Transcript: Nightly Business Report – November 28, 2016

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

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR:  Up in the air.  Fidel
Castro is gone and the American president-elect wants a better deal between the U.S. and Cuba.                                                                                What`s next in the evolving and fragile economic
relationship between the two countries?

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR:  Buy low, sell high.  After a
massive market run-up, are retail investors buying stocks at the wrong
time?

MATHISEN:  And guessing game.  Can OPEC members set aside their differences
and cut oil output for the first time since 2008?

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Monday,
November 28th.

HERERA:  Good evening, everyone, and welcome.

New doubt is being cast this evening on America`s economic relationship
with Cuba following the death this weekend of revolutionary leader Fidel
Castro.  This morning, President-elect Donald Trump threatened to roll back
recently restored relations with the island nation.  In a tweet, he wrote,
“If Cuba is willing to make a better deal for the Cuban people, the
Cuban/American people, and the U.S. as a whole, I will terminate deal.”

The tweet came the same day commercial flights to the island nation
resumed.  American Airlines took off from Miami, JetBlue departed from New
York.

Michelle Caruso-Cabrera reports tonight from Havana.

(BEGIN VIDEOTAPE)

MICHELLE CARUSO-CABRERA, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Although
Fidel Castro stopped ruling Cuba ten years ago, his presence loomed large
until the end.  Observers have long speculated that his successor, younger
brother Raul, might make more meaningful economic changes once Fidel was
gone.

WILLIAM LEOGRANDE, AMERICAN UNIVERSITY PROFESSOR:  The economic reform
program that Raul began in 2011, which is to move toward more of a market
socialism on the China model, was something that Fidel Castro had always
rejected himself.  And the normalization of U.S./Cuban relations is
something that Fidel Castro was very skeptical about.  Right after Obama`s
visit to Havana in March, he said that Cuba didn`t need anything from the
United States.

CARUSO-CABRERA:  It`s the third official day of mourning for Fidel Castro
here in Cuba, and thousands of Cubans have lined up here at the Plaza of
the Revolution so that they can go see his ashes and sign a book of
condolences.

UNIDENTIFIED FEMALE:  Nothing is going to change.  We continue the legacy
from Fidel Castro.

UNIDENTIFIED MALE:  We all want change.  Life is about changing, so that`s
it.

CARUSO-CABRERA:  Notice no one is staring at their phone, texting, tweeting
or posting on Facebook (NASDAQ:FB).  That`s because Internet service is
almost nonexistent in Cuba, part of the legacy of nearly 60 years of
communist rule that severely restricted both political and economic
freedom.  Not to mention an economic embargo imposed by the United States
government dating back to the `60s.

But the thawing of relations between the United States and Cuba initiated
in December of 2014 has meant thousands more U.S. visitors to the isolated
island.  Loosening of regulations means it`s easier to visit.  And just
this week, many U.S. airlines began direct flights to Havana.

What remains unclear is whether or not those changes are rolled back by
President-elect Donald Trump once he takes office.

For NIGHTLY BUSINESS REPORT, Michelle Caruso-Cabrera, Havana, Cuba.

(END VIDEOTAPE)

MATHISEN:  And now, for more on what U.S./Cuba economic relations might
look like, John Harwood joins us from outside Trump Tower.

John, good evening.

Elaborate on what the president-elect`s position is and what he may do and
what he can`t do when he takes office.

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Well, first of all,
he put out over the weekend a very strong statement criticizing the crimes
and repression of Fidel Castro, but he also said, Tyler, that he wants to
help the Cuban people on their journey to prosperity and security.  That
suggests that as in his tweet today when he said that he wants a better
deal for Cubans and for the United States, that he is open to trying to
make a deal that sustains what President Obama has done so far and builds
upon it.

HERERA:  So what did the White House have to say about it all today?

HARWOOD:  Well, the White House noted that even though executive action is
all that`s taken place, remember, there`s an embargo that is legally in
place, that Congress needs to overturn if they decide to do that, but the
White House said that it`s not so easy.  Airlines have made plans based on
the change that`s taken place.  Hotels, the hospitality industry has made
plans based on those changes.

People in the United States and in Cuba have become accustomed to some of
the new regulations about travel and sending remittances back and forth and
that sort of thing.  So, it`s difficult to immediately uproot changes that
have begun to seep through all corners of American society and the economy.

MATHISEN:  Moving at the same time, John, is the decision apparently on who
might be the secretary of state.  It sounds like the choice has divided the
Trump team.  What do we know about the search?

HARWOOD:  Well, we know that Kellyanne Conway, the former Trump campaign
manager, trashed Mitt Romney over the weekend in very stark terms.  We know
that David Petraeus, the former general, who of course has been on
probation for leaking classified — or giving classified information to his
then mistress was at Trump Tower today, we believe interviewing for the
secretary of state`s job.

Rudy Giuliani has been a front-runner.  And Bob Corker, the chairman of the
Senate Foreign Relations Committee, is coming tomorrow, and Mitt Romney is
coming for a second interview.  This is a jump ball.  It`s wide open right
now.

MATHISEN:  All right.  John Harwood, thanks very much.  John Harwood in New
York City.

HERERA:  On Wall Street, the Trump rally took a breather as the financial
sector weighed on the broader market.  Even the small cap Russell 2000
index fell back after rising for 15 straight sessions.  The Dow Jones
Industrial Average closed lower by 54 points to 19,097.  The NASDAQ fell
30, the S&P 500 was off 11.

Despite today`s pullback, though, there has been a massive run-up since the
election.  But are retail investors getting bullish and buying stocks at
the wrong time?

Bob Pisani takes a look.

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT:  If you`re a little
skeptical about the markets hitting historic highs twice last week, you
should be.  The market is on a little bit of thin ice right now and here`s
why.

First, investor sentiment has gone from skeptical to extremely bullish.
That`s not a good sign, particularly when you see it happening among retail
investors.  At the end of last week, a survey of retail investors spiked to
almost 50 percent bullish from 23 percent bullish just the week before the
election.  It was the highest reading in nearly two years.  Now, big spikes
in retail investor sentiment have traditionally been associated with at
least a short-term top in the market.

Second, going long stocks and short bonds is a lot less attractive now than
it was a month ago.  The trade has been made.  The small cap Russell 2000
is up 13 percent in three weeks and bond prices, the ten-year yield down
about 3 percent.  The retail investor seems to be excited right at the
market top.

Finally, the rally is pricing at a near perfect environment, but there`s a
lot of things that can go wrong.  So, a strong dollar could be a problem
for multinationals who export, as well as for emerging markets like China.

Second, any move to aggressively translate Trump`s trade war rhetoric into
reality will be a big problem.  Third, lengthy delays are likely in
enacting any stimulus or infrastructure plan, tax cuts and reductions in
regulations, all three of these for the most part late 2017 and 2018
events.

Finally, the biggest problem could happen if the Fed starts sounding like
it may raise rates more aggressively than expected.  The markets definitely
have not priced that one in.

I`m Bob Pisani at the New York stock exchange.

(END VIDEOTAPE)

MATHISEN:  Gabriela Santos joins us now to talk more about the market and
the potential risks she sees that could derail this rally.  She`s global
market strategist at J.P. Morgan Funds.

Gabriela, welcome, as always.  Great to see you.

You just heard Bob Pisani characterize this market as being on thin ice.
He also said that retail investors are increasingly bullish.  Do you see
this as a market on thin ice?  And what do you make of this sentiment of
retail investors.

GABRIELA SANTOS, J.P. MORGAN FUNDS GLOBAL MARKET STRATEGIST:  We do not.  I
think you have to keep in mind two things.  The first thing is the fact the
fundamentals are actually positive for U.S. equities before the election.

So, there`s been an acceleration in sentiment and in performance after the
election, but this has already been on a foundation that was quite
positive.  Growth was picking up, earnings were turning positive again and
a global economy was healing.  So, it`s already a positive backdrop.

And when it comes to the second part, when it comes to retail investors,
our conversations with our long-term clients is still one where there`s
still tremendous amount of cash on the sideline, over $12 trillion.  So,
it`s still a situation where a lot of retail investors are very underweight
equities or underweight investments in general.

HERERA:  What are the warning signs that you are keeping an eye on or
possible problems that the market may encounter?  You know, the Fed — Bob
mentioned the Fed may be getting a little bit too aggressive as one of
them, but what else is on your radar?

SANTOS:  Well, there are short-term risks, right?  Part of investing in
U.S. equities comes with some normal pullbacks and normal amount of
volatility.  These could arise around Central Bank meetings, they could
arise around political concerns in Europe, that`s possible.

But if we think about the median to long-term outlook, it has to be about a
change in fundamentals, right?  As we mentioned, they were looking positive
even going into the election.  So what we keep an eye on are variables that
could change the course in the medium term.

So, things like wage pressure, U.S. dollar strength, U.S. policy over the
next few years, those are the long-term themes that could shape our long-
term view of U.S. equities.

MATHISEN:  Let`s take a closer view at some of the sectors you like.  I
know that you and J.P. Morgan were early to say that financials would do
well and indeed they have.  What — do you still feel that they`re a good
place to put money, number one.  And number two, what other sectors do you
like?

SANTOS:  We do.  This is part of a broader theme of cyclicals over
defenses.  So, if we think about the market hovering around all-time highs
and it had a nice run in the second half of the year.  But there`s a lot of
dynamics going on underneath the surface.  The whole first half of the year
was about very defensive sectors, sectors that are used purely for yield
and as a safe haven, let`s say in the case of a U.S. recession, which was a
concern a few months ago.

Now, the picture is very different.  It is one where economic and earnings
growth is picking up.  As a whole we would be looking at cyclical sectors,
financials being one of them.

MATHISEN:  All right.  Gabriela, thank you very much as always.  Gabriela
Santos with J.P. Morgan Funds.

SANTOS:  Thank you so much.

HERERA:  The meeting of oil producers is just two days away and crude
prices have been whipsawed.  Today, the commodity rose 2 percent after
tumbling about 3 percent on Friday.

And as Jackie DeAngelis reports, it`s all because of very big question
marks surrounding the OPEC meeting on Wednesday.

(BEGIN VIDEOTAPE)

JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT:  When OPEC said it
would cut production in late September but announced final details at its
November 30th meeting, everyone wondered why.  Now as that meeting
approaches, it`s becoming increasingly clear.  Some members of the cartel,
like the Saudis, want the cut.  Others like Iraq and Iran are still holding
out two days before the meeting, and it seems there still may be no
consensus.

And to further complicate matters, speculation is building that OPEC may be
pressuring Russia to cut output as well, so it`s not alone in its bold
move.  But the Russians need the revenue and may not be eager to play ball.
All the volatility has raised crude prices over $45 a barrel but all the
doubts have kept them under $50.

JEFF GROSSMAN, BRG BROKERAGE:  They`re closer to agreement than
disagreement right now.  I think they have tempered some of their rhetoric
and I think there`s a chance of some sort of a court of sorts.  I wouldn`t
say that it`s a full-fledged lock solid kind of a line in the sand, but I
think there may be some sort of talk about at least moderating production.

DEANGELIS:  Over the weekend, a surprising comment from the Saudi energy
minister saying that the markets will rebalance with or without a cut,
possibly setting the stage to take no action.  In late September, OPEC said
it would cut 750,000 barrels per day from its production, the market now
hoping that it would see a steeper cut than that.

GROSSMAN:  If there`s no deal, I don`t see the catastrophic drop-off that
people are predicting.  I think this market could back off a bit and
certainly trade let`s say to the mid-40s, but I don`t think this market is
going much lower.

It seems to have built a pretty strong base here.  I`m leaning more to the
fact that we probably can work our way higher.

DEANGELIS:  With the dollar strengthening and the OPEC deal hanging by a
thread, crude prices might just see that three handle again.

For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis.

(END VIDEOTAPE)

MATHISEN:  Still ahead, why some say the most beaten down sectors could
deliver the biggest comeback and the best return among stocks.

(MUSIC)

HERERA:  A blow to Boeing (NYSE:BA).  The world trade organization said
that Washington state offered billions of dollars in illegal tax breaks to
the plane maker.  The key tax benefits came on the condition that Boeing
(NYSE:BA) keep production of its newest long haul jetliner in that state.
The ruling is part of a long-standing battle between Boeing (NYSE:BA) and
its European rival, Airbus.

MATHISEN:  Well, “Time” reportedly says no to a takeover bid from a
billionaire investor, and that is where we begin tonight`s “Market Focus”.

Multiple reports say Edgar Bronsman Jr. along with two other executives
approached the publisher of “People” and “Sports Illustrated” with a deal
worth $18 a share.  That values “Time” at just under $2 billion, but the
company rejected that offer.

Time Inc. shares soared following the news, up more than 17 percent on the
session, to $16 even.

The activist investment fund Elliott Investment sent a letter to Cognizant
Technology, urging the IT services provider to make changes it said could
lift Cognizant`s share price above $90 by the end of next year.  Elliott
management, which owns more than 4 percent of Cognizant, outlined plans for
improvement which include job cuts.

Cognizant rose just about 7 percent today to finish at $56.95.

And BTIG slapped H&R Block (NYSE:HRB) with a sell rating on concerns that
potential changes to the tax filing process under a Trump administration
could cut into the demand for the tax preparation company`s services.  BTIG
also cut its price target on the stock to $18 a share and shares plunged
today by 9 percent to $21.82.

HERERA:  Schlumberger (NYSE:SLB) said it signed a preliminary agreement
with Iran to study oil fields in that country.  The deal gives the world`s
largest oil field services company access to three fields but doesn`t
include any services operations.  Shares were off a fraction to $81.06.

And United Health gave an upbeat forecast for 2017, forecasting earnings
and revenue to come in above analysts` expectations.  That news sent shares
initially higher in after-hours trading.  They finished the regular session
down just a fraction to $152.11.

MATHISEN:  Well, there is a school of thought that the best stocks or
sectors to buy are those that have fallen dramatically.  It`s a high-risk
strategy but one that could bring big rewards for those with a strong
stomach.

Mike Santoli runs through some of the deeply discounted groups.

(BEGIN VIDEOTAPE)

MIKE SANTOLI, NIGHTLY BUSINESS REPORT CORRESPONDENT:  2016 has turned out
pretty nicely for Wall Street with the average U.S. stock gaining more than
10 percent.  But that hasn`t stopped the annual ritual of searching for the
most beaten down sectors to play for a dramatic comeback in the New Year.
It`s difficult to buck the market tide.  But buying stocks that have
suffered extreme declines over a prolonged period can offer spring-loaded
gains in years to come.

A good example from the past year, coal stocks had lost some 80 percent
over four years entering 2016.  So far this year, coal stocks as a group
have more than doubled.  In hunting for such potential comeback plays,
investors can start with sectors down more than 50 percent from their highs
over two or more years.

One group that now meets these conditions is specialty pharmaceutical
stocks.  Makers of generic drugs have seen their shares drop by 50 percent
to 80 percent since early 2015 on a litany of concerns over drug pricing
and regulatory threats.  Names such as Endo International, Teva
Pharmaceuticals and Mylan (NASDAQ:MYL) now trade at unusually depressed
valuations.

The pricing and policy outlook remain unclear, but is all that uncertainty
already priced into those shares.  Looking toward the rest of the world,
several countries have seen their equity markets battered.  Index funds
that track the Italian, Turkish and Russian markets have all lost 60
percent in recent years.  Investors looking to diversify might find cheap
entry points in these admittedly troubled economies.

SANTOLI:  Another area deeply out of favor, owners of broadcast stations,
such as Tribune, A.H. Belo (NYSE:BLC) (NYSE:AHC), and Gannet, which have
shed more than half their value in recent years.  Certainly, the economics
of TV are being squeezed, but local television hardly seems destined for
extinction.

One final extreme laggard, how about uranium stocks?  An exchange traded
fund that tracks this industry has fallen for six straight years by a total
of 90 percent.  There is no sense making these hard-hitting investment a
central part of one`s portfolio, and it`s critical to do your due
diligence.

But in a market now trading near an all-time high, these high-risk, high-
reward opportunities offer a chance to potentially profit from stocks that
are way down but not yet out.

For NIGHTLY BUSINESS REPORT, I`m Mike Santoli at the New York Stock
Exchange.

(END VIDEOTAPE)

HERERA:  Coming up, think Santa`s workshop for corporate America.  What an
Amazon (NASDAQ:AMZN) fulfillment center looks like on one of the busiest
days of the year.

(MUSIC)

HERERA:  Holiday shoppers spent less money over the Black Friday weekend
than last year.  According to one estimate, spending totaled on average
about $290 per person, slightly less than in 2015.  But more people spent
online rather than in stores, continuing a trend retailers hope to drive
home today on so-called Cyber Monday.

Courtney Reagan has more from Amazon`s fulfillment center in Robbinsville,
New Jersey.

(BEGIN VIDEOTAPE)

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Even though online
shoppers can fill their carts any day, the discounts on Cyber Monday have
turned it into a top shopping day.  The National Retail Federation predicts
more than a third of all Americans will shop online at some point today.

JAN KNIFFEN, J. ROGERS KNIFFEN WWE CEO:  This used to be the smallest
retail day of the holiday shopping season before we had the Internet.
Nobody went shopping on the Monday after Black Friday.  Now, it`s one of
the biggest shopping days of the season and so is Thanksgiving.

What does that tell you?  That`s all internet sales.  All of the growth
this year came on the Internet.

REAGAN:  Adobe predicts Cyber Monday will again make history as the biggest
online sales day ever in the U.S., and Amazon (NASDAQ:AMZN) is one of the
day`s biggest players.  While Amazon (NASDAQ:AMZN) doesn`t release Cyber
Monday sales figures, Piper Jaffray analyst Gene Munster thinks Amazon
(NASDAQ:AMZN) sales will grow twice as fast as traditional online retailers
today.

Amazon (NASDAQ:AMZN) is king of the jungle beyond just Cyber Monday.
Analyzing data from four million user receipts, slice intelligence
estimates roughly two of every five Internet purchases comes from Amazon
(NASDAQ:AMZN).

This is one of Amazon`s more than 70 U.S. fulfillment centers and it
operates nearly around the clock every day of the year.  When Amazon
(NASDAQ:AMZN) looks to the future, it`s planning for nothing but growth.
It added 18 fulfillment centers in the third quarter, five more in early
October, on top of the 14 it added last year.

Amazon (NASDAQ:AMZN) may make a lot of headlines, but traditional store-
based retailers are seeing a higher percentage of sales come from their
websites, too.  The National Retail Federation says eight of the top ten e-
commerce players are run by traditional brick and mortar retailers.

PATRICK MCKEEVER, MKM PARTNERS MANAGING DIR.:  Certainly a good chunk
belongs to Amazon (NASDAQ:AMZN), but we`re seeing some better performance
from some of the bricks and mortar, traditional bricks and mortar retailers
that do have e-commerce businesses.  Target (NYSE:TGT), for example, grew
its e-commerce sales, its digital channel sales by mid-20 percent range in
the third quarter.  Wal-Mart (NYSE:WMT) has seen some acceleration in its
e-commerce business with the acquisition of Jet.com.

COURTNEY:  And while traditional retailers are still playing catch-up to
Amazon (NASDAQ:AMZN) online, around 90 percent of all retail purchases are
still made in stores.

I`m Courtney Reagan in Robbinsville, New Jersey.

(END VIDEOTAPE)

MATHISEN:  Well, there`s a lot of work behind the scenes when you buy
something either in a store or online.  First data, the world`s largest
merchant processing network is one of a handful of companies that makes
sure your transaction goes through and safeguards your data.

Kayla Tausche reports tonight from First Data Cyber Command in Omaha,
Nebraska.

(BEGIN VIDEOTAPE)

KAYLA TAUSCHE, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Just how much
lighter did shoppers` wallets get over the Thanksgiving weekend?  Some
companies measure foot traffic, down 1 percent.

UNIDENTIFIED FEMALE:  It`s a little less people this year.

TAUSCHE:  Others discounts web traffic or the most sold-out toys.  First
Data crunches real spending from the 6 million merchants that use its
processing technology or the 4,000 banks whose credit cards are issued by
the company.  It found sales up 9 percent for Thanksgiving and Black
Friday, and Cyber Monday shopping on pace to grow 10 percent to 15 percent.

But big spikes could still come from a post-lunchtime procrastination or
after the work day ends.

GUY CHIARELLO, FIRST DATA PRESIDENT:  Last year on Cyber Monday, we saw a
tremendous amount of activity occur in two tranches.  One in the 2:00 to
4:00 p.m. time frame and 6:00 to 10:00 p.m. time frame.

So, we`re already seeing as I said earlier volumes well above last year`s
level.  I can only imagine what we`re going to see the rest of the day.

TAUSCHE:  First Data`s Cyber Command Center in Omaha makes sure those
transactions stay secure even as they move online.

UNIDENTIFIED MALE:  What you can see here is our command center.

TAUSCHE:  Andrew Galver (ph) works with banks to keep the billion cards in
circulation safe from cyber attacks.  He says no threats have emerged this
holiday season, but it`s early.

UNIDENTIFIED MALE:  We always need to be vigilant.

TAUSCHE:  Experts say late December will still be hectic for retailers and
shoppers despite how much buying has already taken place.

DANA TELSEY, TELSEY ADVISORY GROUP:  Typically what you always have is
post-Thanksgiving, December 15th through the 25th is essentially when
almost 40 percent of holiday season sales take place.

TAUSCHE:  For those gift givers, Thanksgiving marks a month-long marathon,
not a sprint.

UNIDENTIFIED FEMALE:  This is a start.  We`re a big family.

TAUSCHE:  For NIGHTLY BUSINESS REPORT, I`m Kayla Tausche, Omaha, Nebraska.

(END VIDEOTAPE)

HERERA:  I haven`t started yet.

MATHISEN:  You`re usually way ahead of the game.

HERERA:  Usually way ahead, and I`m way behind.

MATHISEN:  You usually said, it`s October 20th and you say I`m finished.

HERERA:  Not this year.

MATHISEN:  All right.  Well, we`ll play catch-up.

HERERA:  Stay tuned.

That does it for NIGHTLY BUSINESS REPORT tonight.  I`m Sue Herera.  Thanks
for joining us.  And we want to remind you that this is the time of year
your public television station seeks your support.

MATHISEN:  And I`m Tyler Mathisen.  Thank you for your support.  Have a
great evening, everyone, and we`ll see you back here tomorrow night when
all of our shopping will be done.

HERERA:  Absolutely.  Every bit.

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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