Transcript: Nightly Business Report – January 3, 2017

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

Funded in part by HSS.

(COMMERCIAL AD)

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: New Year, new gains. The
rally of 2016 sprints into 2017 with triple digit gains. Tonight, how to
protect your profits and still leave room for more.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Switching gears. Ford
cancels plan to build a plan in Mexico as president-elect threatens General
Motors (NYSE:GM) with a big border tax.

HERERA: Fine-tuning your 401(k). With pensions disappearing, there are
things you can do to shore up your retirement savings.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Tuesday,
January 3rd.

MATHISEN: Good evening, everyone and happy New Year.

The stock market got off on a good foot for 2017. Equities rose this first
major trading day of the New Year. Early in the day, the Dow came within
about 100 points of that yet to be touched 20,000 level, flirting with it
as did it for the last couple weeks. But as oil prices slipped, so did
stock prices.

The blue chip index added 119, it closed at 19,881. NASDAQ was up 45. And
the S&P 500 advanced 19, rising on the first trading day of the New Year
for the first time since 2013. With the sharp and steep rise in the stock
market over the past couple of months, many investors are wrestling with
one big question: will this be the year of the bull`s big finale?

Mike Santoli takes a look.

(BEGIN VIDEOTAPE)

MIKE SANTOLI, NIGHTLY BUSINESS REPORT CORRESPONDENT: Stocks are showing
new life as 2017 gets underway. The major U.S. index has hit record highs
starting in July after moving sideways for more than a year. And
confidence has surged among investors and consumers after the election of a
president promising business-friendly policies. While these upbeat trends
seem to have some momentum, investors should probably view any further
gains for stocks as a spirited latter phase of this bull market, not the
start of a multiyear boom.

While some talk about it like the Reagan era in the 1980s when tax cuts and
a new bull market helped revive American capitalism, the Trump
administration will begin against a far different back drop. The S&P 500
is up some 230 percent since March 2009. The index has had a positive
return in even of the past eight calendar years, one shy of the nine-year
streak in the 1990s.

Unemployment is already near historic lows, and while growth expectations
are perking up, stocks now appear fully valued compared to corporate
profits, even if earnings continue to rebound as expected.

All this suggests to some market observers that any significant upside
might have to come from a classic euphoria phase of this bull market, when
the public embraces stocks with enthusiasm and drives indexes up toward an
extreme. The upturning surveys and a rush of investor cash from bonds into
stocks late last year are hints that such a trend might be underway.

Of course, there`s no signs to pinpoint where we are in the market`s life
cycle. The economy might simply continue grinding slowly ahead and carry
stock prices with them, or perhaps inflation fears a strong U.S. dollar and
possible trade tensions could unnerve world markets and derail that
confidence trade. However things turn out, it`s probably best not to
expect several more years of smooth gains for stocks which after all have
been doing quite well even as the public debate has focused on the
economy`s weak spots.

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

(END VIDEOTAPE)

HERERA: So, with the rally continuing into the New Year, how do you
protect the gains that you`ve seen in your portfolio?

Peter Mallouk is president and chief investment officer of the wealth
management firm Creative Planning and he joins us now to talk about that.

Welcome back, Peter. Nice to see you again.

PETER MALLOUK, CREATIVE PLANNING PRESIDENT & CIO: It`s great to be with
you again.

HERERA: What is the best strategy? It`s a New Year, but not necessarily a
new market.

MALLOUK: Right. I like — I like to look at the markets and look at your
personal portfolio from an opportunistic rebalancing perspectives, which
basically means instead of trying to guess when the U.S. is going to stop
running the strong and when international is going to turn, when the
portfolio gets out of whack, you rebalance right then. You don`t wait for
the end of the year. You don`t wait for end of the quarter. You take
advantage of it right away.

If you look at last year, not meant you were doing in it February. You
were buying energy. You were buying small cap stocks. You`re buying
international stocks.

The U.S. has been doing better. Those were very weak. And if you did
that, you were greatly rewarded and you will be rewarded over time. And if
you`re doing that right now, you`re starting to look at maybe taking some
of your U.S. profits and looking overseas a little bit.

MATHISEN: So, buy stuff that is not participated quite as much as other
sectors. You know, Peter, I hear an awful lot of commentators these days
sort of saying, hey, the market could continue to run here another 10
percent, another 15, whatever, because we`re going to have the prospect of
lower taxes, less regulation, maybe more infrastructure spending. When
everybody starts to say and think the same thing, that`s when I start to
worry.

What are the possibilities that`s something might get in the way of this
sort of clear sailing path?

MALLOUK: Well, I think if you look at the market`s valuation from where
interest rates are, from where unemployment is, interest rates still near
all time lows, unemployment near all time lows, the market is fairly
valued. And if you look at all the things you talked about, pulling back
on regulations, lowering corporate taxes, repatriation of assets, those
drop to the bottom lines for these companies. So, that`s — it`s not
really hypothetical that these companies are going to make more money in
this kind of environment.

The question becomes, will we see more growth? And with the low
unemployment, even regardless of all the things Trump is talking about,
when you have unemployment drop below 5, you start to see wage inflation
which starts to drive, you know, more growth.

HERERA: Now, you say — you gave us a couple of ETF that you think might
allow people who want to rebalance their portfolio some diversity.

MALLOUK: Yes, I likes VEA, which has developed markets international, and
IEMG, which is emerging markets. In Creative Planning, we believe in being
globally diversified all the time. But when you look at the discrepancy
that`s happened between international stocks and U.S. stocks, that sort of
discrepancy has never been sustained. We never know when it`s going to
change, when one is going to start and the others today, indicative of how
the year is going to go, nobody knows that.

But this sustained gap of performance is not sustainable. If you`ve got
patience and you`re looking for value, well, there is plenty overseas. To
the extent you think the U.S. is fully valued, fairly valued, and I do, at
Creative Planning we do, you can look at it globally and see a lot of value
on the table.

HERERA: Excellent. Peter, thank you for those suggestions. We appreciate
it.

MALLOUK: Thanks for having me.

HERERA: Peter Mallouk with Creative Planning.

MATHISEN: The president-elect today targeted another American icon,
General Motors (NYSE:GM). He did this just hours before finding out Ford
canceled plans to build a small car plant in Mexico. As a candidate,
Donald Trump vowed to stomp Ford from building that very plant. Now, just
weeks from becoming president, Mr. Trump is pushing even harder to change
automakers look at building their vehicles south of the border.

Phil LeBeau has the details.

(BEGIN VIDEOTAPE)

PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT: After months of
repeatedly saying Ford would not change plans to move small car production
to a new plant in Mexico, Ford CEO Mark Fields switched gears, calling
President-elect Donald Trump to say Ford is not expanding south of the
border, but rather in the U.S.

MARK FIELDS, FORD MOTOR CEO: While we inform President-elect Trump and
also Vice President-elect Pence this morning that we were going to be
investing $700 million here in our plan in Flat Rock, Michigan, adding 700
jobs on top of the 28,000 jobs that we`ve created over the past five years.

LEBEAU: Ford says it`s not adding a Mexico plant because demand for small
cars is showing down. Perhaps. But this is clearly a victory for Donald
Trump. While running for president, he hammered automakers for building
vehicles in Mexico and importing them tax-free to be sold in the U.S., a
message he is still pounding, this time with GM, tweeting, “General Motors
(NYSE:GM) is sending Mexican-made model of Chevy Cruze to U.S. car dealers
tax free across border. Make in USA or pay big border tax.”

GM responded saying, “All Chevrolet Cruze sedans sold in the U.S. are built
in GM`s assembly plant in Lordstown, Ohio. GM builds the Chevrolet Cruze
hatchback for global markets in Mexico, with a small number sold in the
U.S.”

Approximately 4,500 of those hatchbacks sold last year in the States. So,
not a huge part of the more than 400,000 vehicles GM imported to the U.S.
from Mexico last year.

But in Lordstown, Ohio, where the auto maker is laying off 2,000 workers
because of slowing demands for the Cruze, Trump`s message plays well. In
fact, Spitzer Chevrolet in Lordstown refuses to sell Cruze models built in
Mexico.

BARRY GONIS, SPITZER CHEVROLET: What we said, well, we`re not keeping them
on the lot. And we`re sending them out of the area. We want to support
our plant and the guys and girls that are up there, third shift. It`s kind
of sad what`s happening, so we like to keep them here.

LEBEAU: The big question remains, whether Mexico`s soaring auto production
which will top 4 million this year, will eventually lead to a tax being
slapped on those models sold in the U.S.

If that happens, how much will those increased costs hurt demand? And the
bottom line of auto makers who are increasingly taking a second look at
their operations south of the border.

Phil LeBeau, NIGHTLY BUSINESS REPORT, Chicago.

(END VIDEOTAPE)

MATHISEN: One stock that fell after the Ford`s announcement was Kansas
City Southern (NYSE:SO) (NYSE:KSU). The automaker`s Mexican plant was
supposed to have been built along Kansas City Southern`s railway lines.
The railroad received nearly half its revenue from its Mexican operations
during the first nine months of 2016.

HERERA: The president-elect tapped a new trade ambassador. Robert
Lighthizer is a former Reagan administration official. Trump says that he
has repeatedly fought to prevent bad deals from hurting Americans.
Lighthizer is a critic of China`s trade practices and says he is fully
committed to leveling the playing field for American workers.

MATHISEN: The president-elect tweeted his pledge saying the Affordable
Care Act, saying, quote, “It just doesn`t work.” This as the House and
Senate convened today for the start of the 115th Congress which saw Paul
Ryan easily reelected as House speaker.

John Harwood is outside Trump Tower in New York City with more on the
congressional agenda.

John, Congress has an aggressive to do list, beginning with the repeal of
Obamacare. I assume that remains the top priority. Did they put in a bill
to do it today?

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT: Yes, they started the
process in motion. They passed language for the process that is an
expedited process. That means they can reveal big parts of Obamacare with
only a majority vote. It does not make it vulnerable to a filibuster by
Democrats. That process is going to take a few weeks. It will go through
end of January.

But Republicans are on track for what they`re calling a repeal-and-delay
strategy to have a phase-in period for some replacement. The question is
whether they come up with one or just keep putting it off.

HERERA: Yes.

On the environmental side of things, can we expect to see the reversal of
the environmental regulations? And on what kind of a timetable?

HARWOOD: No question about it. There are a couple regulatory bills,
rollbacks that they`re passing. Donald Trump vowed to have a policy that
repeals two regulations for every new one that is passed. And regulations
like the president`s clean power plan, which is now subject to legal
challenge, holding up its implementation. That is something that
Republicans in the executive branch are going to take a different attitude
on, of course, once Donald Trump becomes president.

MATHISEN: All right. John, thank you very much. We have to leave it
there.

John Harwood in a rainy New York City tonight.

HERERA: Indeed.

Still ahead, preparing for retirement. If that`s one of your New Year`s
resolutions, there are some things you may want to do to maximize your
401(k).

(MUSIC)

MATHISEN: Finland is launching a two-year experiment. The country is
providing 2,000 unemployed citizens with a monthly income of roughly
US$580. Those receiving the money will continue to do so even after they
find work. The government hopes the experiment will cut government red
tape, reduce poverty and lower unemployment in that country, which stands
now at more than 8 percent.

HERERA: Tesla misses its delivery goal for 2016. That`s where we begin
tonight`s “Market Focus”. The automaker delivered just over 76,000
vehicles last year, missing its target of 80,000. The company noted that
more than 2,500 cars in the fourth quarter were not counted as delivered
because the vehicles did not make it to the customer in time. Tesla shares
initially fell in afterhours trading following the news but ended the
regular session up 1.5 percent to $216.99.

Xerox (NYSE:XRX) has officially split into two publicly traded companies.
Over the week, the printer and copier maker spun off its business services
division called Conduent. That company debuted on the New York Stock
Exchange today, opening at $14.90. Separately, J.P. Morgan and Credit
Suisse upgraded Xerox`s stock. So, shares of Xerox (NYSE:XRX) soared
almost 20 percent to $6.89, while Conduent shares fell nearly 8 percent to
$13.72.

Chip maker Intel (NASDAQ:INTC) said that it will buy a 15 percent stake in
the German digital mapping company called Here. Intel (NASDAQ:INTC) said
it also entered into an agreement with Here where the two companies will
research and develop technology for autonomous driving. Shares of Intel
(NASDAQ:INTC) rose almost 1 percent to $36.60.

MATHISEN: The molecular diagnostic test maker Interpace Diagnostic said it
has signed an agreement with Blue Cross Blue Shield. Under the deal,
Interpace will work with one of the insurer`s programs to help it developed
the best ways to secure ongoing coverage for its products and tests in the
pipeline. Shares of Interpace skyrocketed 70 percent to $7.50.

Shares of the pharmaceutical company Depomed surged today following a
report that said the coil will sell itself and it is accepting final bids
tomorrow. According to “The New York Post”, the private equity firm KKR
(NYSE:KKR) is among the potential suitors. Depomed surged nearly 13
percent today to $20.34.

HERERA: Early champions of the 401(k) are having some regrets, reportedly
about, the investment resolution that they started. According to the “Wall
Street Journal”, many of the backers say the 401(k) has fallen short of
expectations and was never meant to replace pensions.

But it has. So how do you make the most of and it improve your retirement
savings?

Tim Maurer, director of personal finance at BAM Alliance joins us now to
talk about that.

Happy New Year. Good to see you.

TIM MAURER, BAM ALLIANCE DIRECTOR OF PERSONAL FINANCE: And to you.

HERERA: Tim, what do you make first of ball the article and whether or not
those claims, do they resonate with you? And then how can we really help
ourselves improve our 401(k) performance?

MAURER: Well, in many ways, they do resonate with me because anyone who is
in the financial space as I am, spending all my time working with clients,
many times, their retirement objectives, I do see how the 401(k) has been
underutilized. I absolutely see how companies in many cases have abdicated
the role that they were playing and retirement for their employees` lives
through pension plans, by eliminating pension plans and just pointing
people in the direction of a 401(k).

And I absolutely see the institutional challenges with big companies
filling plans with bad investment that have high expenses. But at the same
time, this is option that we have on the table today. And if you utilize a
401(k) correctly, if you know how to hack it a little bit from the
institutional problems that it has, you absolutely can make the most of it
for yourself and your family.

MATHISEN: When you say hack it, what are you talking about there? Making
the right investment choices within the panoply of choices that you have or
what?

MAURER: Well, that certainly is part of it, Tyler. One of the reasons the
choices are a problem is because most 401(k) plans are run by these big
financial firms that fill them up with their own high expense investments.
But you can often find index type funds inside of your plan. Well, that`s
where I`m referring to with the hacking. You may have to look between the
lines in order to find the best options. It should be easier and hopefully
it will be going into the future, but you can still absolutely make the
most of it.

HERERA: You say there are three things that individuals should be doing to
maximize their 401(k) contributions. Tell us about that.

MAURER: Well, the first one is contribute. No matter how many times we
want to complain about the options that are available, no matter how many
times we want to be concerned with market volatility and the challenges
that we all have and investing throughout our lifetimes, the number one
predictor of financial success in retirement is the degree to which you
apply yourself and your funds that you save. So, let`s not see this news
about 401(k)s. It can be a little dreary and use it as reason to abdicate
our role in saving for the future.

Number two, we have to do our best to allocate the funds inside. And
that`s where we get to Tyler`s point about hacking what might be a mediocre
plan. Hopefully, we`re going to see improvement there, especially with the
new Department of Labor ruling requiring financial advisers to be
fiduciaries this coming April.

But, lastly, you also want to maximize whatever fixed income opportunities
that you have. For most of us, that`s still going to be Social Security as
the primary. And as we continue on age in the future, I am encouraging
retirees to stave off taking their Social Security benefits until as late
as possible, because then you will see your Social Security income go up
and you will reduce the reliance on your 401(k) and retirement.

HERERA: And on that note, we have to leave it there, Tim. Thank you, Tim
Maurer with BAM Alliance.

MAURER: Thank you.

MATHISEN: Coming up, why some in Silicon Valley are giving new meaning to
the term “pet rock.”

(MUSIC)

HERERA: The Fed releases the minutes of its last meeting when it voted to
raise interest rates. There will be two competing meetings on Obamacare on
Capitol Hill, one with President Obama, and the other with Vice President-
elect Pence. And the world`s largest automakers release their sales
numbers for December, potentially setting a record for the year. That`s
what to watch for on Wednesday.

MATHISEN: The space industry could enter a new phase this year after a
number of stumbles. SpaceX plans to resume rocket launches shortly and
there`s a lot of money on the line, as private companies shoot for the
stars.

Morgan Brennan has more.

(BEGIN VIDEOTAPE)

MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Space Exploration
Technologies says its rockets are ready for blast off. The privately held
company is targeting a return to flight this Sunday. For months after a
Falcon 9 rocket erupted on the Cape Canaveral launch pad, destroying a
commercial satellite and halting an aggressive launch schedule.

After an intensive investigation, SpaceX determined that explosion was
triggered by the failure of the helium vessel used to help pressurize a
liquid oxygen fuel tank. The anomaly initially stumped founder and CEO
Elon Musk who called it a, quote, “toughest puzzle we`ve ever had to solve”
in a CNBC phone interview back in November.

ELON MUSK, SPACEX FOUNDER AND CEO: I think we`ve gotten to the bottom of
the problem. Really surprising problem that`s never been encountered
before in the history of rocketry, and it basically involves a combination
of liquid helium, advanced carbon fiber composites, and solid oxygen —
oxygen so cold that it actually enters solid phase.

MORGAN: SpaceX says it`s taking, quote, “corrective actions” to address,
quote, “all credible causes of the explosion”, including long term, some
design changes. But to launch, the upstart must first get the green flight
from regulators — a process likely to happen if tests this week go
according to plan. Experts say it`s crucial that the company is
successful.

DAN DUMBACHER, PURDUE UNIVERSITY: What SpaceX is doing with this launch is
another step in exercising commercial entities, to take over the role that
has been done by the government in the past so that we can do it more
efficiently and then focus our government resources on the next stage of
exploration.

MORGAN: Like deep space.

The upcoming launch would put ten Iridium satellites into orbit, the first
of seven such trips to replace an aging constellation. That will be in
part used to help track aircraft. Shares of Iridium soared on the news.

SpaceX has a $10 billion backlog of launch contracts, and September`s
explosion already caused the company at least one order. It also has deals
with the Pentagon and NASA, including to shuttle cargo and starting next
year, astronauts to the International Space Station. And beyond that, the
company`s own plans to go to Mars.

But it all come down to this week and whether SpaceX can finally get back
into space.

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan.

(END VIDEOTAPE)

HERERA: So, what is about it billionaires and space? From Elon Musk to
Amazon`s Jeff Bezos, Virgin`s Richard Branson, and Microsoft`s co-founder
Paul Allen all have entered the race for civilian space travel. But
there`s another space race playing out in Silicon Valley.

Josh Lipton has our story from San Francisco.

(BEGIN VIDEOTAPE)

JOSH LIPTON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Steve Jurvetson knows
he might never get to travel to Mars. But that doesn`t mean the respected
venture capitalist can`t bring a piece of Mars home. He`s converted his
office in Menlo Park, California, into a private museum. It`s filled with
treasures, including the second largest Mars rock in private hands.

Jurvetson won`t say how much he paid for the rock, only that it costs more
than his first home. To find such space rocks, Jurvetson turns to
professional meteorite hunters like Michael Farmer. Since the late 1990s,
he has traveled to some 80 countries, searching for these rocks, which he
then sells to private collectors, including tech heavyweights like
Jurvetson.

MICHAEL FARMER, METEORITE HUNTER: The Silicon Valley guys have been pretty
good the last couple of years. They buy a bit different than the Chinese.
The Chinese want large iron, large things to put in office lobbies and
things like that. Whereas the tech guys, they want rare things. Very,
very special things.

LIPTON: Farmer, along with his friend and business partner Greg Hupe,
recently returned from Bolivia where they brought several meteorites from
Quechua people, a local indigenous community. The rocks were some 4
billion years old. And within 24 hours, they flipped them for $60,000.

This work is not for the faint of heart. In 2011, Farmer was kidnapped,
beaten and nearly killed by Kenyan thieves. In that same year, he was
charged with illegal mining in Oman and imprisoned for two months. Greg
Hupe also counts tech entrepreneurs as his clients, seen here with Naveen
Jain, who is the founder of startup Moon Express (NYSE:EXPR), a commercial
space company.

Hupe sold Jain two slices of lunar meteorite, each weighing roughly one
pound and about the size of a large dinner plate. Each slice of this rock
costs hundreds of thousands of dollars. The market for meteorites extends
well beyond just tech powerbrokers. Last April, Christie`s held an auction
for these rocks and sales totaled some $700,000.

Collectors don`t necessarily think of these space rocks as sound
investments. Instead, Jurvetson says he buys meteorites because of the
unique, rare story that each ancient rock reveals.

For NIGHTLY BUSINESS REPORT, I`m Josh Lipton, San Francisco.

(END VIDEOTAPE)

HERERA: You just never know, do you?

MATHISEN: You never know.

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

MATHISEN: I`m Tyler Mathisen. Thanks from me as well. Have a great
evening. We`ll see you back here tomorrow.

END

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