Transcript: Nightly Business Report – April 4, 2017

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

Trump will meet with China`s president in just a few days and now we know
the controversial topics the two will talk about.

long-time Fed officially stepping down abruptly over his involvement in a
2012 case where confidential Fed information may have been leaked.

HERERA: Tax tips. With just two weeks left to file, there are a few
things that you can try to do to avoid an audit.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Tuesday,
April 4th.

MATHISEN: Good evening, everyone, and welcome.

Investors know that there the a lot riding on the economic relationship
between the United States and China. There`s trade, of course. There`s
jobs. There are thorny national security issue, including North Korea and
China`s interests in the South China Sea.

And lately, the areas of conflict between the world`s two largest economy
and two biggest partners seem to have eclipsed the areas of cooperation.
President Trump has referred to China as the biggest trade cheater in the
world. He`s accused Beijing of killing American jobs. The White House
called out China for manipulating its currency and has threatened tariffs.

Later this week, President Trump and Chinese President Xi Jinping will meet
in what some are calling President Trump`s most important meeting yet with
a world leader. And tonight, the White House outlined what will be on the
meeting`s agenda.

Kayla Tausche was on the call.


meeting with his tiny counterpart at his Mar-a-Lago resort beginning
Thursday, a 24-hour summit, parts of which will be accompanied by their
wives with the most urgent topic on the agenda, is diffusing tensions with
North Korea.

Senior White House officials said the clock has run out on dealing with
North Korea, and all options for the U.S. are on the table. Specifically,
President Trump is expected to ask China to exercise its economic leverage
over North Korea. China, for instance, wield significant power over the
country because it represents nearly all of North Korea`s external trade.

As for other economic topics, the president plans to discuss the barriers
China has set up to investment, with the two leaders establishing a
framework for working through trade and currency issues in the weeks and
months to come. The White House relying on the Commerce and Treasury
Departments to continue monitoring these issues.

And while the president is hoping to build a results-oriented relationship,
senior White House officials expect no resolution on those economic issues
this week.

For NIGHTLY BUSINESS REPORT, I`m Kayla Tausche, Washington.


HERERA: David Riedel joins us now to talk more about what to expect from
the meetings between China`s president and President Donald Trump later
this week. He is president and founder of Riedel Research Group.

Welcome back. It`s a pleasure to have you here, David.


HERERA: Let`s start, first of all, you know, Tyler outlined some of the
campaign rhetoric that the now president used. How does he get past that
and beyond that and forge a meaningful, hopefully, relationship with
China`s president?

RIEDEL: Well, you quite right to bring that up, because there has been a
lot of rhetoric on the campaign trail, which is just that, rhetoric. And
he`s going to have to get away from demeaning them as a currency
manipulator and really lashing out at them for taking American jobs. All
of that is China from the past. China of the last ten years and the next
ten years doesn`t have any interest in dumping cheap goods on the U.S.
market. They are interested in transitioning peacefully at home to a more
consumer-oriented society.

But we`ve already seen glimmers of Trump learning and adjusting to the
realities of the playbook post the election. Remember, he`s questioning
the One China policy. He certainly backed off that pretty quickly once he
got better informed about the importance of that and the importance of the
Chinese-U.S. relationship.

MATHISEN: Walk us through the matter of currencies and currency
manipulation. As I understand it, while the Chinese currency is down over
the past five years or so, it`s not down nearly as much as the British
pound or the Japanese yen, and in fact, has been appreciating recently.

RIEDEL: That`s exactly right. This view that China is somehow
manipulating its currency to the detriment of the U.S. or other markets is
simply not true. If you want to point fingers at anyone who`s been doing
that, it`s great U.S. allies like the Japanese and the British who have
seen 20 percent, 25 percent depreciations of their currencies over the last

The reality is, the Chinese yuan is connected to a basket of currencies.
The U.S. is the largest of those currencies. So, it gets dragged around by
the U.S. dollar and stays very close to it.

HERERA: The North Korea situation is perhaps the most volatile. How does
the president negotiate that? Just the other day, he said that if China
won`t help, the U.S. might take on North Korea on its own, which, you know,
kind of triggered jitters through the markets. How does he negotiate that?

RIEDEL: The markets are right to react strongly do that because of the
massive population centers and close U.S. allies. In South Korea, the U.S.
forces there, the large U.S. presence in Japan and the large population
there would be the first in the firing line from a rambunctious North

HERERA: Uh-huh.

RIEDEL: But I think he might be right to bring up the idea that all
options are on the table and we`re not just going to wait for China.
Waiting for China didn`t work for Bush. It didn`t work for Obama. And I
think he`s right to reopen the dialogue with a clean sheet of paper and
hopefully the Chinese and the U.S. can get on the same page, because they –
– we all need the Korean peninsula to be less militarized and more

HERERA: We will wait and see. David, thank you very much for joining us

RIEDEL: Thank you.

HERERA: David Riedel with the Riedel Research Group.

MATHISEN: On Wall Street, stocks were mostly flat ahead of that big China-
U.S. summit. Investors are in a wait-and-see mode, because many don`t want
the administration basically to take a protectionist stance against the
world`s second largest economy. The Dow Jones Industrials up 39 points at
20,689. The others are basically flat. NASDAQ hired by 3, S&P by one and
a third.

HERERA: Infrastructure as you know is another pillar of the Trump
administration`s agenda. And today, the transportation secretary gave a
time line for possible legislation. Elaine Chao told a group of chief
executives that a legislative package may be ready sometime next month.
The secretary said she hopes to offer a package that includes a trillion
dollars over ten years.

MATHISEN: Well, an abrupt resignation inside the Federal Reserve.
Richmond Fed President Jeffrey Lacker is stepping down immediately over his
role in alleged leaks of confidential Federal Reserve information.

Steve Liesman has the surprising details.


President Jeffrey Lacker resigned unexpectedly today, disclosing that he
played a key role in the release of confidential Fed information. Lacker,
who has spent 13 years at the helm of the Richmond Fed, acknowledged that
he spoke a newsletter writer at Medley Global Advisers and inadvertently
confirmed Fed deliberations on monetary policy.

He said in a statement, quote, “I regret that in this instance, I crossed
the line to confirming , information that should have remained

On October 2nd, 2012, Lacker spoke with that Medley analyst and Medley on
the third or the next day wrote a story with some of those confidential Fed
details. Lacker was interviewed by the Federal Reserve general counsel in
December. And in 2015, he was interviewed by law enforcement officials,
including from the FBI and United States attorneys for the southern
district of New York.

In January 2017, Lacker announced he was resigning, but it was effective
October 1st. Today, Lacker announces resignation effective immediately.

Lacker`s resignation according to CNBC sources is the result of
negotiations with law enforcement officials and his attorney Richard Cullen
told CNBC that Lacker has been told by the U.S. district attorney for the
southern district that he will face no charges. He`s being replaced by
First Vice President Mark Mullinix.

The Federal Reserve Board in a statement later in the day said it
cooperated fully with the investigation and the inspector general of the
Federal Reserve also put out a statement saying it would be concluding that
investigation soon.



HERERA: The trade deficit dropped sharply in February. Exports rose to a
more than two-year high, helped by an improving global economy and
softening of the dollar. Imports of things like cars and smartphones fell.
The deficit, which is the gap between imports and exports, was off 10
percent to about $43.5 billion. That more than cancelled out a big increase
in January.

MATHISEN: Well, Boeing (NYSE:BA) landed a $3 billion deal to sell 30
jetliners to Iran. It is the company`s second sale to that country since
the 1970s. Iran`s aging air fleet is among the oldest in the world because
of sanctions that were in place for decades. The average age of their
planes: 20 years. Financing details are not disclosed.

HERERA: The airline industry is gearing up for one of its busiest summers
ever. In fact, several airlines are adding flights or new routes,
especially in smaller cities.

So, Phil LeBeau takes a look at what seats and more flights might mean for


to take off. And the airlines are planning to be ready for the surge of
people getting away. For example, United Airlines is adding flights to 13
cities in the U.S., including all new service to many small cities like
Columbia, Missouri.

Not to be outdone, American is adding or expanding summer services to 26
cities. Meanwhile, southwest and Alaska will also be adding flights over
the next several months. What`s behind this expanded service? Part of it
is airlines filling in routes where they haven`t been flying or they`re
grow income demand. But another factor is the chance for airlines to bring
more customers into their hubs, where they can connect with other

HELANE BECKER, COWEN & CO.: I think some of the cities that they`re
serving will be very competitive and fares will come down. They definitely
are adding a lot more capacity than they thought they would maybe six
months ago.

LEBEAU: With a record number of people expected to fly this spring, don`t
surprise that it carries into the summer and planes are crowded.

While airfares remain lower than just a few years ago, they are expected to
climb this summer and hit a high of $269 for the average domestic ticket.

Perhaps the biggest reason this summer will be a busy one for the airlines
is consumer confidence, which remains at close to a record high, convincing
many Americans the next couple of months will be a good time to get away.



MATHISEN: Still ahead, tax day two weeks away. Tonight last minute tips
for you procrastinators.


HERERA: A growing number of brands are pulling their ads from FOX News
“O`Reilly Factor”. The decision comes amid allegations of sexual
harassment by the host. Bill O`Reilly has denied the accusations. There
are reports that he or FOX paid about $13 million to five women since 2002.
Some of the advertisers include BMW, Hyundai, Sanofi and Allstate

MATHISEN: It is also the time of year when brands commit a lot of money to
advertise on TV networks. It`s known as the upfront sales period. But
this year, there is a shift going on and advertisers are taking a hard look
at content, amid the YouTube ad backlash.

Julia Boorstin reports tonight from Los Angeles.


targeting in the safety premium television will be front and center during
this year`s upfront ad sales period. Cable networks, including the Food
Network and Discovery, have already pitched their lineup to Madison Avenue,
showcasing their digital reach and measurement capabilities.

NBCUniversal is switching to total guarantees across broadcast cable and
digital for the Olympics. While CBS`s total content ratings include DVR
and video on demand viewing. In the wake of advertisers boycotting Google
(NASDAQ:GOOG) because it adds proximity to offensive content on YouTube the
safety of premium video content is expected to have its appeal.

NANCY HILL, 4A`S PRESIDENT & CEO: You think there will be some shift,
because I think, you know, a lot of the advertisers moved dollars into
digital. And now, they`re recognizing they need to go back to where they
can actually control where their message is played.

BOORSTIN: The big question is whether during the upfront, TV companies
will be able to secure more ad dollars or price increases, the CEO of ad
giant IPG, Michael Roth, projects TV ad dollars will be flat after nearly 5
percent gains in 2016.

There is another at play this spring, the debut of new streaming video
options, such as Hulu and YouTube`s new skinny bundles, hoping to lure
advertisers with the combination of traditional premium content and next
generation high-tech advertising. Roku just announced it`s partnering with
Nielsen to give advertisers a measure of how many people are watching on
its over-the-top platform, to make it easier for them to reach the right

JIM LOMBARD, ROKU HEAD OF AD SALES: It is using data to inform so you can
target at the household level and the individual experience rather than
just blanketing everyone with the same mask.

BOORSTIN: The majority of the top 100 advertisers say they will increase
their marketing expend this year, according to a J.P. Morgan survey. With
growing concern about brand safety, we`ll see where they put those extra

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


HERERA: Staples (NASDAQ:SPLS) maybe for sale and that`s where we begin
tonight`s “Market Focus”.

“The Wall Street Journal” says the office supplies retailer is in talks
with some potential private equity firms. The report also said a possible
deal could value Staples (NASDAQ:SPLS) at about $7 billion. Shares of
Staples (NASDAQ:SPLS) rose almost 10 percent to $9.51.

MSG Networks might also be looking to sell itself. According to “The New
York Post”, the regional cable and television network is in early talks
with potential suitors and telecom giant Verizon (NYSE:VZ) may be one of
them. But the report added there`s no guarantee a deal would be made.
Shares of MSG Networks were up 6 1/2 percent to $24.45.

Ralph Lauren is cutting jobs and closing its flagship store on Fifth Avenue
in New York City. The fashion retailer also plans to restructure its
digital operations. It`s unclear how many positions will be affected but
the company said the moves are an extension of its cost savings plan
announced last summer. Shares fell more than 4 percent to $77.74.

MATHISEN: Teva Pharmaceuticals said its drug for treating an involuntary
movement disorder associated with Huntington`s disease, which is a fatal
degenerative condition, has been approved by the FDA. This is only the
second product approve for the disorder and Teva shares nonetheless fell 19
cents to $32 on the button.

The furniture and electronics retailer Conn`s said a strong fourth quarter
helped it post an unexpected adjusted profit. The company did post lower
revenue, though. It`s still good enough to impress investors. Shares of
Conn`s climbed nearly, yes, 29 percent today, to $10.90.

The electric and lighting maker Acuity Brands (NYSE:AYI) said weak demand,
particularly in North America, caused the company to report profit and
sales that disappointed, despite the miss, Acuity said it still sees long-
term growth opportunities in that market. Shares fell, however, down
nearly 15 percent to $173.93.

HERERA: Tax Day fast approaching now, just two weeks away. And no one
wants to get an audit.

Well, while some audits are random, others are not. Nerd Wallet put
together a list of things that could raise red flags at the IRS.

Here`s Kate Rogers (NYSE:ROG).


audit red flags.

At number five, using two many round numbers. An even amount is unlikely,
so round to the nearest dollar, not the nearest hundreds.

Number four, claiming a home office. It must be a space used only for
work. A laptop in front of your flat screen doesn`t count.

Number three, claiming too many charitable donations. If you don`t have
the proof, don`t report it.

Number two, claiming too many business expenses. If you can`t perform your
job without it, then it`s legit.

Number one, making math errors. If it literally doesn`t add up, you could
be flagged. So, triple check your columns because the IRS probably will.



MATHISEN: We are less than two weeks away from the April 18th tax filing
deadline. And if you haven`t prepared your tax returns yet, our next guest
has some last minute tips that could be helpful to you, maybe save a little

His NerdWallet`s personal finance expert Sean McQuay and he joins us now.

Sean, welcome. Good to have you with us.


MATHISEN: What if I really, really just can`t possibly get my taxes done.
What do I do?

MCQUAY: That`s really important that we do file our taxes by the 18th.
But if we can`t for some reason, we always can file an extension. There is
a specific form that IRS enables. The trick is while we can file for that
extension. The money is actually still due on the 18th. So, that means
we`ll need to make a best guess of what the taxes will be, pay that and
then figure it out moving forward.

MATHISEN: How much time does that buy you?

MCQUAY: It depends on the extension. It can be several months to the end
of the year.

HERERA: All right. What about filing electronically? Does that help you
out or not?

MCQUAY: So, filing electronically is nice because it`s a very fast

HERERA: Right.

MCQUAY: I personally haven`t filed yet. So, I fit in the procrastinator
but —

HERERA: I think that makes three of us.



MCQUAY: Yes, and I`m — perfect.

And I`m really relying on my online tax offer to build a file quickly
because I know that will happen. Yes.

MATHISEN: Let`s talk a little about last minute deductions I might claim.
I think the only one that you can probably claim this late for 2016 taxes,
would be to fund fully an IRA, if you haven`t done so, already.

MCQUAY: That`s right. Any retirement savings account, so it`s an IRA or
401(k), we can still contribute through to the 18th. And this is really
great because it`s different from normal contributions where they`re, let`s
say, a charitable contribution where they`re simply counting against your
taxes owed.

These are actually decreasing your top line revenue. So, actually,
effectively made less. So, you`re decreasing your tax burden while also
saving up for the future.

So, yes, absolutely. These are the best tax deductions to pursue at this

HERERA: You know, a lot of people have been using different times of
computer programs to do their taxes. Are there some that you looked at
that are maybe are better or maybe simpler than others?

MCQUAY: Yes. So, when you`re looking at tax software, one that`s really
important to remember that the IRS is the one who writes the code, not the
tax preparers. So, while companies, they promise to get you a higher
return than others, at the end of the day, that actually doesn`t make
sense, because again, it`s not their math, it`s the IRS` math.

So, where do they do actually differ? They differ in terms of cost, in
terms of capabilities and in terms of user experience. So, you want to
find the software that kind of answers the questions you want to answer and
kind of helps you through with the little hand holding you actually want,
and one that has a personal price point.

MATHISEN: All right. Sean, thank you very much.

MCQUAY: Thanks.

MATHISEN: Sean McQuay with NerdWallet. We appreciate it. Get your filing
done, man!

MCQUAY: Will do. Will do.

MATHISEN: Doctor, heal thyself.

HERERA: I think I have to do an extension.

OK. Coming up, can Amazon (NASDAQ:AMZN) reinvent the very thing it
disrupted? Brick and mortar retailers.


MATHISEN: The Labor Department has decided to delay the implementation of
its retirement rules. The so-called Fiduciary Rule, which requires brokers
offering retirement advice to act in the best interest of their customers,
will be delayed now by 60 days while it undergoes a review. According to a
filing in the federal register, the review will examine whether the rule
hinders Americans ability to get access to retirement financial advice.

HERERA: A Seattle law allowing drivers of ride-hailing companies to
unionize has been temporarily blocked. The first such law in the nation
applied to companies like Uber and Lyft. The case was brought by the U.S.
Chamber of Commerce, which said it violates federal antitrust and labor
law. Seattle lawyers said the law will make the industry safer. Uber and
Lyft are members of the chamber.

MATHISEN: And speaking of Seattle, Amazon (NASDAQ:AMZN) shares closed at
their fifth straight record high, bullish analysts note helped fuel the
gains today. Stocks above $900.

But Amazon (NASDAQ:AMZN), which is the king of online retailing, is doing
something curious. It`s moving into brick and mortar retail, the very
thing it disrupted.

Deirdre Bosa has more from Seattle.


dominated by the likes of Borders and Barnes and Noble (NYSE:NE), until
Amazon (NASDAQ:AMZN) showed up. Now, Barnes and Noble (NYSE:NE) is
struggling and Borders is gone.

But then, something strange happened. Amazon (NASDAQ:AMZN) is trying to
reinvent the very thing it disrupted: brick and mortar retail. Amazon
(NASDAQ:AMZN) Books in Seattle was the first company`s physical store and
it opened less than two years ago. This year, its physical book stores are
expected to be in 11 locations throughout the country.

On the surface, it looks like your typical bookstore, but title phase out
and gadgets like Amazon`s Kindle and Echo and Fire TV devices showcased
around the space, with a likely goal of encouraging customers to join its
online prime membership program.

And then there is the push for the grocery store business, with the goal of
getting rid of the checkout counter. It is another technological leap that
would dramatically changes the way by eliminating the cashier.

UNIDENTIFIED MALE: It`s pretty cool. I used to walk in and pick up and go
— walk out the door. They already have those sort of self checkout
things, right, the next step.

UNIDENTIFIED MALE: I tend to just enjoy whatever is convenient. So, if I
have to go to a grocery store and if it`s an automated process, where
they`re going to put groceries on my car, that seems quick and easy and a
lot of time, that`s better for me.

BOSA: For now, brick and mortar is mostly still an experiment, and a tiny
part of Amazon`s overall business. But it may be a part of Jeff Bezos`
strategy to revolutionize the retail business again. And expansion is a
byproduct of that.

Last year, Amazon (NASDAQ:AMZN) took over a staggering 70 percent of all
the new downtown Seattle office space that opened, and continued
construction on giant biospheres for its new campus in the heart of
downtown Seattle. This year, it`s aimed to lease another 300,000 square
foot office building.

It`s becoming clear, Amazon (NASDAQ:AMZN) wants to be in every aspect of
consumer`s life, and that also means leaving a mark on its hometown.

For NIGHTLY BUSINESS REPORT, I`m Deirdre Bosa, Seattle.


HERERA: Just days ahead of that meeting between President Trump and
China`s President Xi, one Iowa man is talking about his rare relationship
with the Chinese leader.

Eunice Yoon has his story from Beijing.




DVORCHAK: Yes. the president was offering some of his impressions and you
know his famous saying at least to this group to me, are you America.

YOON: For an American businessman, Gary Dvorchak has an unusual connection
to China`s elusive president. More than 30 years ago, as a young communist
party cadre, Xi Jinping stayed in Dvorchak`s Iowa bedroom, on an
agricultural fact-finding mission to the U.S.

DVORCHAK: He was a young man. He`s in his early 30s. He was with the
delegation. He was a regular person.

YOON: But this week, now President Xi is making another trip to America,
this time to meet President Trump.

DVORCHAK: This is our house. Welcome.

YOON: Dvorchak currently living in Beijing has had dinner here with Xi
Jinping, thanks to his old family connection, he has access to top Chinese
officials and negotiating tips for Trump.

DVORCHAK: The Chinese have a lot of work to do internally to develop the
economy both for domestic consumption and more exports. So, I don`t think
we can be as forceful as we`d like to be. We have to understand that yes,
we do need fair trade, but China ultimately is still a developing country
and they need to sell before they can buy.

YOON: So, what do you think President Xi wants from this meeting?

DVORCHAK: I think he would like to have the rhetoric tone down a bit.
Even though it`s all talk for the most part, really, it`s culturally, you
know, the Chinese do not like that level of conflict.

YOON: What would be the worst thing that President Trump could do during
this meeting?

DVORCHAK: If the public harshness translates into private discussion,
across the table, I think it won`t be a productive meeting.

YOON: And Dvorchak`s advice for President Xi?

DVORCHAK: Read “The Art of The Deal”, because a lot of what he`s doing,
he`s done over and over his whole life. That`s what I think would be very
help for President Xi is to understand the style, understand the approach
he`s going to have. That helps you think of ways to disarm it.

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


HERERA: It`s going to be fascinating to see how that meeting goes.

MATHISEN: Something tells me Xi has already read that book.

HERERA: I would think so, exactly.

That will do it for NIGHTLY BUSINESS REPORT tonight. I`m Sue Herera.
Thanks for joining us.

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


Nightly Business Report transcripts and video are available on-line post
broadcast at The program is transcribed by ASC Services II
Media, 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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