Transcript: Nightly Business Report – November 25, 2016

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

Stocks levitate to new highs on this holiday shortened trading day, but how
much gas is left in the market`s tank?

America shops.  Black Friday, it`s an annual event.  And after a rocky
year, retailers have a lot riding on this holiday shopping season.

Go small or go home.  The Russell 2000 index not just its longest win
streak in 20 years and our market monitor says there are some names that
are still worth buying.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Friday,
November 25th.

Good evening, everyone, and welcome.  I`m Tyler Mathisen.  Sue Herera is
off tonight.

Well, doorbusters for stocks on this Black Friday, consumer were out
shopping for bargains while investors returned from Thanksgiving to buy up
equities.  The Dow, the S&P 500, the NASDAQ and even the small cap Russell
2000 all closed at records on this holiday shortened trading day, extending
the rally seen since Election Day.  Stocks have risen sharply on
expectations that the president-elect will cut taxes, reduce regulations
and spend heavily on infrastructure.

Today, the Dow Jones Industrial Average rose 68 points to 19,152.  The
index closed at a record every trading day this week.  The NASDAQ added 18.
The S&P 500 was up eight.

And the major indexes saw their third straight week of gains, as you there,
about 1.5 percent for each of them.

Well, the old cliche, of course, is that the markets hate uncertainty.  And
Trump`s election removed some of that, but the market`s powerful rally
since November 8th is built on a lot of promises and campaign intentions
often prove very hard to achieve.  So, are stock pricing in too much
anticipation right now?

Here to discuss is Ernesto Ramos, head of equities and portfolio manager at
BMO Global Asset Management.

Ernesto, welcome.  Good to have you with us.

There are a lot of “make America great again” expectations built in to
stock prices.  Are stocks vulnerable as a result?

front ended a lot of the good news coming from Trump`s election and now pro
growth programs, so there might be room for back.  But in general, I think
the market will continue to move higher because we have a much different
environment today than we had a few weeks ago in terms of his announced
programs, even if they come in at a smaller amount that he actually talked
about, in terms of the infrastructure spent and in terms of the tax cuts.
It`s still going to be very positive for earnings and at the end of the
day, earnings is what drives stock prices higher.

So I still this see room for further upside.  A lot of that has been front
ended in the last couple of weeks.

MATHISEN:  So, even if some of the anticipation does not come to fruition,
you think that even smaller achievements will be correct directionally for
the market.  Let`s talk a little bit about the big winner.  And that`s so
far, among others, have been industrials and defense stocks, but most
particularly, financials.

How do you see them performing over the next few months?

RAMOS:  Well, financials are actually in the sweetest spot they have been
for quite a number of years because of the following.  You had a very flat
yield curve, which compresses their net interest margin, which is their
ability to make money.  So, now, with interest rates moving higher,
especially on the longer end of the curve, that allows the margin to expand
and that`s very positive for them.

Number two, you have the profit of lower regulation or rolling back some of
Dodd-Frank, which working as part of a bank myself, I know how much, how
many resources are devoted to just complying with regulators and it`s an
inordinate amount of people and effort.  So, just roll back some of that
isn`t going to allow us to be b more profitable.  So, it`s very positive
from those two perspectives.  And, finally, just higher economic growth
allows for them to start lending again and the promotion should grow from

MATHISEN:  Something like I was told the other day by a very good source,
something like 40,000, one out of six employees at Chase, are tied up with
complying with regulations.

Ernesto, thank you very much.

RAMOS:  Thank you, Tyler.

MATHISEN:  Ernesto Ramos with BMO Global Asset Management.

Well, now to Black Friday, what a day it has been?  Retailers reporting a
very strong start to the holiday shopping season at both brick and mortar
stores and online.  That`s a positive sign for an industry that gets as
much as 40 percent of its annual revenue from money spent right now, this
time of year.

The nation`s largest department store, Macy`s, opened its doors at 5:00
p.m. yesterday.  The CEO said 16,000 shoppers, more than last year, lined
the street waiting to enter its flagship store in Manhattan and they were
there to shop.


TERRY LUNDGREN, MACY`S CHAIRMAN & CEO:  On a value day like today, they`re
going the buy.  They`re not going to wonder and wait will it be there
tomorrow, will they be there when I buy it online the next day?  So, here,
it`s clearly an urgent response and reaction.  And so, that`s why they`re
here buying.

But that combination of using technology and the experience of being inside
the store is a way to consumers are shopping today and will continue to be
so in the future.


MATHISEN:  Five-mile traffic jam at Woodbury Commons up in Upstate New York
today to get into the mall there.

Initial indications of an Internet sales were also strong according to
Adobe Digital Index.  Shoppers spent more than $1 billion online
Thanksgiving evening.  That`s a 14 increase from a year ago.  It reflects a
broader trend away from traditional brick and mortar retailing.

Well, Target (NYSE:TGT) shattering records.  The big box retailer said
Thanksgiving Day was the biggest online shopping day in the history.
Traffic grew by double digits compared with a year ago and sales even blew
past last year`s record breaking Cyber Monday.  Target (NYSE:TGT)`s CEO
said shoppers with were buying up consumer electronics.


BRIAN CORNELL, TARGET CHAIRMAN & CEO:  TVs were selling at an unbelievable
rate.  We had a 50-inch 4K TV for under $250, it attracts a lot of
attention.  But we saw great results with Apple (NASDAQ:AAPL) yesterday
with both iPads and watches.  The new gaming systems from Xbox and
Nintendo, lots of interest there.


MATHISEN:  Well, Target (NYSE:TGT) stores opened at 6:00 p.m. Thanksgiving

The National Retail Federation expects more than 137 million Americans to
shop over this four-day holiday weekend.  That is an increase from a year
ago and positive news for the industry that has struggled to boost foot
traffic and sales for much of this past year.

Courtney Reagan is at the mall at Fairfield Commons in Dayton, Ohio.

Courtney, you`re back home, my friend.  That`s very nice.

really lovely to be back home.  And it was always great, Tyler, is that
this is a mall that I`ve been to multiple time.  So I`ve gotten to sort of
figure out the of what Black Friday looks like from year to year.

And you were talking a lot there about retailer`s websites and how much of
the traffic is moving online and retailers can do everything that they can
possibly think of to get themselves dry run scenarios leading up to a big
shopping day.  Like Thanksgiving or like Black Friday.  But you really
don`t know what`s going to happen until the day it comes.

It was going pretty smoothly until about midday of Black Friday.  Around
that time, Macy`s shoppers saw the sign that came up on the website that
said temporary shopping issue or temporary shopping pass, check back in
about ten seconds.  Reload your browser.

Now, that got a little bit better after some period of time, but there are
still issues clicking through the website.  William Sonoma`s web and mobile
sites were having trouble loading.  Sometimes upward of 25 seconds.  That
is way too long on any day, but especially on Black Friday.  Retailers say
that could cost as much as $30,000 an hour when that happens, so yes, sales
were strong, but might have left some on the table when those problems

MATHISEN:  It`s like you call that a good problem to have, breakthrough a
problem is a problem any way you look at it.  What are shoppers at the mall
telling you, Court?

REAGAN:  You know, it`s the same story every year and it probably will be
for many to come, many years to come.  And it`s a good one.  It`s all about
deals.  That`s what Black Friday weekend is all about and shoppers here
feel pretty good about what they`ve gotten.

We know tablets are on average, 25 percent off.  Last year, they were about
12 percent off.  So, that`s twice as good as what they saw and many of the
shoppers started at the discount stores, and then they went to the anchor
stores and shopped until they dropped.  Take listen.


UNIDENTIFIED FEMALE:  Not gone to sleep yet.

REPORTER:  Really?

UNIDENTIFIED FEMALE:  Yes.  We had our turkey and moved out at 6:30 and
have been going strong.

UNIDENTIFIED FEMALE:  We stopped at Kohl`s and then straight to mall after

UNIDENTIFIED FEMALE:  We started at Walmart.  We`ve been to Target
(NYSE:TGT).  We have been to the outlet malls in Cincinnati.  We`re going
to do bunch of other places I can`t even think of.


REAGAN:  So, analysts are telling me traffic is a little light and somewhat
choppy, but many of the mall managers like JLL says traffic and sales are
actually on par with last year, if not up.  So, we`re going to have to wait
and see how this all shakes out.

But so far, so good I think for Black Friday — Tyler.

MATHISEN:  Courtney, bring me one of these kill brownies from Dorothy Lane
in Dayton, all right?

REAGAN:  You got it.  I`ll bring you more than one.

MATHISEN:  All right.  Courtney Reagan, thanks a lot.

While consumer electronics like TVs and gaming always seem to be big
sellers.  Technology has also come to the toy aisle.  Not only transforming
the what we buy, but how we buy it.

Aditi Roy reports from Redwood City, California.


on toy that can literally take your child for a spin is a hot seller this
year.  The joystick controlled gadget is also an example of a toy-driven by
tech, a popular theme among top sellers this year.

Even the wildly popular Hatchimals are created by Spin Master, a toy
company with a robotics division and known for innovation.  Retailers say
toy robots, kid-friendly drones and even coding caterpillars are popular
this year.  Many of these products are Wi-Fi enabled.

STEVE HUYNH, TOYS “R” US STORE MANAGER:  So, in an opportunity to take
something and go into your iPad or going to any type of Android and really
program something for it to move.  I think that`s very really cool, because
you have — you learn coding, you kind of understand how things work.  And
so, to see an item that you created through technology, through the
robotics, it allows the child to kind of really feel like they created
something on their own.

ROY:  It`s not the only way technology is transforming holiday shopping.
The manager of this Toys “R” Store in Redwood City, California, says online
retail giants like Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY) have shrunk
Black Friday lines.

HUYNH:  That`s how consumers shop nowadays.  They go online, they look at
the information, they compare, and do reviews and next you know, they buy.

ROY:  A recent survey of holiday shoppers by Deloitte found shoppers plan
to spend more than half or 51 percent of their holiday shopping budget

first time we`ve seen online actually outpace in store from a sales
perspective over the holiday period.

ROY:  But retailers are fighting back, beefing up their online strategies,
and highlighting their option to buy online and pick up in stores.  At Toys
“R” Us, they`re also emphasizing the experience of Black Friday as a
cultural event rather than just a day to buy things, staging the store for
the ultimate consumer party.

HUYNH:  (INAUDIBLE) all happens in fourth quarter.  So, this is our kickoff
to the season, our kickoff to the big game.  All the things we`re
practicing for for the consumers, for our team member, especially for the
customers, getting the right flow in there.  I mean, you look around the
store today, we`re well jam-packed.  We`re in the best inventory to have
I`ve ever seen in the last nine years.

ROY:  This store is in the middle of 30-hour marathon sales event.  They
open Thanksgiving and will stay open through this Black Friday.  It`s just
another way to trying to compete with online retails.

For NIGHTLY BUSINESS REPORT, I`m Aditi Roy, Redwood City, California.


MATHISEN:  JCPenney has had a rocky run over the past few years, but the
department store is executing a strategy it hope wills turn thinning
around, give shoppers spending in stores.

Morgan Brennan inside a Penny`s at the Roosevelt Field Mall in Garden City,
New York.


earliest start time of the major retailers on Thanksgiving, opening its
doors at 3:00 p.m. and shoppers lined up to get in.  At least here at this
Long Island location.

UNIDENTIFIED FEMALE:  We got over here by like 5:00 and we started shopping
and now that we`ve been out for almost three and a half hours.

BRENNAN:  Since then, staffers have struggled to keep pace with merchandise
and boxes strewn about and many shelves they clean.

JCPenney has been rolling out appliance showrooms in 500 of its locations,
including this one, betting on the housing recovery as a key part of its
turnaround strategy, under CEO Marvin Ellison, who was hired from Home
Depot (NYSE:HD) in 2015.

The retailers also expanding its partnership with Sephora, bringing the
make up boutique at more of its department stores.

At this Long Island location, there`s been a lot of foot traffic in both of
those areas, and as you can see here, long lines and many of the stores

So, what is boring shoppers?

UNIDENTIFIED FEMALE:  The $10 off, $7.99 for the sheet set, the towels.  I
mean, practically, things are free in here.

BRENNAN:  So, then if foot traffic has turned out to have increased this
year, the question will be how much has JCPenney, not to mention other
brick and mortar retailers, had to discount to get these coveted consumers
through the door and what expense to profitability.

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan on Long Island in New York.


MATHISEN:  Our next guest has names of retailers that she thinks will be
the winners and losers this holiday shopping season.  She is Jessica Bornn
senior retail analyst at Merchant Forecast.

Jessica, welcome, good to have you.

I want to start by asking you whether Black Friday is important as it used
to be since so many of the sales have been spread out.  Not just the
Thanksgiving Day, but the last weekend and even before.

not just about one day of shopping anymore.  What we saw is a lot of
retailers break their Black Friday sale as early as last weekend, expecting
to Black Friday sales and their marketing messages this week in the mall,
Monday, Tuesday, Wednesday, even Thanksgiving was already, we saw a lot of
traffic, we saw a lot of people going to the mall looking for those deals
because they realized the Black Friday verbiage was there and they thought
they were going to get a deal early.

MATHISEN:  So, how does it work out for them?  Do they make more money
because they spread out the sales or does it all come out in the wash the
same way, or do you even know?

BORNN:  I think — I think they do make more money.  I think people want to
get their shopping out of the way early.  I think they`re maybe less
inclined to go to the mall on one day, on Black Friday.  Maybe they think
before head out of town on a Tuesday or Wednesday, they can pop in the mall
and get some of those savings early.  I think that might be more appealing
to some people.

MATHISEN:  Let`s talk about some of the names you think are going to do
well.  The stores that seem to have some mojo this time around.  Name a
couple.  I see American Eagle Outfitters (NYSE:AEO) is one of your faves.
What are they doing right?

BORNN:  Yes, I think what they`re doing right is they`ve really welcomed
all teenagers with open arms.  What I mean by that is, as you know,
Abercrombie and Fitch (NYSE:ANF), one of their main competitors, many years
ago, they really stood for exclusionary practices and I think they haven`t
been able to repair the damage they did.

And American Eagles have come to us.  And what they`ve done is they`ve
offered a collection that is, in some cases, one size fits all.  They have
a new collection with the hashtag #weallcan.  It`s all about body
positivity.  Fashion that`s safety for everyone.  Fashion that`s

Aerie, their intimate concept is doing well by using real life models and
not using airbrushing.  And again, welcoming everyone to their store.  It`s
really the destination of choice for teens.

MATHISEN:  So, I just want to be clear — when you say that Abercrombie was
inclusionary, did you mean you had to look a certain way?  To look good in
their clothes, or you have to have a six pack abs to do it or whatever?

BORNN:  Yes, you said it well.  There`s a certain look that they wanted to
attract, and, you know, the CEO did come out and say, hey, we just want the
cool kids shopping here and I think a lot of people won`t forget that.

MATHISEN:  You know, you put on your list a couple of others that have not
been necessarily knocking the cover off the ball lately, Coach (NYSE:COH)
and Target (NYSE:TGT).  Though Target (NYSE:TGT)`s turnaround seems to be
going well.  What do you like from them quickly?

BORNN:  Actually, what we like at Target (NYSE:TGT) is the combination of
fashion, home and grocery.  I think it`s very important to remember that
most Target (NYSE:TGT) locations offer a large grocery selection and I
think while people are in store shopping, fashion is appealing to them,
shopping the home department, buying gifts.  They`re also going to do
holiday grocery shopping and liquor shopping while they`re in the store,
and that`s a huge plus.

MATHISEN:  All right.  Thanks very much, Jessica.  We appreciate it.
Jessica Bornn with Merchant Forecast.

And still ahead, small caps have advanced for 15 straight sessions.  And
tonight, our market monitor has some names for your shopping list.


MATHISEN:  Wells Fargo (NYSE:WFC) has asked a federal court to dismiss a
lawsuit filed by customers over the creation of those fake bank accounts.
The bank instead wants the disputes resolved in private arbitration.  The
motion is aimed at the first class action lawsuit filed after Wells agreed
to pay a $185 million in penalties for opening up unauthorized accounts.

Johnson & Johnson (NYSE:JNJ) begins talks with a Swiss drug maker Actelion
about a potential merger and that`s where we begin or I try to begin
“Market Focus”.

The health care company confirmed today that it has approached the company
after news surfaced of a possible deal and Johnson & Johnson (NYSE:JNJ)
said the discussions are in early stages.  While Actelion noted that it is
not guaranteed a transaction will be reached.  Johnson & Johnson (NYSE:JNJ)
shares rose almost 1 percent to $114.13.

China`s largest online travel site CTrip International will buy the U.K.-
based flight search company Sky Scanner for $1.5 billion.  The acquisition
is expected to significantly expand CTrip`s air ticketing business.  Shares
of CTrip up nearly 10 percent on the session to $45.01.

The U.S. Department of Defense made an advance payment of nearly $1.3
billion to the aircraft maker Lockheed Martin (NYSE:LMT) as part of a
contract that could be worth more than $7 billion.  The final terms of the
agreement for 90 fighter jets is still being finalized.  Shares of Lockheed
up marginally today at $265.92.

The domain registration provider Go Daddy reportedly in talks to take over
web hosting company Host Europe Group.  The potentially move would let Go
Daddy expand its footprint in Europe.  Go Daddy shares rose 1 percent.
They finished at $36.82.

Our market monitor has some small cap names she says should be in your
portfolio.  Last time she was on May, she recommended Urban Outfitters
(NASDAQ:URBN), up 29 percent, VF Corp., down about 4 percent, Intel
(NASDAQ:INTC), 18 percent higher.

She`s Kim Forrest, senior equity analyst at Fort Pitt Capital.

Kim, welcome.  Great to have you with us.

You know, I was asking one of our earlier guests whether he worried too
much expectation has come into the market and that we may be vulnerable.
How do you read it?

always the case, because you know, stocks really react to market news.  And
it looks like the S&P 500 is looking for, you know, a double digit year
next year, with respect to earnings.  And if we don`t get that, we might be
disappointed as investors and more importantly, as stockholders.

But that being said, time`s on your side.  If you hold stocks long enough
and have confidence in the management team and the company and the products
that they make, you know, things generally turn out OK.

MATHISEN:  You have three stock picks and we`re going to start with one
called II VI.  A hometown pick of yours.

FORREST:  It is.

MATHISEN:  In Pittsburgh.  And one of the things in it and in your other
pick that you like is significant management or foundership ownership.

FORREST:  Right.  And in the world of small cap, where if you`re in to
buying a smaller company, you`re probably taking on way more risk and thus,
you should be expecting way more reward.  So, how do you reduce those
risks?  Well, one of the ways we do it is we look for managements that have
a lot of stock that they either bought themselves or bought by you founding
the company.

And you know, that is the case of II VI, the founder still owns an
appreciable part of that company and there are a lot of employees that are
there from the very beginning of the company, so that`s kind of a risk
reduction strategy.

MATHISEN:  It owns about 7 1/2 percent of the company.  It makes equipment
for optical networking.

Let`s move on to one that`s at the other end.  That`s Inter Parfums
(NASDAQ:IPAR) IPAR.  Tell us about it.

FORREST:  Well, there are two founders there.  Together, they own about 44
percent of that business.  And they make perfume.

A lot of that perfume gets bought in Europe and we enjoy holding it because
they act like a shareholder.  They are.

MATHISEN:  It smells good.

FORREST:  And it smells good, yes.

MATHISEN:  And, finally, quickly, 20 seconds on Net Scout.  What do they

FORREST:  Sure.  They do system and network management, software and
hardware.  Doesn`t that sound exciting?


FORREST:  But they`ve grown a lot and they did a large acquisition and we
think they`re going to be able to do really well again because the founders
still involved and owns a large portion of his own wealth is in that

MATHISEN:  All right.  Kim, we`ll check back with you in a few months.  Kim
Forrest with Fort Pitt Capital.

FORREST:  Thank you.

MATHISEN:  Coming up, shopping small.  Why independent retailers have a lot
riding on tomorrow.


MATHISEN:  Well, small business owners are hoping that people wait until
tomorrow to go shopping on what has become known as Small Business
Saturday.  Today was a big win for retailers last year.

And as Kate Rogers (NYSE:ROG) reports from Bedminster, New Jersey, they`re
hoping for the same type of turnout this year.


Saturday is all about community, encouraging customers to step away from
malls and computers to support local neighborhood businesses.  At Tons of
Toys in Bernardsville, New Jersey, co-owner Anthony Desalis is hopeful an
emphasis customer service will help set his business apart.

ourselves on our service.  You know, we did a free wrap, free delivery for
local people and so, we go above and beyond for the service, and I think
there`s a really strong push and there`s a grassroots movement for shop
small.  And when it`s picked up by an organization like AmEx, it becomes
that much stronger.

ROGERS:  The store, one of five locations in New Jersey, does about 50
percent of its annual sales in the last quarter of the year.  This location
has participated in the event the past three years and it`s seen its sales
increase each time.  Small Business Saturday was launched in 2010 by
American Express (NYSE:EXPR) (NYSE:AXP), landing on the Saturday after
Thanksgiving.  Last year, sales hit $16 billion across the country,
according to AmEx, with 95 million people shopping at local retailers.

Good news for local retailers like Tons of Toys, research from AmEx shows
that 76 percent of people who are aware of the holiday say they plan to
shop small and what`s more?  Forty-eight percent of them say they plan to
spend more this year than they did in 2015.

For Alicia Schaffer, owner of Three Bird Nests in Dublin, California, this
small business Saturday is a bit different.  She started selling hand-made
head bands five years ago online and it became a big hit on Etsy.  Since
then, she`s expanded her offerings.  And this year, she decided to take
plunge and open her first brick and mortar business.

ALICIA SHAFFER, THREE BIRD NEST FOUNDER:  It`s really like our following,
how we kind of listen to them and really say, you know, we`re going to take
the plunge and kind of go against the grain again and, really, you know,
everyone is going online were like, no, we`re going to open up a store and
really deliver our customers an amazing, you know, custom shopping
experience that they`re not going to find anywhere else.

ROGERS:  Back at Tons of Toys, customers like Christine Kelly say it`s
worth shelling out a few extra bucks to help the community.

UNIDENTIFIED FEMALE:  You might pay more, but you know what you`re getting
isn`t just the product you`re buying, but the personal connection you`re
making with someone in the community.

Bernardsville, New Jersey.


MATHISEN:  And that will do it for NIGHTLY BUSINESS REPORT for this Friday.
I`m Tyler Mathisen.  Thanks so much for watching.

Have a great weekend, everybody, and we`ll see you back here rough and
ready on Monday.


Nightly Business Report transcripts and video are available on-line post
broadcast at 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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