Transcript: Nightly Business Report – January 24, 2017

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

BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Flirting with Dow 20,000.
It is back in sight as the S&P 500 and NASDAQ close at record levels amid a
rash of blue chip earnings.

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Taking the wheel. President
Trump calls the big three automakers to the White House and tells them if
cars are sold in the U.S., he wants them made in the U.S.

GRIFFETH: Financial gamble. Why some of America`s largest cities could be
at risk of losing billions of dollars in federal aid.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Tuesday,
January 24th.

Good evening, everybody. I`m Bill Griffeth, in tonight for Tyler Mathisen.

HERERA: Great to have you here.

GRIFFETH: Thank you.

HERERA: Good evening, everybody. I`m Sue Herera.

Well, S&P 500`s record, check, NASDAQ record, check. The Dow, well, it`s
still trying to reach that elusive 20,000 level but that milestone came
within striking distance today on a number of blue chip earnings and a rise
in oil prices. Also helping the rally was a jump in infrastructure-related
stocks following the signing of executive orders by President Trump. We`ll
have more on that in just a moment.

But, first, here the closing numbers for you. The Dow Jones Industrial
Average advanced 112 points to 19,912. The NASDAQ increased 48. And the
S&P 500 added 14.

Investors are also hoping earnings will help drive stocks and today, five
Dow components reported.

(BEGIN VIDEOTAPE)

HERERA: A strengthening dollar continues to eat into Du Pont`s earnings.
The agriculture giant is looking to grow by merging with Dow Chemical
(NYSE:DOW). But European antitrust authorities are questioning how their
plan to combine insecticide, weed killing and crop seed businesses can help
competition.

3M (NYSE:MMM) says fourth quarter earnings and revenue were up. It`s
holding firm on its 2017 forecast. The stronger dollar makes its products
things like components for smartphone screens, as well as wind and solar
power generation and, of course, Post-Its more expensive on global markets.
But also helps profit margins on some of them.

Travelers operating profits hit an all time high but its auto insurance
business disappointed. Costly personal injury claims are up and there`s
concern about the growing number of accidents caused by distracted drivers.

Johnson & Johnson (NYSE:JNJ) beat earnings estimates but sales fell short.
J&J lowered its output for 2017. Drugs sales, especially Remicade, used to
fight arthritis, were down more than 3 percent. And that could be a worry
for the rest of the pharmaceutical sector.

And Verizon`s revenues dropped, too. Subscription growth dropped 61
percent. It`s still growing but much more slowly than before.

Verizon (NYSE:VZ) is trying to expand into digital media and advertising,
offering to buy Yahoo`s internet business. But that deal, according to
Yahoo (NASDAQ:YHOO) won`t close until the second quarter of 2017, a quarter
later than expected.

(END VIDEOTAPE)

HERERA: Of those five Dow companies, Du Pont saw the biggest gain, while
Verizon (NYSE:VZ) saw the biggest drop.

GRIFFETH: Meanwhile at the White House, the president moved quickly on the
promise to bring back manufacturing jobs. This morning, he hosted a
meeting with the CEOs of America`s big three automakers with one objective
— to build more cars here and to hire more workers.

Eamon Javers reports tonight from the White House.

(BEGIN VIDEOTAPE)

EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: In his first office,
President Trump has made it clear that American business and jobs will be
top priority. And today, the auto industry led the agenda as the president
summoned the CEOs of Ford, GM, and Fiat Chrysler to the White House.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: It`s the long term jobs that
we`re looking for. We`re bringing manufacturing back to the United States
bigly. We`re reducing taxes very substantially and we`re reducing
unnecessary regulations.

JAVERS: Speaking to reporters outside the White House, Ford CEO Mark
Fields sounded an optimistic tone, saying the auto industry is excited the
work with the president on tax policies, regulation and trade.

MARK FIELDS, FORD MOTOR CEO: We just had a great conversation with the
president and he is very focused on policies that will grow investment and
jobs here in America and American industry, and, of course, in the
automotive industry which is what we talked about this morning.

JAVERS: Ford recently committed $700 million to upgrade a plant in the
Detroit area and Fiat Chrysler committed $2 million for factories in Ohio
and Michigan. While GM has been under scrutiny from Trump who in a tweet
on January 3rd, criticized the company for importing the Chevy Cruze from
Mexico.

Trump perhaps making light of that in today`s meeting with CEO Mary Barra.

TRUMP: We had a very big push to have plans, many other plans. You`re not
being singled out, believe me, Mary, I promise.

JAVERS: Just last week, GM announced plans for 1,000 new or retained
factory jobs and a billion in new U.S. spending.

So, two sectors in two days — manufacturing and automotive — meeting with
the president here at the Trump White House. No indication, though, from
Sean Spicer, the new White House press secretary, of which other sectors
will soon be brought in to meet with the president.

For NIGHTLY BUSINESS REPORT, I`m Eamon Javers at the White House.

(END VIDEOTAPE)

GRIFFETH: By the way, Toyota (NYSE:TM) added its name to the list of
companies announcing new jobs here in the U.S. The Japanese automaker says
it plans to invest $600 million and add 400 jobs to an assembly plant in
Indiana where it already builds the Highlander.

HERERA: Phil LeBeau covers the auto industry for us and he joins us now.

So, Phil, let`s put some numbers on this. How many cars are made here in
the U.S. versus, say, in Mexico?

PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT: In terms of
production, the U.S. is far bigger than Mexico. I`ll tell you, about 11.5
million vehicles built here in the United States last year. Most of them
were sold and bought here in the United States.

There you see the other numbers. Mexico coming in at 3.5 million and in
Canada, a little smaller at 2.4 million. The bulk of the vehicles sold
here in the U.S. are built here. But it`s the rising presence of Mexico
and Canada, that`s what has Donald Trump`s attention.

GRIFFETH: Well, what`s the likelihood that one of the big three will
commit soon to building a new plant here in the U.S.? What do you think?

LEBEAU: I think the likelihood of something happening soon is pretty low.
In part because the automakers want to see what happens with NAFTA? Why
commit a couple billion dollars to build a plant in Ohio or Michigan or
wherever in the United States, when you`re not sure what`s going to happen
with NAFTA, because you have to decide, is it NAFTA in Mexico where the
things are changing? The taxes will be coming with import tax? Or is it
Canada? Is it both?

So, for the automakers, they`ve got to see basically what hand they`re
dealt in terms of NAFTA before they make some type of a commitment.

HERERA: There`s also the question of the third party manufacturers in the
automotive industry.

LEBEAU: Right.

HERERA: Could we see more of them? Because the automakers are worried
about higher costs. Might that help to lower their costs?

LEBEAU: Yes. And particularly if there is a niche model. Let`s say a
compact car that they`re currently building in Mexico. They`re not going
to build a new plant in the United States and build a low margin care in
the United States.

What they might do is they might say to an independent contractor, we still
want that car. We want it under our particular brand. We`ll have you
build it. That way, it`s built in the United States for domestic
automakers.

HERERA: Phil, thank you as always.

LEBEAU: You bet.

HERERA: Phil LeBeau in Chicago.

GRIFFETH: As we reported earlier, infrastructure stocks, specifically
materials and industrials, rallied today after President Trump signed those
executive orders reviving two controversial oil pipeline projects. The
Keystone Pipeline is backed by TransCanada. Energy Transfer Partners is
behind the Dakota Access Pipeline. Both stocks rose more than 3 percent
today.

Jackie DeAngelis now takes a look at what might happen next.

(BEGIN VIDEOTAPE)

TRUMP: With regard to the construction of the Keystone Pipeline, something
that`s been in dispute and is subject to a renegotiation of terms by us.

JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT: He said it was on
his agenda for day one and he came through as promised. President Trump
making a bold statement that he will carry out his promises to be more
supportive of energy infrastructure projects that will put Americans to
work.

TRUMP: We are and I am very insistent that if we`re going to build
pipelines in the United States, the pipes should be made in the United
States.

DEANGELIS: Both projects were highly controversial and highlighted the
political clashes over the energy boom in this country. The Keystone was
vetoed by President Obama in 2015; a crucial permit for the Dakota Access
Project being denied in December.

But all that seems to be changing, as these projects get underway, there
are roughly a dozen other pipelines that are under federal jurisdiction,
expected to move forward with more ease.

REP. PAUL RYAN (R-WI), SPEAKER OF THE HOUSE: Our goal is to leverage not
just roads and bridges, but pipelines and FAA reauthorization, and so many
other things. So, you know, infrastructure involves many different aspects
that will create jobs in this country.

DEANGELIS: But there`s a lot at stake. These projects are controversial
for a reason, namely environmental concerns. And opposition groups will
continue to rally against them.

In a statement, Earth Justice, which represents the Standing Rock Sioux
Tribe on the Dakota Access issues, said President Trump, quote, “should
brace himself to contend with the laws he is flouting, and the millions of
Americans who are opposed to these dangerous and destructive projects. We
will see his administration in court,” end quote.

And what will happen to oil prices now that they have recently stabilized?
The risk is they do initially fall. More pipelines mean more oil, whether
produced here or at home or abroad. And of demand isn`t there to meet
supply, well, we could just see prices fall again.

On the jobs front, we`re talking about roughly 12,000 during construction
for Dakota Access. Some of those fade when the project is complete. For
Keystone, nearly 4,000 direct construction jobs and more than 40,000 when
you include indirect jobs. But most of those are temporary, too.

Either way, it`s seemingly a win for Trump who is checking off items his
lengthy to-do list.

For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis.

(END VIDEOTAPE)

HERERA: Six of the eight biggest oil producing states are now in a
recession. According to a new report by S&P, the decline in the price of
crude hurt the economies of Alaska, New Mexico, Wyoming, Oklahoma, North
Dakota and Louisiana last year. Texas and Montana saw a slight increase in
growth, barely avoiding a recession.

GRIFFETH: Still ahead, the costly decision some cities may have to make.

(MUSIC)

HERERA: Republicans in Congress are laying out an aggressive agenda which
includes overhauling the entire federal tax code. Today, the chair of one
of the more powerful committees in the House warned that Congress will not
be able to lower the corporate tax rate unless the controversial border
adjustment tax remains part of the plan.

(BEGIN VIDEO CLIP)

REP. KEVIN BRADY (R), TEXAS: There are severe consequences for America if
special interests succeed in blocking this provision. Foreign products
would continue their tax advantage over “made in America” products,
undercutting President Trump`s focus on American jobs and growth. Tax
rates on businesses would have to increase significantly from the proposed
15 and 20 percent rates, undercutting our ability to make America
competitive again.

(END VIDEO CLIP)

HERERA: As we`ve reported, the border adjustment would exempt export
revenues from taxation, but impose a 20 percent tax on imports. President
Trump has called that tax complicated.

GRIFFETH: We had an economic report out this morning. Sales of previously
owned homes dipped in December, that according to the National Association
of Realtors. Existing home sales were off nearly 3 percent which was more
than expected. Despite the decline, though, the report caps the strongest
year for housing since the real estate peak about ten years ago and it
could also indicate that the pace of sales may be difficult to sustain this
year as prices rise along with mortgage rates.

HERERA: Corning (NYSE:GLW) shatters estimates and that`s where we begin
tonight`s “Market Focus”.

The glass and ceramics company which makes products for the automotive and
aerospace industries said strong performance in its display technologies
and specialty materials businesses led to the higher than expected results.
Corning (NYSE:GLW) shares rose more than 5 percent to $26.18.

Lockheed Martin (NYSE:LMT) posted profit and sales in its latest quarter
that beat estimates, but the defense contractor`s outlook wasn`t as
positive. The company lowered its full year sales forecast and gave
earnings guidance below expectations. That sent shares lower. Lockheed
ended the day down nearly 2 percent to $252.91.

Specialty metals maker Alleghany (NYSE:Y) Technologies reported a narrower
than expected loss in the latest quarter. Revenue rose nearly 8 percent,
which was slightly below street targets but still indicates the company`s
turnaround as moving in the right direction. So, shares rallied 31 percent
to $22.28.

GRIFFETH: An increase in new orders helped lift results at D.R. Horton
(NYSE:DHI). The nation`s largest homebuilders said the profits and sales
grew and that topped analysts` expectations. The company also reaffirm its
full year outlook as well. Shares popped more than 6 percent today to
$30.64.

And Chinese ecommerce giant Alibaba said the strength in its core and cloud
businesses led to a rise in profit and sales. Those results easily beat
expectations. Alibaba also said that it would raise its revenue guidance
for this whole year. Alibaba shares were 3 percent higher to $101.43.

And packaging servicing company WestRock is going to buy rival Multi
Packaging Solutions for more than $1 billion. The tie up there is expected
to increase West Rock`s exposure in the health care spirits and cosmetic
markets. WestRock stocks rose more than 1.5 percent to $54.05. Meanwhile,
shares of Multi Packaging Solutions soared by 23 percent to $17.79.

HERERA: Immigration reform as you probably know was a cornerstone of
President Trump`s campaign. But when an undocumented immigrant is arrested
for a crime in Portland, Oregon, he or she may get jail time, but will not
be deported. And that`s because Portland is one of hundreds of sanctuary
cities across the country.

But being called a sanctuary city may cost those municipalities billions of
dollars.

Aditi Roy reports.

(BEGIN VIDEOTAPE)

ADITI ROY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Every day, Romeo Sosa
helps more than a hundred day laborers find temporary work in Portland,
Oregon. As the executive director of VOZ, a nonprofit group that works in
immigrant communities, Sosa says most of its clients are from other
countries. But he`s not sure how many of them are undocumented.

ROMEO SOSA, VOZ EXECUTIVE DIRECTOR: No. It`s not our job to ask.

ROY: It`s a familiar response among civic leaders here. Portland is a
sanctuary city by virtue of being in a sanctuary state.

So, what does that mean? Sanctuary policies range. In milder cases, local
governments don`t ask offenders about their immigration status. Stronger
sanctuary policies require municipalities to decline request from
Immigration and Customs Enforcement or ICE to hold suspected undocumented
immigrants.

It`s not just a political statement. Some sanctuary cities and counties
say they don`t want to burden local law enforcement carrying out federal
immigration policy. And contend it prevents immigrants from cooperating
with local officers, which hurts their ability to solve crimes.

There are more than 300 sanctuary jurisdictions across the U.S. and they
are poised for a showdown with Donald Trump. In his contract with the
American voter, President Trump has promised to cancel all federal funding
to sanctuary cities. Some legal experts say the law doesn`t require local
governments to comply with federal requests to detain immigrants.

JULIET STUMPF: If the Trump administration were to say, we`re going to
pull your federal funding if you don`t comply with these immigration
detainers, it`s actually putting the cities between a rock and a hard place
because the cities then have to choose between obtaining this federal
funding and complying with the Constitution and staying on the right side
of the law.

ROY: If the president stands by his pledge, New York City could lose out
on $8.5 billion in federal aid. San Francisco could lose $1.2 billion in
federal funds. Seattle could lose $80 million in federal dollars and
Summerville, Massachusetts, could lose $6 million federal dollars.

Despite those potential losses, many cities like Portland vow to remain
sanctuary cities no matter what Trump does, even as some critics argue
sanctuary policies allow criminals to walk free which Portland`s mayor
denies.

TED WHEELER, PORTLAND MAYOR: We are not harboring criminals. If someone
commits a crime, certain misdemeanor, and certainly felonies, people who
commit acts of violence, murder, rape, burglary. They`ll still be
prosecuted here for those crimes.

ROY: Mayor Wheeler says even though the city receives $77 million in
federal funds, he is not backing down from Trump.

He is the only one. Chicago Mayor Rahm Emanuel has proclaimed the Windy
City will remain a sanctuary city. And in New York, the attorney general
has issued a guide to help city and county governments uphold their
sanctuary policies.

For NIGHTLY BUSINESS REPORT, Aditi Roy, Portland, Oregon.

(END VIDEOTAPE)

GRIFFETH: All right. Let`s turn now to our guests who have opposing views
on this very nuanced topic. Ira Mehlman is the director of the Federation
for American Immigration Reform. He supports stopping federal funding to
sanctuary cities. Ali Noorani is with the National Immigration Forum, says
the current legislative proposals could represent a step backwards.

Gentlemen, thank you both for joining us tonight.

Ali, I`m going to start with you. Clearly, Mayor Emanuel in Chicago said
that they will remain a sanctuary no matter whether the federal funding
dries up or not. Can you say that for all sanctuary cities? What happens
to those cities that really rely on that federal funding if it is pulled?

ALI NOORANI, NATIONAL IMMIGRATION FORUM EXECUTIVE DIR.: Well, this is more
than federal funding. This is the economic impact that immigrants have on
cities, and frankly, the American workers who are living a prosperous life
because of immigrant contribution. So, when you have a city like a
Chicago, and New York or Los Angeles whose workforce is 25, 30, 40 percent
of the total work force in the city, the last thing a mayor like the Mayor
Rahm Emanuel wants to do is position their local law enforcement to be seen
as targeting or profiling an immigrant community for their immigration
status.

So, it is much more than an important infusion of federal dollars. It`s
also the economic contribution of immigrants and immigration to American
families in these cities.

HERERA: Ira, I know that you are opposed to the sanctuary city concept.
But can you quantify how much, Aditi Roy mentioned the financial burden
from the federal funds that they may be losing if indeed the federal
government decides to withdraw those funds. But what about on the local
level, what kind of budget impact might that have?

IRA MEHLMAN, FEDERATION FOR AMERICAN IMMIGRATION REFORM DIR.: Well, that
depends on which funds are withheld from these cities.

Look, they are making a political choice here. They are determining that
they would rather protect people who are in the country illegally,
including people who are here and committing other crimes, than they would
getting this money from the federal government to meet local needs. So
these are choices that these governments are making.

And, by the way, sanctuary cities were outlawed by Congress in 1996. The
law is on the side of the federal government. It is up to Congress now to
withhold those funds.

Under the Obama administration, they were reluctant to do that because the
Republican leadership claimed that President Obama would just veto it.
Under this administration, the president will sign it and hold these local
jurisdictions accountable.

GRIFFETH: Ira, do you dispute Ali`s contention that the role these
immigrants play in these cities, to take up maybe 40 percent of the
employment for some of the jobs that some of the locals would not want
otherwise? I mean, that would be a huge impact on those cities if they
were to lose some of that, those employees, wouldn`t they?

MEHLMAN: Well, first of all, Ali is conflating legal immigrants with
illegal aliens. The legal immigrants have nothing to fear because they are
here legally. But illegal aliens are forbidden to work under federal law.
And in many cases, they are displacing American workers or driving down
wages to a point where American workers will no longer take those jobs at
the wages that are being offered.

In addition, local communities have to provide education, all sorts of
other benefits where people once they get there. So, it`s already costing
them a lot of money. What they should allow is, were the law to be enacted
and for these people to move over and get the American worker an
opportunity to take these jobs.

HERERA: All right. Ali, do you want to respond to that? Because it`s not
always people who are in the country legally who are doing those jobs. A
lot of times, it is people who are here undocumented.

NOORANI: Well, this is the thing about this issue. It`s very complicated
and like you said earlier, it`s very nuanced. But when you get out of the
big cities, let`s think of small cities and towns in Idaho, Iowa, South
Carolina, even small towns in Texas. Their law enforcement, they took an
oath to serve and protect the entirety of their community. They don`t want
to be in the position to enforce immigration law so that they are in
essence are chasing immigrants out or even worse, immigrants are not
reporting crimes to law enforcement because they`re afraid of the
implications of offering their immigration status, legal or otherwise,
because it tends to lead to many, many questions.

HERERA: But quickly, to the point of jobs very quickly — Ali.

NOORANI: Sure. To the point of jobs, a place like Idaho. Idaho has an
unemployment rate of 3 percent. Immigrant workers are contributing to the
dairy industry, to agriculture, up and down that state. They are a great
deal for the American worker in Idaho. So, why are we removing immigrants
from the country, much less out of thriving state like Idaho?

GRIFFETH: Gentlemen, there`s never enough time and this is a very, very
complicated topic. But we appreciate you sampling it for us tonight.
Appreciate it very much.

Ira Mehlman with the Federation for American Immigration Reform and Ali
Noorani with the National Immigration Forum.

HERERA: Coming up, will the new man in charge of the FCC give a jolt to
the entertainment industry?

(MUSIC)

GRIFFETH: President Trump`s choice to lead the Federal Communication
Commission could lead to the unraveling of many policies put in place by
his predecessor. Ajit Pai wants to see regulations rolled back, including
one that pits internet providers like Verizon (NYSE:VZ), AT&T (NYSE:T) and
Comcast (NASDAQ:CMCSA) (NYSE:CCS), against websites like Netflix
(NASDAQ:NFLX) and Facebook (NASDAQ:FB).

Julia Boorstin has more for us tonight.

(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Newly appointed FCC
chief Ajit Pai has been a Republican commissioner at the FCC since 2012.
Since then making it clear that he`ll take a light-handed approach and a
top priority will be dismantling the commission enacted to support Net
Neutrality, the possibility guaranteeing that all video will be treated
equally and companies such as Netflix (NASDAQ:NFLX) and Google
(NASDAQ:GOOG) won`t have to pay for access to the fastest broadband types.

Pai explaining in 2015 his opposition to Net Neutrality.

AJI PAI, FCC CHAIRMAN: I`m very disappointed. I`m most disappointed for
the American consumer. In the short term, it`s going to mean that the
broadband bills go up. It`s going to mean that their broadband speeds go
down.

BOORSTIN: Reversing this legislation is expected to benefit broadband
providers such as Comcast (NASDAQ:CMCSA) (NYSE:CCS), AT&T (NYSE:T) and
Verizon (NYSE:VZ).

Liberty Media`s Greg Maffei explaining how those companies will be able to
cash in.

GREG MAFFEI, LIBERTY MEDIA: The idea that you might be able to charge for
quality of service, for variability, that the amount of traffic, the speed
of traffic, how you want to make sure the traffic is delivered, might
change the ability to price it. And you would be able to charge for those
kinds of services, I think that`s now becomes a reality.

BOORSTIN: But defenders of Net Neutrality such as Internet giants Netflix
(NASDAQ:NFLX), Google (NASDAQ:GOOG) and Facebook (NASDAQ:FB) have raised
concerns that innovation start-ups will be stifled if companies end up
having to pay for their videos to smoothly reach customers.

ELLIE WHEELER, GREYCROFT PARTNERS: What we all hope for is for the same
opportunity for the next Google (NASDAQ:GOOG) and the next Netflix
(NASDAQ:NFLX), right? So that the next 20 years, all of those companies
that are upstarts are going to have the same access and the same ability to
reach the end users in an unobstructed manner being treated equally. And
that`s the big concern theoretically.

BOORSTIN: Pai is expected to take a more restrained regulatory approach
across the board, and that includes when it comes to allowing big mergers.
Though President Trump has expressed opposition to AT&T`s acquisition of
Time Warner (NYSE:TWX), under Pai, analysts say the FCC is unlikely to get
involved in the regulatory review of the deal.

For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Los Angeles.

(END VIDEOTAPE)

GRIFFETH: Just a reminder, Comcast (NASDAQ:CMCSA) (NYSE:CCS) is the parent
company of CNBC which produces this program.

HERERA: And on that note, that will do it for NIGHTLY BUSINESS REPORT for
tonight. I`m Sue Herera. Thanks for joining us.

GRIFFETH: I`m Bill Griffeth. Have a great evening, everybody. We`ll see
you tomorrow.

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) 2017 CNBC, Inc.

 

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