Funded in part by —
TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Stocks breakout. Records
are being broken on Wall Street and that maybe overshadowing another
equally important event — a market rally worldwide.
SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Face-off. Boeing`s workers
will vote tomorrow on whether to unionize in one of the least unionized
states in the U.S.
MATHISEN: And, a Valentine`s Day breakup. Cigna terminates its merger
agreement with Anthem, and now, it`s getting really ugly.
Those stories and more tonight on NIGHTLY BUSINESS REPORT for Tuesday,
HERERA: Good evening, everyone, and welcome.
Stocks keep on climbing. The major indexes notched new records as
investors like the optimism expressed by the Fed chief on the economy. On
Capitol Hill, Janet Yellen signaled that a rate hike could be discussed at
the central bank`s meeting next month. More on that in just a minute.
Now, usually, that would cause stocks to fall but not today. The Dow Jones
Industrial Average was up points to 20,504, the NASDAQ added 18, and the
S&P 500 rose nine, its 15th record closed since the election.
And it`s not just the U.S. in rally mode. Bob Pisani tells us which other
stock markets are on the rise.
BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: There was another day,
another new high in the U.S. stock market. But the focus on the breakout
in U.S. stocks is overshadowing an equally important event — a global
stock market breakout. While the U.S. is up roughly four percent for the
year, the rest of the world is doing even better, with new highs in
regional ETFs like Latin America and Japan and Europe.
What`s going on? Well, first, it`s not just the U.S. economy that`s
getting better. After years of stagnation, Europe is slowly improving,
Japan is slowly improving, that`s helping corporate earnings overseas.
Second, as inflation is starting to pick up, it`s powering a reflation
trade that`s lifting prices on everything from commodities to finish goods,
which is lifting profits as well.
Indeed, the stock markets of countries with a focus on commodity production
like Peru, and Chile, and Brazil and Australia are at new highs.
Now, what would stop this rally? Trade wars would be a big problem.
That`s an issue for many, concerns about the Trump administration`s
rhetoric on tariffs and border taxes.
For the U.S., it would be a delay or watering down of tax reform, or if
U.S. corporations disappointed on higher earnings expectations.
And the Feds not in the clear either, after keeping rates low for years,
they clearly want to raise rates. But if they don`t too fast, it could
stall the economic recovery and the stock market rally. It`s a delicate
balancing act because raising rates will affect everything from mortgage
rates to credit card payments.
For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock Exchange.
MATHISEN: More detail now on the testimony by the Federal Reserve Chair
Janet Yellen. Answering questions from the panel of senators, she
expressed optimism over the job market and rising inflation. She also
signaled that the Fed could consider raising short-term interest rates at
its policy meeting next month.
Steve Liesman tells us now how serious that possibility is.
STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Fed Chair Janet
Yellen in Senate testimony ever-so-slightly raising the chance of a rate
hike by the Fed in March, saying the economy was closing on the Fed`s goals
for inflation and employment. But her words didn`t feel the deal. They
weren`t enough to convince markets that March is even are 25 percent chance
for a quarter-point hike.
JANET YELLIN, FEDERAL RESERVE CHAIR: Precisely when we would take an
action, whether it`s March or May or June, I think I know people are
focused on that. I can`t tell you exactly —
UNIDENTIFIED MALE: They are. They are. Just so you know, they are.
YELLEN: — which meeting it would be.
UNIDENTIFIED MALE: Right.
YELLEN: I would say that in every meeting is live.
LIESMAN: Yellen stuck to her stance that it`s way too early to say how
economic policies from the Trump administration will change the Feds rate
or economic outlooks. She added that she agrees with core principles of
reforming the Dodd-Frank regulatory reform law that President Trump listed
in an executive order. Also, she agreed with the need for reducing
YELLEN: Considering regulatory burden and looking for ways on in issuing
rules and reviewing outstanding rules, constantly looking for ways to
mitigate burden, I think, is an important goal and it`s one that we will
strive, have strived in, will strive to achieve.
LIESMAN: But Yellen also sided with Senator Elizabeth Warren that the data
did not show much impact on lending or on bank profits from tougher banking
rules, suggesting she`s not in favor of a major overhaul.
For NIGHTLY BUSINESS REPORT, I`m Steve Liesman.
HERERA: The president of the Richmond Fed says the next interest rate hike
should come sooner rather than later. Jeffrey Lacker said rates need to
rise more quickly than the market now seems to expect. Mr. Lacker added
that the Central Bank does not want to be in the position where it has to
raise rates more rapidly later on, if there is substantial fiscal stimulus
out of Washington.
MATHISEN: And new evidence today that inflation is ticking higher. That`s
something the Fed pays a lot of attention to. The Producer Price Index,
which measures the change in prices that U.S. companies receive for their
goods and services rose point-six percent in January. That was its largest
gain in four years.
The increase largely reflects the advanced in commodity prices like oil,
but a strong dollar kept underlying inflation tamed.
HERERA: Confidence among small business owners is at its highest level
since 2004. The National Federation of Independent Business says owners
are increasingly optimistic about the economy. Nearly one-third have
reported job openings that they can`t fill, and that is the highest reading
since the recovery.
MATHISEN: And today, President Trump`s pick to lead the Small Business
Administration was confirmed by the Senate. But who is Linda McMahon and
what does Main Street want to see her do?
Kate Rogers (NYSE:ROG) reports.
KATE ROGERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: America`s new small
business administrator is promising to be an advocate for change at the
MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: This is my great
privilege to be here today.
ROGERS: At her confirmation hearing, businesswoman Linda McMahon spoke out
in support of deregulation, financial literacy, growing the federal
contract program for small businesses, and advocating for women and
minority-owned businesses. She also drew on her own experience, launching
a business from scratch.
LINDA MCMAHON, SMALL BUSINESS ADMINISTRATOR: I am proud of our success. I
know every bit of the hard work that it took to create that success. I
remember the early days when every month, I had to decide whether I should
continue to lease a typewriter, or if I could finally afford to buy it.
ROGERS: She is best known for co-founding the WWE with her husband, Vince
McMahon more than 30 years ago. It since grown into a publicly traded
company worth more than one-and-a-half billion dollars. McMahon stepped
down from WWE in 2009 and had two unsuccessful bid for the Senate in
Now that she`s confirmed, nonpartisan advocacy groups are hoping McMahon
will work quickly on their behalf. For the National Small Business
Association, taxes and access to capital are top issues.
PEDRO ALFONSO: Certainly, we do some of the paperwork required and the
timeframe for getting loan. Increase the cap, because a lot of small
businesses need more capital in order to create jobs expand their
businesses and it with small businesses are the ones that a backbone of the
ROGERS: Meanwhile, the Small Business and Entrepreneurship Council would
like to see the agency get back to admission of education and training.
Beyond that, regulatory reform is on the bucket list.
KAREN KERRIGAN: The big issues of concern for small business owners are
tax reform, the complexity of the tax system, a burdensome tax code that
the tax can be internationally competitive. I`m certainly on the
regulatory side. They are burdened by over-regulation and there are
certainly — there`s a lot of uncertainty with regard to some of the
ROGERS: Main Street is hoping the former wrestling executive will be
fighting for the little guy.
For NIGHTLY BUSINESS REPORT, I`m Kate Rogers (NYSE:ROG).
HERERA: So, from small business to big business. CEOs from some of the
country`s largest retailers are heading to Washington tomorrow. The chief
executives are meeting with President Trump to discuss the economy and
taxes. It`s also widely expected that they will make their case against
the controversial border adjustment tax. The possible twenty percent tax
on imports they say would raise consumer prices and hurt their business.
The CEOs are from Target (NYSE:TGT), Best Buy (NYSE:BBY), the Gap
(NYSE:GPS), AutoZone (NYSE:AZO), among others.
MATHISEN: Well, that border adjustment tax is considered a key part of the
yet-to-be proposed Republican tax plan. It would generate a lot of revenue
to pay for such items as lower corporate and personal income taxes and
John Harwood following the story for us from Washington.
John, how is this border adjustment tax being received on both sides of the
aisle and what do we know about how the president feels about it?
JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, you can strike
Democrats out of the equation. They`re not relevant at this point.
They`re not involved in the discussion.
But on both sides of the Capitol, there are rapid, hugely divergent views.
House Republicans are very much for this. Senate Republicans are reluctant
and agree with the retailers that this could hurt consumers.
HERERA: So, the overarching theme of tax reform, can that be accomplished
without the border adjustment tax or not?
HARWOOD: Yes, but the rates cannot be lowered as much as the House does in
their plan. They would take in the plan that`s being translated into
legislative action or legislative language is being taken down to 33
percent. You can`t get that much progress if, in fact, you don`t have that
trillion dollars over ten years of revenue.
MATHISEN: What do we know about where the president stands on it, John?
HARWOOD: Well, this is the key issue. He initially said that it was too
complicated. Later, he took that back, but he`s not sent across a strong
signal and when I talk to Republicans, they say only a strong signal by the
president can push this over the finish line. If not, those objections
from Senate Republicans are likely to kill it.
HERERA: Now, the market is looking at the prospect of tax reform and the
broader economic agenda where some of that would be, you know, funded by
for instance infrastructure spending. So, where do we stand on some of
those broader issues?
HARWOOD: Well, you really haven`t gotten much progress at all
legislatively so far from Republicans. They had passed their budget
resolution, but they`re still trying to work up their plan to repeal and
replace Obamacare, that we do not have an infrastructure plan, we don`t not
have the replacement plan, and we don`t have a tax plan. So, there isn`t
And on the key issue of whether or not deficits will be expanded to finance
some of these things or whether they`re going to be held harmless where
they at the level they are now, don`t have answers on that either.
MATHISEN: All right. John, a lot of moving parts and a lot of
distractions for the White House these days.
John Harwood in Washington.
HERERA: Still ahead, big labor faces a big test tomorrow and why Boeing
(NYSE:BA) is at the center of it all.
HERERA: On this Valentine`s Day, there were two big breakups in the health
insurance industry. First, Cigna and Anthem are walking away from their
proposed $48 billion merger. Cigna says Anthem must pay nearly $2 billion
for terminating the deal and is suing Anthem for $13 billion in damages.
Anthem is attempting to appeal.
The second break up, Aetna (NYSE:AET) and Humana (NYSE:HUM). Those two
companies are walking away from their billion-dollar merger. Aetna
(NYSE:AET) will pay Humana (NYSE:HUM) a one-billion dollar breakup fee.
The decision to terminate comes after federal judges block the takeover on
MATHISEN: Organized labor faces its first big test since the election of
Donald Trump. Tomorrow in South Carolina, workers at Boeing (NYSE:BA) or
not part of the union are voting on whether to join the International
Association of Machinists.
As Phil LeBeau reports, a yes vote would be historic given the location and
the state of unions in America.
PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT: In a state where blue-
collar workers are typically not in a union, Boeing`s plant in Charleston,
South Carolina, is a test of whether attitudes of workers in the south are
changing. Nearly 3,000 of the 7,500 workers at Boeing`s plant will vote on
joining the International Association of Machinists. If they say yes,
they`ll join Boeing (NYSE:BA) workers in the Seattle area who have long
been represented by the union.
It would also send a message to President Trump who has a candidate ported
blue-collar workers. But for the most part, he did not embrace union
leaders. After his election, he feuded over Twitter with a steel worker at
the Carrier plant in Indianapolis and he blasted the local union saying,
“If it was any good, it would spend more time working, less time talking.”
And since taking office, Trump`s met with numerous CEOs at the White House
about adding jobs. But he has seldom mentioned fighting for organized
labor. Does that matter to workers at Boeing (NYSE:BA) in Charleston?
Union votes typically come down to other factors, like pay, benefits and
most importantly, job security.
When the final vote is tallied, Boeing (NYSE:BA) could find itself with
even more members of the machinists union. And for the first time, they
would be a plant in South Carolina, which is increasingly important in
Boeing`s growing production of commercial airplanes.
Phil LeBeau, NIGHTLY BUSINESS REPORT, Chicago.
HERERA: General Motors (NYSE:GM) is thinking about getting out of Europe
and that`s what we begin tonight`s “Market Focus”.
The automaker said it has entered into talks with France`s PSA Group
regarding a potential sale of GM`s unprofitable Opel business. PSA, which
owns Peugeot, would become Europe`s second-largest carmaker if it buys GM`s
Opel and Vauxhall brands. Shares of GM rose about 5 percent to $37.24.
Profit and sales at T-Mobile rose is that company benefited from an
increase in postpaid phone subscribers. The results topped analysts
expectations and T-Mobile CEO said the results set it apart from its
(BEGIN VIDEO CLIP)
JOHN LEGERE, T-MOBILE CEO: What`s important is we`re the only wireless
carrier who had double-digit service revenue growth, overall growth,
customer growth. We grew service revenue 11 percent in Q4 year-over-year.
The whole industry has been declining. Nobody has grown service revenue
for over three years.
(END VIDEO CLIP)
HERERA: Shares rose 1 percent to $61.60.
Generac said strong demand for portable and standby home generators caused
sales to rise above expectations. The maker of small engines also posted
higher profits. It was better than expected. Still, shares fell more than
six and a half percent to $39.80.
And the Mexican peso dragged down results at Dr. Pepper Snapple. The
beverage giant said that currency`s volatility hurt revenue, adding that
could continue through the year and dent its earnings. For the latest
quarter, the company posted revenue that matched estimates, while its lower
profit disappointed. Shares were down just a fraction to $93.07.
MATHISEN: Mattel (NASDAQ:MAT) said it was expanding its partnership with
the Chinese e-commerce giant Alibaba to sell its products to Chinese
consumers through one of Alibaba`s marketplaces. The maker of Barbie and
Hot Wheels also said it would work with Alibaba to create new products.
Mattel (NASDAQ:MAT) shares up 16 cents to $25.69. Alibaba down nearly one-
and-a-half percent at $101.59.
Meantime, Discovery Communication set a strong dollar and higher
international costs impacted results in the latest quarter. Still, the
company which operates cable channels Animal Planet and TLC posted higher
than expected profit and revenue that was in line with expectations.
Discovery shares down, though, more than one-and-a-half percent at $28.53.
The insurance giant AIG said a nearly $6 billion pre-tax charge caused the
company to post a wider loss. But the outfit said it would add $3.5
billion to its existing share buyback program. Shares initially fell in
after-hours trading to finish the regular session, though, up 1 percent at
And Express (NYSE:EXPR) Scripts saw revenue fall and miss estimates in its
latest quarter. The pharmacy benefits manager which is responsible for
negotiating drug prices directly with drug companies did post higher profit
that beat expectations. Shares initially fell after hours during that
trading, but ended the regular session up a fraction at $69.63.
HERERA: President Trump`s executive order banning travelers from seven
mostly Muslim countries may be on hold but it`s still causing trouble and
could actually cost millions of dollars for some investors in a popular
immigration program designed to create U.S. jobs.
Diana Olick explains how that order is rippling through the real estate
DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Gehad Masri is a
physician in Dubai who wants to help you son fulfill a dream to become a
doctor just like him, so much so that he invested half-a-million dollars in
a U.S. program that offers green cards for investments that create jobs.
Masri who has lived in Dubai with his family for years was accepted to the
program last summer but the final interview was put on hold when President
Trump signed this travel ban.
DR. GEHAD MASRI, SYRIAN NATIONAL: It let me more worry actually. As you
said, nothing is certain. We cannot plan anything because moving family,
they`re buying house, arranging everything, schools, the university, you
have to make a plan. You have to invest. You have to do a lot. But now,
nothing is certain.
OLICK: Developers use the so-called EB-5 program to get low-cost funding.
Each $500,000 investment must generate at least 10 jobs. President Trump`s
son-in-law and White House adviser Jared Kushner used $50 million worth of
EB-5 money to develop this rental apartment complex in New Jersey. The
program has generated thousands of jobs, green cards and now uncertainty.
PREEYA MALIK, STEP AMERICA: It`s caused a lot of instability in the
market, right? So, a lot of people are very concerned about what is going
to happen next in U.S. immigration. Isn`t going to affect me? What is the
next thing that he`s going to put in place?
OLICK: Malik and her partner Shai Zamanian are attorneys who assist
investors in the EB-5 program.
SHAI ZAMANIAN, STEP AMERICA: There`s a lot of insecurities and
understanding the current administration and their ability to rewrite
executive orders so that perhaps it is more narrowly tailored.
Masri`s son, a straight-A student, has already been accepted to two U.S.
universities but a school-sponsored trip to Boston to see more schools was
cancelled when President Trump signed the order.
MASRI: I felt bad and I felt unfair. Why? What the mistake we did or —
I cannot find explanation.
OLICK: Masri is understandably starting to have mixed feelings about the
program as a whole. He has no idea if he`ll ever get his family to the
U.S., if there will be another executive order banning them, or even if
he`ll ever be able to get his half-a-million dollars back.
For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Washington.
HERERA: And to read more about the immigration order and its potential
impact on real estate, head to our website NBR.com.
MATHISEN: Coming up, is that app on your smartphone, the one you use all
the time, actually leaking personal information about you. That story is
HERERA: And here`s a look at what`s watch for tomorrow:
Retail sales, consumer prices and industrial production are just a few of
the economic reports scheduled to be released.
Dow component Cisco (NASDAQ:CSCO) reports its earnings and investors will
be looking to see if it`s big investments in software are starting to pay
And President Trump is meeting with Israeli Prime Minister Benjamin
Netanyahu at the White House.
That`s what to watch for on Wednesday.
MATHISEN: The airline industry turn its best performance in decades last
year. According to the Department of Transportation, U.S. airlines
canceled just 1 percent of scheduled flights in 2016, lowest cancellation
rate in 22 years. The number of complaints about mishandled bags dropped
more than two-and-a-half percent to the lowest level ever recorded, and the
percentage of passengers bumped fell to its lowest mark since 1995.
HERERA: Toshiba`s troubles are mounting. The Japanese company said it
plans to write off more than $6 billion. The embattled technology
conglomerate will withdraw from the business of building nuclear power
plants following its acquisition a decade ago of Westinghouse Electric
Company. The company`s chairman is also resigning after weeks of
speculation. Toshiba also said that the estimates released today could
change, quote, “by a wide margin because of uncertainty.”
MATHISEN: An arrest warrant is out for Samsung second in command. Jay Y.
Lee is wanted by South Korean prosecutors as part of its investigation into
a graft scandal. A first attempt to take him into custody was rejected due
to a court order of lack of evidence.
Korea`s biggest company and its heir apparent are at the heart of an
investigation into influence-peddling that`s led to the impeachment of the
president of South Korea.
HERERA: If you own a smartphone, you likely use apps every day. But there
are things that you should know. That app you trust could be leaking
personal information and it might not take an experienced hacker to find
Andrea Day with what you should watch out for before you download.
ANDREA DAY, NIGHTLY BUSINESS REPORT CORRESPONDENT: From games, to news, to
The global app business tops $140 billion a year, with get this, more than
10 million downloads every hour. But with each download, according to
experts, comes the risk of your private information leaking out.
MICHAEL COVINGTON, WANDERA VICE PRESIDENT OF PRODUCT: Maybe it`s leaking
your username, your password and your credit card information just by you
hitting a single button. Anything that they may have put into that tool is
DAY: Michael Covington is a VP at the mobile security firm Wandera. Their
recent study uncovered more than 200 mobile apps and websites leaking
COVINGTON: Information security professional was not aware that this many
brands were not protecting that information
DAY: Major brands we won`t mean here but Covington says his group alerted
the app developers.
COVINGTON: I`ve seen some of the parties usually react by having a new app
or new website out within 24 hours. And in other cases, they don`t even
pick up the phone. There`s so much demand for each service provider to
have an app available for their customers that there`s a push to accelerate
DAY: Some of the findings, close to 60 percent of all leaks coming from
news, sports, and shopping apps. And 80 percent of the top adult sites
were found leaking personal data.
COVINGTON: But was really surprising was that about eighty-five percent of
the data leaks that we saw actually included a password. If you think
about the combination of a username and a password, that`s all that you
need is an attacker to get access to everything else that might be in an
DAY: And he says fake Wi-Fi hotspot for hackers pretend to be a trusted
network are on the rise, making the unsecured info easy to grab.
COVINGTON: There is no attack required on a mobile device when it is
freely giving away information in an unprotected way.
DAY: His advice: think twice about the type of info you enter.
COVINGTON: A company that`s providing a free newsfeed shouldn`t be asking
for credit card information dates of birth and Social Security number.
DAY: And this other advice is to read the reviews before you blindly trust
any app especially one that`s just landed in the app store. Don`t be
patient zero. Give the app sometime too sort the kinks out before you try
For NIGHTLY BUSINESS REPORT, I`m Andrea Day.
HERERA: It`s kind of a scary.
MATHISEN: I think I`m way too trusting of all of things.
HERERA: You are very trusting.
MATHISEN: I`m a trusting guy.
HERERA: I`m not.
MATHISEN: Happy Valentine`s Day, by the way.
HERERA: That`s right. And you too.
MATHISEN: All right.
HERERA: And to our lovely spouses.
HERERA: That does it for us tonight. I`m Sue Herera. Thanks for joining
MATHISEN: And thanks for me as well. I`m Tyler Mathisen. See you
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.
<Copy: Content and programming copyright 2017 CNBC, Inc. Copyright 2017 CQ-
Roll Call, Inc. All materials herein are protected by United States
copyright law and may not be reproduced, distributed, transmitted,
displayed, published or broadcast without the prior written permission of
CQ-Roll Call. You may not alter or remove any trademark, copyright or other
notice from copies of the content.>