feel. You`re asking me. I feel that way.

UNIDENTIFIED MALE: Me too.

OLICK: Most analysts agree that Donald Trump cannot win the White House without Florida, the math just doesn`t work.

As of now, the race in this state is razor-close and as with everywhere else, turnout will be key.

For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Port St. Lucie County, Florida.

(END VIDEOTAPE)

HERERA: Next, Contessa Brewer in Nogales, Arizona.

(BEGIN VIDEOTAPE)

CONTESSA BREWER, NIGHTLY BUSINESS REPORT CORRESPONDENT: A miles-long fence separates Nogales, Arizona, from Nogales, Mexico. On the U.S. side, little more than 22,000 people live. On the Mexican side, more than 220,000.
Spanish is the predominant language on both sides of the border.

And Donald Trump`s characterization of Mexican immigrants as rapists and drug dealers made its mark.

Is there no part of you that is a little worried about his perception of Latinos in America?

MIKE MELENDEZ (R), CANDIDATE SANTA CRUZ COUNTY: No. Since I`m not a drug dealer and I`m not a rapist. And I`m also from Mexico. So it doesn`t bother me a bit.

BREWER: Mike Melendez imports arts and crafts from Mexico. He has seen profits plummet because of declining tourism and the strength of the dollar against the peso. So, he doesn`t have a problem with Donald Trump`s stand against NAFTA and free trade.

MELENDEZ: If Mr. Trump gets elected, and he puts like a fee of, I don`t know, maybe 20 percent, 30 percent, I would just be getting less of a profit because Mexican goods are — they have a lot of profit, a lot of margin.

BREWER: Melendez was a Democrat until a year ago, now, he`s a Republican running for county supervisor, and sharing his shop space with a state Republican Party. The Arizona GOP has seat belt up headquarters in Nogales for the first time ever to woo Hispanic voters. They have an uphill climb.
The Democrats have been a steady presence in Nogales.

VICTOR RODRIGUEZ, DEMOCRATIC PARTY VOLUNTEER: We`re Latinos, and I think the other party is not, like — they`re not supporting a lot of Latinos.
They`re not caring about how the city here.

BREWER: More than 90 percent of the population here is Latino. The Democrat Party is so dominant that in 2008, when Arizona`s own Senator John McCain was on the presidential ballot, Santa Cruz County went for Barack Obama 72 percent to 27 percent.

And times are tough here. Empty store fronts, unemployment at 12.6 percent, declining tourism and a weak peso against the dollar. Small business owners say their profits are down 40 percent from last year.

MICHAEL SON, NOGALES BUSINESS OWNER: If Trump does win, it`s going to kill whatever Nogales has left over.

BREWER: And Donald Trump`s insistence that he build a wall doesn`t go over well in this state. An “Arizona Republic” poll shows 42 percent said one should definitely not be built, while 27 percent said it definitely should be built.

But that`s not the driving issue here. After all, they already have a wall. Both Democrats and Republicans are pedaling the promise of prosperity. The question is, who is better positioned to deliver the American dream?

For NIGHTLY BUSINESS REPORT, Contessa Brewer, Nogales, Arizona.

(END VIDEOTAPE)

MATHISEN: Still ahead, changes in China. Why the man who helped reform the world`s second largest economy is now out of power.

(MUSIC)

MATHISEN: The investigation into Volkswagen`s diesel emissions scandal is expanding. VW chairman Dieter Poetsch is under investigation by German prosecutors. Investigators want to know whether the automaker failed to properly disclose financial risks to investors. VW has admitted to rigging
11 million diesel vehicles worldwide with software to cheat emissions tests.

Meanwhile, California regulators have reportedly discovered a new type of defeat device hidden inside an Audi automatic transmission.

HERERA: China`s finance minister, the man who played an important role in trying to reform that country`s economy, is out. And the move comes at a time when China is facing mounting debt and large deficits.

Eunice Yoon reports from Beijing.

(BEGIN VIDEOTAPE)

EUNICE YOON, NIGHTLY BUSINESS REPORT CORRESPONDENT: China`s finance minister, Lou Jiwei, who`s been in office for the past three years, was unexpectedly replaced, and as is the case in China where there isn`t a lot of clarity as to why government ministers come and go, there wasn`t a lot of clarity here and that`s left a lot of people wondering what it all means.

Some analysts and observers believe that this could be a sign that the government is backtracking on economic reforms and that`s because the outgoing finance minister, Lou, was known to be outspoken and reform-minded and was credited with furthering fiscal reforms.

There`s also some speculation that this decision could have been about politics and part of the President Xi Jinping`s efforts to tighten his grip on the party, as well as the government. Not a lot is known about the new finance minister, Xiao Jie, but there are some who do believe that he is closer to the president and the premier than his predecessor. The replacement of the new finance minister is part of a greater political reshuffle here, which includes the state security minister. The new state security minister is known to have a background in anti-corruption. He played a key role in the president`s anti-corruption campaign.

He`s also believed to have a background in cyber security. Separately, the government passed a very controversial cyber security law, international companies as well as NGOs are fearful that this new law could mean that there will be even greater restrictions on the internet here, and possibly narrow the access of foreign tech companies to this market.

For NIGHTLY BUSINESS REPORT, I`m Eunice Yoon in Beijing.

(END VIDEOTAPE)

MATHISEN: LendingClub receives last investment and that is where we begin tonight`s “Market Focus”.

The online lending platform said National Bank of Canada will buy nearly
$1.5 billion worth of loans off the company`s platform. That sparked optimism that the company is turning itself around, following the discovery of lending improprieties. LendingClub also reported a narrower than expected loss and said loan volume stabilized. Shares up 15 percent to $5.91.

The Internet services provider Windstream (NASDAQ:WIN) said it would acquire rival EarthLink (NASDAQ:ELNK) for more than $1 billion. The combination would increase scale and competitiveness while cutting costs.
Separately, both companies quarterly profit that missed street targets.
Shares of Windstream (NASDAQ:WIN) were off a tick, but shares of EarthLink
(NASDAQ:ELNK) were down nearly 10 percent to $5.60.

The factory automation systems maker Rockwell Automation (NYSE:ROK) said it expects to see sales rise for the first time in three years next year. In addition, the company also posted profited revenue for the quarter that was above analysts` forecasts. Shares were up better than 5 percent to $124.24.

HERERA: Biotech companies Ionis and Biogen said their experimental drug for treating spinal muscular atrophy showed promise during a trial. The company said the children who were given the treatment showed a statistically significant improvement in motor function compared to those who didn`t receive the medication. Ionis shares surged as much as 18 percent to $32.12. Shares of Biogen popped 6 percent to $295.62.

And lower raw milk prices helped Dean Foods (NYSE:DF) post earnings that surpassed analysts` expectations. The nation`s largest dairy processor also said it saw volume performance improve and expects that trend to continue. Shares were up 42 cents to $18.88.

Travel booking company Priceline said an increase in hotel bookings helped to lift its revenue above estimates. Net income did see a decline, though, as a more than $900 million charge tied to the company`s open table business ate into profits. Even so, those results still exceed street targets. Shares initial rose in after-hours trading but ended the regular day up to $1,480.33.

MATHISEN: A major oil hub in Oklahoma was rattled overnight by an earthquake. A magnitude 5.0 quake shattered windows and caused substantial damage to dozens of buildings in Cushing. But officials say no damage has been reported to the big oil terminal there. Oklahoma has had numerous earthquakes in recent years with most traced to injection of wastewater that results from oil and gas fracking.

HERERA: Coming up, do you prefer back flips over bonds? What about flips instead of Fed funds? If you were born to perform, have we got a job for you?

(MUSIC)

HERERA: Wall Street bonuses are expected to decline for a third straight year. According to compensation consulting firm, Johnson Associates, payouts are projected to be 5 to 10 percent lower this year. The reasons include limited trading activity, and a number of very large mergers that never went through, despite being announced. Bankers who advise on deals get paid largely when the merger is completed.

MATHISEN: Well, there have been a lot of jokes made about how this presidential election season is like a circus, but there is one circus that`s offering a new twist for job-seekers.

And Kate Rogers (NYSE:ROG) has the story from Vegas, baby.

(BEGIN VIDEOTAPE)

KATE ROGERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Cirque du Soleil performer Ashley Skivington has seen her life come full circle.

ASHLEY SKIVINGTON, CIRQUE DU SOLEIL PERFORMER: I remember seeing the stair when I was 14. I remember walking out, just in awe. Wondering how something like that was ever made. And thinking I want to do that someday.
And here I am.

ROGERS: The 35-year-old gymnast performs bungee and Chinese poles in Las Vegas` Mystere, the show she saw as a kid.

SKIVINGTON: It`s very physical. We do 470 shows a year.

ROGERS: Performers like Skivington will see more opportunities in the next decade as the entertainment industry is poised to grow by about 6 percent, creating nearly 46,000 new jobs.

Pay in the industry can vary widely from $50 a night for a small production to up to six figures and a full contract with benefits at a major company like Cirque Du Soleil which brings 450 artists each year for new and existing production.

Casting directors say today`s ideal candidate is multitalented.

PAVEL KOTOV, CIRQUE DU SOLEIL CASTING DIRECTOR: Generally, we`re looking for extraordinary talent. We`re looking for people who can do something that you do not see in the real life. Many roles are actually going now into more of a — what we call a generalist profile, multitalented, multidisciplinary profile. On Broadway, they call it triple threat.

ROGERS: Social networks given the aspiring performers the opportunity to showcase their talents to a wider audience. But it`s also harder than ever to stand out. Out of every 100 applications Cirque`s casting scouts received, only two to four will make it to the talent database with a potential to one day receive a coveted contract.

YVES SHERIFF, CIRQUE DU SOLEIL ARTISTIC SCOUT: My hope is that all of them one day receive a phone call from us. The reality is like maybe less than a quarter of them will receive a phone call.

ROGERS: At Cirque`s auditions in New York City, talent came in all shapes and sizes, from eccentric clowns to gymnasts, jugglers and puppeteers. To make the cut, they had to impress talent scouts with three P`s.

SHERIFF: It`s projection, precision and presence. Presence, very subjective. Some have presence, some don`t have. Precision and projection, it`s something that they learn in school.

ROGERS: Having found success at Cirque, Ashley Skivington says getting is hard but well worth trying.

SKIVINGTON: I would say go for it. Find what you love, find what you`re good at and if it`s something you really want to do, just push for it. Do whatever it takes to get there.

ROGERS: But just make sure you`re cut out for it. Not everyone is.

That is seriously, so, so hard.

For NIGHTLY BUSINESS REPORT, I`m Kate Rogers (NYSE:ROG), Las Vegas.

(END VIDEOTAPE)

HERERA: She is such a trooper.

Before we go, here`s another look at the rally on Wall Street ahead of Election Day. The Dow Jones Industrial Average soared 371 points to 18,259. The NASDAQ added 119. And the S&P 500 rose 46.

I couldn`t do any of that stuff.

MATHISEN: Oh, my goodness, she`s brave.

HERERA: That`s NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera.
Thanks for joining us.

MATHISEN: I`m Tyler Mathisen. Have a great evening, everybody. And we`ll see you back here on election evening.

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) 2016 CNBC, Inc.

 

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