Transcript: Nightly Business Report – March 6, 2017

ANNOUNCER:  This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Sue
Herera.

Funded in part by —

(COMMERCIAL AD)

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR:  New vision.  House Republicans
unveil their blueprint to repeal and replace key parts of the Affordable
Care Act, potentially changing health care as we know it.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR:  Target trimmed.  China
expects slower economic growth and there`s one thing creating uncertainty
for the world`s second largest economy.

HERERA:  Losing fizz.  Why soda sales may be slipping in the City of
Brotherly Love.

Those stories and much more tonight on NIGHTLY BUSINESS REPORT for Monday,
March 6th.

Good evening, everyone, and welcome.

Well, Washington promises to play a very prominent role on Wall Street over
the next few days, not that it hasn`t been already this year.  President
Trump started this week by signing a new immigration order, an issue
important to businesses.  The week will end with a key report on job
creation, when the Labor Department releases the employment for February.

But we begin tonight with late breaking news on health care.  Late today,
investors got their first look at the White House — at the House, excuse
me, Republican plan to repeal and replace the Affordable Care Act.

Kayla Tausche reports tonight from Washington.

Kayla, this is not even yet a bill, really.  It is more a blueprint.
What`s in it?

KAYLA TAUSCHE, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Well, Tyler, it will
get marked up this week.  So, it is a language that two important
committees in Congress will use as their starting point for discussions
over exactly what this new health care law that the Republicans are putting
forward will look like.  And as many of the tenants that previous leaked
draft had, they were leaked to start discussion and conversation about what
House Republicans could actually support, they interestingly transitioned
to a tax credit for customers who would qualify under this plan between
$2,000 and $14,000.  Interesting, it will depend on the customer`s age and
the customer`s income.

Also, states will get about $100 billion in an innovation fund is what the
House is calling it, but it is expected to go towards covering patients
that have pre-existing conditions.  Customers will be able to nearly double
the amount that they contribute to health spending accounts to go toward
their health care.  And then one of the more controversial points is
exactly what the transition out of a Medicaid expansion would look like.
The expansion would be frozen in 2020 and some changes to the Medicaid
program would kick in at that point.  Expect state governors to weigh in
very vocally about what that looks like.

HERERA:  Kayla, you walked us through a little bit of what happens next,
but what are some of the steps that investors can expect this week?

TAUSCHE:  Well, later this week, Sue, you will see the House Ways and Means
Committee, as well as the Energy and Commerce Committees, do what they call
a mark up of the bill.  That`s where people weigh in, they make at this.
They have a vociferous debate about exactly what`s in it and then what
emerges between those two committees will go to the budget committee.  And
you will see potentially the Congressional Budget Office release a scoring
of the bill or exactly what it would do to the financial situation in this
country.

That is something that conservatives are watching very closely for.  House
Republicans say that their hope is to have a bill on the president`s desk
by Easter.

MATHISEN:  So tell us about the president.  Has he weighed in on this in
any way?  I assume that much of what is in this the draft bill has been run
by the White House.

TAUSCHE:  Well, he has very much deputized House Republicans to put this
legislation together.  It is at the top of the administration`s agenda, but
they largely put the responsibility in the hands of Congress.  Last week,
House Speaker Paul Ryan said that the White House, the Senate and the House
are all in sync on this, but there has been some opposition from the
Senate.  We`ll see exactly once they get their hands on this language what
parts of it they want to pick apart and whether Senate support for this is
actually there.  If not, you could see the president hit the trail to drum
up support, guys.

MATHISEN:  All right.  Kayla, thanks very much.  Kayla Tausche, late
breaking news from Washington.

HERERA:  President Trump today signed a new executive order on immigration
today.  The action temporarily suspends immigration into the U.S. from six
predominantly Muslim countries.  Citizens (NYSE:CIA) from Iran, Somalia,
Sudan, Yemen, Syria, and Libya will be subject to a 90-day ban on travel
into this country.  Iraq was part of the first order, but removed from this
one.

(BEGIN VIDEO CLIP)

REX TILLERSON, U.S. SECRETARY OF STATE:  Iraq is an important ally in the
fight to defeat ISIS.  With their brave soldiers fighting in close
coordination with America`s men and women in uniform, this intense review
over the past month identified multiple security measures that the State
Department and the government of Iraq will be implementing to achieve our
shared objective of preventing those with criminal or terroristic intent
from reaching the United States.

(END VIDEO CLIP)

HERERA:  Separately, the Department of Homeland Security will temporarily
suspend the fast tracking of appear capitals for H-1B visas, which are
primarily used by the tech industry to hire high skilled workers.  That
means that applicants can no longer pay extra to have their paperwork
expedited.

MATHISEN:  Let`s turn now to Andrew Friedman to talk more about that new
immigration order and the possible changes coming to the Affordable Care
Act, and how he sees it all playing out in the financial markets.  Oh,
incidentally, he`s a principal at the Washington Update.

Andy, welcome.  Good to have you with us.

ANDREW FRIEDMAN, THE WASHINGTON UPDATE PRINCIPAL:  Thanks, Tyler.

MATHISEN:  All right.  Let`s talk first about health care.  There`s a lot
more we don`t know.  We really just got this massive blueprint within the
last half hour.  I believe it has no coverage mandates and no penalties for
people who don`t have it.  It`s going to be a heavy lift in Congress, even
on the House side.

FRIEDMAN:  Yes.

MATHISEN:  Especially on the Senate side.  Can they do it?

FRIEDMAN:  I think it`s going to be hard.  I mean, they can pull the
financial underpinnings from out from under the Affordable Care Act, as you
know, with 51 points in the Senate, because there`s a procedure that lets
tax and fiscal legislation pass with 51 votes.

But to replace the whole law requires 60 votes in the Senate and, more
importantly, to actually replace it with something requires an affirmative
vote.  So I think it`s going to be hard to get something through exactly as
it is.  I think the most concern for the markets here, though, is something
we don`t know, which is how much is it going to cost.

HERERA:  Right.  That`s what I was just going to say.  How do you think
Wall Street will view it?  Obviously, they`re going to pars through the
language such as we have it tonight and probably react to it tomorrow.
What do you think?

FRIEDMAN:  I think, for now, it`s going to be a wait and see approach.  I
think if it comes down to, is this really going to balloon the deficit,
which is what I think businesses are most concerned about.

There`s also a tangential concern.  It`s a little bit ironic.  But I think
businesses want to get this out of the way so that Congress can focus on
the most important thing, which is tax reform and government stimulus.

So, I think if the process is able to move smoothly and the Congress can
pivot, that well-received.  But in the short run, I think businesses will
wait to see what the cost is and what kind of reaction they get from others
in Congress.

MATHISEN:  Where, from what you know, and forgive me because I know this is
really just news out in the last half hour or so.

FRIEDMAN:  Sure.

MATHISEN:  Where would the cost ballooning come from in this proposal?

FRIEDMAN:  Well, it would probably come from the devil in the details of
the tax credits.  As you heard, the idea is to replace a public system with
subsidies with a private system where people get their own credits and go
out and buy their own insurance.  How large are those credits, how many
people will accept them, how many people will still be able to get Medicaid
— you`re going to get rid of the major funding mechanism of Obamacare,
which is the 3.8 percent surtax on investment income.  That`s going to get
repealed.

So, you`re not going to have as much revenue coming in.  How much of this
money is going to be going out in tax credits?

MATHISEN:  Andy, thank you for being with us again.  Andrew Friedman with
Washington Update,

FRIEDMAN:  Thanks for inviting me.

MATHISEN:  You bet.

HERERA:  On Wall Street, stocks closed lower.  Financial and security
stocks weighed on the broader market as investors analyzed the likelihood
of a possible rate increase at the central bank`s meeting last week.  The
Dow Jones Industrial Average fell 51 points to 20,954.  The NASDAQ was off
21, and the S&P 500 dropped 7.

MATHISEN:  New U.S. orders increased for the second straight month in
January.  According to the Commerce Department, factory orders rose 1.2
percent, which is more than expected.  The report is more evidence that the
manufacturing sector is regaining its footing after being hit by weak
overseas growth, low oil prices and the strong dollar.

HERERA:  President Trump wants to reinvigorate the nation`s manufacturing
base by renegotiate some trade deals.  Today, one of his policy advisers
issued a stark warning on trade deficits.

Steve Liesman is in Washington.

(BEGIN VIDEOTAPE)

STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Imagine a future
where foreigners own a significant part of the nation`s food supply, why
they can swoop in and buy cutting edge technologies in Silicon Valley.
That`s the danger for large U.S. trade deficits as we`re told by Peter
Navarro, President Trump`s top trade economist.

PETER NAVARRO, WHITE HOUSE NATIONAL TRADE COUNCIL:  If the current
distorted market patterns continue, and to paraphrase Keynes, in the long
run, we are all likely to be owned by foreigners.

LIESMAN:  Navarro was speaking to the National Association for Business
Economics, a group whose members are highly skeptical of Trump`s trade
policies.

RICHARD DEKASER, WELLS FARGO CORPORATE ECONOMIST:  So, economists are not
expressing a lot of concerns about immigration policies or trade policies
as we`re hearing from the administration.

LIESMAN:  When the U.S. buys more goods and services from foreigners than
they buy from us, foreigners accumulate dollars.  They can then use those
dollars to buy hard assets in the U.S.  Now, foreigners currently own about
20 percent of U.S. assets.  So, most of it is in the form of treasuries and
stocks, not controlling interests in companies.

DEKASER:  This kind of assets these foreigners have been buying have been
things like U.S. treasury bills, which have, in effect, lowered our cost of
funding.

LIESMAN:  Navarro said the Trump administration`s plans are not necessarily
to fix these problems primarily with tariffs, though he wouldn`t rule them
out.  He said the president seeks fair, free, and reciprocal trade
agreements.  That will mean negotiating tougher deals with countries that
have large surpluses with the U.S.  He says this could help bring back
manufacturing jobs.

NAVARRO:  One of the major goals of the Trump administration is to regain
all of the supply chain and manufacturing capabilities that would otherwise
exist if the playing field were level.

LIESMAN:  Many economists are skeptical, believing that automation is more
responsible for job losses than trade and they argue that trade has helped
boost U.S. growth and productivity and lifted many around the world out of
poverty.  That`s a stark difference from the darker view of trade from the
Trump administration.

For NIGHTLY BUSINESS REPORT, I`m Steve Liesman in Washington.

(END VIDEOTAPE)

MATHISEN:  Oil prices fell modestly today following a down feed economic
forecast from China.  More on that in just a moment.

Now, that down beat outlook raised concerns about demand for the commodity,
especially as production here in the U.S. ramps up.

And as Jackie DeAngelis reports, that was the topic of conversation at
CERAWeek, a major oil conference in Houston.

(BEGIN VIDEOTAPE)

JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT:  It`s a Super Bowl
of the energy industry, CERAWeek, attended by the movers and shakers in the
global oil and gas industry.  Not just big oil, but also shale players and
representatives of the world`s major oil producing nations and OPEC.

The central theme is how to operate at this delicate time when recent oil
price hikes seem to be sticking.  CEOs are approaching this environment
with caution, though they are enthusiastic about what`s to come.

Chesapeake CEO Doug Lawler says it`s important to remain nimble.

DOUG LAWLER, CHESAPEAKE CEO:  What`s very, very important, I think
particularly for the U.S. producers, the company like Chesapeake, that the
strength of the company, the cost improvements were very well-positioned in
this $50 to $55 a barrel window to continue to invest and provide the
energy that our country and the world needs.

DEANGELIS:  Trump administration policies can also change the game.  A pro-
energy and infrastructure-driven policy stance is expected to help the
industry thrive as the U.S. moves towards its goal of energy independence.
Policies aside, the technologies are making companies more efficient and
competitive in some cases getting twice as much of out of each well than
had been possible before.

LAWLER:  The continued improvements in technology have been remarkable in
the past several years.  We continue to make great progress on drilling,
completion cycle times, opportunities to reduce cash costs, as well as our
capital efficiency, to make the U.S. more competitive.

DEANGELIS:  While generally confident about an uptrend in prices, most
players are still cautious.  Policy changes and other surprises could
disrupt the delicate balance of supply and demand.

For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis in Houston.

(END VIDEOTAPE)

MATHISEN:  Late today, ExxonMobil (NYSE:XOM) said it will invest $20
billion through 2022 to expand its chemical and oil refining plants on the
Gulf Coast.  The world`s largest publicly traded oil producer said the
investments should create 35,000 temporary construction jobs and 12,000
permanent jobs.  ExxonMobil (NYSE:XOM) recently said it plans to increase
spending this year by 16 percent to expand operations.

HERERA:  Still ahead tonight, how North Korea is bankrolling its nuclear
missile ambitions despite tightening sanctions.

(MUSIC)

MATHISEN:  China cuts its economic growth forecast to a 25-year low.  That
country`s government now expects the economy to grow at 6.5 percent.
That`s down slightly from last year.

Eunice Yoon in Beijing takes a look at what might be the biggest source of
China`s economic uncertainty.

(BEGIN VIDEOTAPE)

EUNICE YOON, NIGHTLY BUSINESS REPORT CORRESPONDENT:  China`s leaders have
gathered in Beijing for the annual National People`s Congress.  It`s a time
when lawmakers map out the economic agenda for the year.  And looming over
it all is the Trump administration.

Over the weekend, I had an exclusive interview with the Chinese vice
finance minister and he told me that the biggest source of uncertainty for
China this year is U.S. policy.

ZHU GUANGYAO, CHINESE VICE FINANCE MINISTER:  Internationally, I think the
big challenge is uncertainty.  So, I see some uncertainty firstly is the
Trump administration economic policy.  That is, what will happen and what
impact to the U.S. economy and the global economy.  Second uncertainly is
certainly is the Federal Reserve, how they will make decision for interest
rate.  And the most challenge situation is anti-trade.

YOON:  The vice finance manager told me that Beijing wants and needs to
have better communication with the Trump White House and I specifically
asked him if Beijing is concerned about being labeled a currently
manipulator.

GUANGYAO:  We hope that should be based on reality and also U.S. Treasury
has their three conditions.  They have their judgment.  We have our
judgment.  We keep very close communications day by day.

YOON:  Another big concern among Trump advisers and foreign businesses is a
lack of market access.  Many American companies here feel that the
environment has become much more hostile.

I asked the vice finance minister about this and he said that under the
leadership of President Xi Jinping, that China would continue to embrace
market reforms and that foreign firms will soon see the results.

For NIGHTLY BUSINESS REPORT, I`m Eunice Yoon in Beijing.

(END VIDEOTAPE)

HERERA:  Also in Asia, North Korea wants the world to know that it`s
aggressively moving forward with its nuclear weapons program.  This after
launching more missiles over the weekend.

But how does a country like North Korea afford something as expensive as a
nuclear weapons program?  A new report from the United Nations may hold the
answer.

Michelle Caruso-Cabrera has the details.

(BEGIN VIDEOTAPE)

MICHELLE CARUSO-CABRERA, NIGHTLY BUSINESS REPORT CORRESPONDENT:  The new
U.N. report details how North Korea makes millions by selling arms to
countries in Africa and the Middle East and billions selling coal and iron
ore to China.  One example in the report, a ship seized by Egypt in the
Suez Canal was carrying shipments of 30,000 rocket propelled grenades from
North Korea, destination unclear.

The report shows the country sells various armaments through a company
called Glocom, short for Global Communications, which advertises on the
Internet and makes almost no effort to hide its North Korean origins and
there are many front companies like Glocom in the report, which are
registered in Malaysia or China in order to try and hide their North Korean
roots.

But not very well.  North Korean diplomats have been repeatedly caught
smuggling banned goods such as gold bars, cars, watches, even this Bentley.
Investigators also discovered that the SWIFT system, the international
payment system, still processes transactions for North Korean banks even
though some of those banks are supposed to be banned from using the
financial global system by the U.N. sanctions.  I`ve reached out to the
SWIFT and am waiting for an explanation.

But North Korea`s biggest influx of cash, more than a billion dollars last
year, came from selling coal and iron ore to China.  China has promised to
curtail those purchases more than once, but it hasn`t happened.  The U.N.
and the panel of experts authoring the report have asked China for an
explanation.

For NIGHTLY BUSINESS REPORT, Michelle Caruso-Cabrera.

(END VIDEOTAPE)

MATHISEN:  General Motors (NYSE:GM) pulls out of the European market and
that is where we begin tonight`s “Market Focus”.

In a story we told you last week might happen, GM now will sell its Opel
and Vauxhall brands and the European arm of its financial division to the
French automaker PSA Group.  Separately, the largest U.S. automaker said it
would lay off more than a thousand workers in its assembly plant in
Michigan in May as it moves production of the vehicle to Tennessee.  Shares
of GM were off a fraction at $37.91.

Meantime, Delta cut its first quarter operating margin forecast because of
rising costs.  Also, Delta sees the key metric of passenger revenue per
available seat mile as flat instead of the 2 percent rise previously
expected.  Shares fell 2 1/2 percent to $48.85.

HERERA:  Deutsche Bank is looking to raise $8.5 billion and sell part of
its assets management business in a major strategic overall.  It comes as
the bank posted a net loss of $2 billion in the fourth quarter following a
settlement with the U.S. government over bad mortgages during the financial
crisis.  The bank CEO said that the concerns over the bank`s loss of
capital led to the cash call.

(BEGIN VIDEO CLIP)

JOHN CRYAN, DEUTSCHE BANK CEO:  We were listen to go some feedback from the
market where there was still concerns which were to some extent shared by
our clients and our counterparts that we still didn`t have enough capita.

(END VIDEO CLIP)

HERERA:  Deutsche Bank shares fell nearly 4 percent to $18.61.

A strain of bird flu was found in a Tennessee farm contracted to Tyson
Foods (NYSE:TSN).  The USDA says this is the first confirmed case of the
virus in commercial poultry in this country this year.  The government says
nearly 74,000 chickens will be destroyed to ensure the disease will not
spread or enter the food system.  Shares of Tyson off 2.5 percent to
$61.99.

And late today, railroad operator CSX (NYSE:CSX) reached a deal with its
activist investor to install industry veteran Hunter Harrison as the
company`s new chief executive.  The founder of the activist fund will join
CSX`s board along with new independent directors.  Shares of CSX (NYSE:CSX)
rose slightly in after hours trading.  It closed the regular session at
$49.79.

MATHISEN:  Coming up, soda tax spillover.  Is the price increase in
Philadelphia causing layoffs at Pepsi?

(MUSIC)

MATHISEN:  In its first month, the soda tax in Philadelphia has brought in
more than $5.5 million, more than double projections.  That increase caused
customers to change their habits and drink less soda.  Now, Pepsi is laying
off some workers in the region.

Rosemary Connors reports tonight from NBC`s Philadelphia station.

(BEGIN VIDEOTAPE)

ROSEMARY CONNORS, NBC NEWS PHILADELPHIA STATION:  This is what the
Philadelphia mayor`s office says the sugary drink tax pays for, free pre-K.
At the Peewee Prep Educational Center, administrators say the tax has
spurred ten new hires, including teachers and teacher`s aides to
accommodate the 70 new pre-kindergartners enrolled here since January.

UNIDENTIFIED FEMALE:  When you get programs helping you be consistent with
your budgeting, you absolutely can offer better wages, and even many times
above the city minimum wage which is very exciting to me.

CONNORS:  Soda giant like Pepsi insists the local tax is taking a toll on
their bottom line.  In a statement today Pepsi said in part,
“Unfortunately, after the careful considerations of the economic realities
created by recently enacted beverage tax, we have been forced to give
notice that we intend to eliminate 80 to 100 positions.”

Those jobs are based here at the Pepsi plant on Roosevelt Boulevard.  While
the company would not provide anyone to speak on camera, by phone, I did
track down the head of the Teamsters Union which represents the workers.

UNIDENTIFIED MALE:  Eventually, I knew there would come this day and time
that layoffs would happen.

CONNORS:  Doesn`t this seem premature, though?  And that the soda tax just
went into effect at the beginning of the year?

UNIDENTIFIED MALE:  No.  Most of our companies have lost between 40 percent
and 50 percent of their business between January 1st and the end of
February.  That`s an incredible amount of revenue that`s lost.

CONNORS:  How much revenue are we talking?

UNIDENTIFIED MALE:  I don`t know dollars and cents.  I`m just saying the
percentage that sales are off.

(END VIDEOTAPE)

MATHISEN:  A soda tax in Cook County, Illinois, which is home in Chicago,
of course, goes into effect July 1st.  Similar legislation has been passed
in Boulder, Colorado, and three cities in California including San
Francisco.

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

And we want to remind you this is the time of year your public television
station seeks your report.

MATHISEN:  And I`m Tyler Mathisen.  And we thank you for your support.
Have a great evening, everybody.  We`ll see you back here tomorrow.

END

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