SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Slow start. The economy is
limping along at its slowest pace of growth in three years. So, why aren`t
TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: At a crossroads.
ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) report solid quarters. But
not everything is turning around for big oil.
HERERA: At odds. Lawmakers avert a government shutdown, for now. But
another budget battle may just be starting.
Those stories and more tonight on NIGHTLY BUSINESS REPORT for Friday, April
MATHISEN: Evening, everyone, and welcome.
Getting the economy growing again faster is a goal of the Trump
administration and a desire of investors, and, of course, American workers.
But today, a new report shows it`s certainly not happening just yet.
According to the Commerce Department, the economy stumbled in the first
quarter. Gross domestic product, which is basically the broadest measure
of U.S. output, grew at a paltry rate of 0.7 percent, below what had been
expected. Even an increase in confidence readings over the last few months
didn`t even translate into stronger consumer spending, which accounts for
roughly 70 percent of economic activity.
So, while the headlines are disappointing, upon closer inspection, the
anemic reading may not be all that bad.
Steve Liesman did some digging.
STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Weak growth in the
first quarter GDP doesn`t have economists worried that the economy is
really weak. Instead, they see a bunch of one-off factors, pushing down
the growth rate to just 0.7 percent. Most believe a bounce back in the
current quarter is likely.
A big part of the weakness came from inventory adjustments. But
forecasters think that bounces back as companies restock their shelves in
the current quarter. Consumer spending was also slow, which contradicts
both buoyant confidence measures and fairly strong job growth.
Another quirk, Q1 growth has been unusually weak for years, a problem that
economists say is because of data-crunching, not the actual economy.
JOE LAVORGNA, DEUTSCHE BANK CHIEF U.S. ECONOMIST: Q1 has been very quick.
We though, actually, our guess is that government might fix it, because
some of the seasonalities in defense you`d think they would be able to
adjust for that.
LIESMAN: So, many forecasters believe growth in the current quarter is
likely to clock in and around 3 percent, with some even boosting their
But when you average it out, it`s still around 2 percent. And the bigger
question is whether the economy can do better.
LAVORGNA: I have to think this will give the administration, the Congress
more impetus to make some good policy to get that growth rate closer to 3
LIESMAN: But the effects of those changes to tax and spending policies are
months, if not years, in the distance, if the advertised growth happens at
all. For now, the best that can be hoped for is that weak first quarter
growth was really an anomaly, that the economy is bouncing back right now,
as we speak.
For NIGHTLY BUSINESS REPORT, I`m Steve Liesman in Washington.
HERERA: While economic growth is sluggish, earnings are rebounding.
ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX), the two latest examples.
Exxon saw its earnings double, while Chevron (NYSE:CVX) swung to a profit.
Both were helped by cost cuts and a rise in the price of oil. That helped
send shares of the Dow components higher in trading today.
But as Bob Pisani explains, there are still some headwinds for the
BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: You could say big oil
earnings are at a crossroads right now. The markets are near historic
highs and earnings are rebounding nicely. But the one fly in the ointment
is energy stocks, they`re down more than 10 percent this year, this while
the S&P is up 7 percent. That`s a huge disparity.
It wasn`t supposed to be this way. This was supposed to be the year of the
big turnaround for big oil. But so far, that has not been the case. Crude
oil is down 9 percent year to date. The global energy market is undergoing
a massive transition, shifting the focus away from the Middle East and
towards the U.S. It`s a huge help to consumers. And it`s a big headache
for big oil.
The result is the investor love affair with energy is waning. Oil stocks
don`t just lose on a fundamental level. They lose as a relative value
play. Why buy oil stocks when oil is down and the rest of the market is
You take ExxonMobil (NYSE:XOM). They reported earnings this morning. The
good news is they beat earnings expectations, and overall, earnings more
than double compared to the first quarter of last year. That`s largely
because oil prices improved from about $30 a barrel average in the first
quarter last year to $50 in the first quarter this year. That`s good news.
The bad news is, the price of oil is trending down recently. And they`re
producing less of it, at least Exxon is.
The magic combination of an improving economy plus OPEC production cuts,
which was supposed to drive oil to $60 and maybe beyond. Well, what messed
it all up was shale production. Even if OPEC continues to cut, how can oil
move up when you have this enormous open faucet that is North American
The big hope is that, eventually, big oil prices will rise again fueled by
an improving global economy, continued OPEC cuts and less capital spending
by the big oil companies. Well, we`ll see.
For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock Exchange.
MATHISEN: On Wall Street, stocks sagged as earnings reports and new data
on the economy were not enough to lift the market today. Investors will be
keenly watching developments this weekend after reports that North Korea
unsuccessfully tested yet again a ballistic missile late this afternoon.
On this last trading day of the month of April, the Dow Jones Industrial
Average was off 40 points to 20,940. NASDAQ lost one. S&P 500 fell 4 1/2.
For April, all of the major intersections were higher, as you see there,
with the biggest gain coming from the record setting NASDAQ.
HERERA: The gains since President Trump took office are even bigger, as he
gets ready to mark his 100th day in office in the White House. The major
indexes are all up 5 percent or more. As we`ve been reporting, the market
has rallied in recent months in large part because of expectations that the
Trump administration will push through pro-growth policies.
The three pillars of his economic agenda include tax reform for both
individuals and corporations, infrastructure spending, and deregulating
industry. But at the 100-day mark, some on Wall Street say frustration is
beginning to set in because these reforms haven`t happened as quickly as
hoped. And that may be a reason why the rally has recently lost some
Dominic Chu has more.
DOMINIC CHU, NIGHTLY BUSINESS REPORT CORRESPONDENT: The stock market has
generated some stellar returns since the election last November. But the
trajectory of those gains has moderated over the last couple of months.
The index gained 12 percent between the Election Day close and the record
highs on March 1st. But since then, markets have been trading in a
relatively narrow range and have pretty much gone nowhere.
MARGIE PATEL, WELLS FARGO ASSET MANAGEMENT: I think the market is waiting
to see first quarter earnings, and particularly to see that the growth is
sustainable from the economy and also looking for any sectors in the
industries in the economy that look as if they may be growing faster.
CHU: Financial markets are often referred to as discounting mechanisms.
That is to say, they take all available current information and future
expectations and it puts a price on it today.
Many experts believe that the coming weeks will be all about whether
Trump`s administration can tap the ability to make progress on things like
tax and health care reform and whatever else it takes to revive economic
MARK LUSCHINI, JANNEY MONTGOMERY SCOTT: Investors are going to be most
keen on what kind of policy comes forward, particularly as relates to
corporate tax reform. So, getting back on track with regard to moving that
legislation forward will I think be key to making a difference between what
might be good returns for the equity markets and potentially great.
CHU: Stocks are entering the summer season, one which many say is a
seasonally weaker time of the year. So, there could be headwinds to return
in the coming months. But there`s a still optimism medium to long term.
LUSCHINI: The gains are still there relative to where we were from
November, and we expect again trade to resume once we start to get more
tangible evidence that, in fact, legislation will be converted to actual
CHU: The market is looking for the next catalyst, whether it`s President
Trump or corporate profits or geopolitical concerns. And whether that
catalyst keeps the rally going higher or sends markets lower.
For NIGHTLY BUSINESS REPORT, I`m Dominic Chu.
MATHISEN: Let`s turn now to Jimmy Lee for more perspective on the market
and what might lie ahead in the days and weeks to come. He`s CEO of The
Wealth Consulting Group.
Mr. Lee, welcome. Good to have you with us.
Let me begin with the late news this afternoon that the North Koreans once
again attempted to test a ballistic missile. It apparently failed or did
not succeed in the ways that the regime might have liked.
Are you worried that the biggest risk to momentum in the market may come
from some outside geopolitical risk, or something else?
JIMMY LEE, THE WEALTH CONSULTING GROUP CEO: It`s a big concern, Tyler.
And, you know, in the short term especially, if something happens between
North Korea and the U.S., I think it causes a lot of panic and potential
concern amongst investors, and definitely could cause a lot of volatility.
So, we`re watching it closely. I`m South Korean. So, it`s something
that`s of particular interest to me, I have family members in South Korea
too. But it is definitely a concern.
HERERA: I can understand that, certainly.
Are you doing anything different with your clients` money, either in
anticipation of the things heating up in that part of the world? Or are
you simply watching it closely?
LEE: Watching it very closely. But, Sue, if we get some sort of a
correction because of these geopolitical concerns, whether it`s North Korea
or maybe the election in France, I really think it`s a buying opportunity
for investors in the long term. And so, I think there`s a lot of dry
powder that`s been waiting for a correction. On the other hand, there`s a
risk out there is that people don`t buy in the correction, or they`re
waiting for something really deep to happen, a severe bear market, which I
just don`t think is going to happen.
MATHISEN: Let`s talk about the topic that we sort of begun the broadcast
with, and that is some soggy economic numbers, 0.7 percent growth in the
first quarter, and yet the stock market is moving up rather briskly.
What`s the disconnect? Should we be worried about that? Is the first
quarter just an anomalous print on the GDP?
LEE: I think it is, actually. You`ve got to remember that analysts were
predicting I think a 0.9. So, it wasn`t that far off from the actual
predictions. And I think it will actually pick up. We have consumer
spending peak in the fourth quarter last year.
So, have a little bit of a setback in the first quarter is not that bad, I
don`t think. But I think in the second quarter and possibly beyond, you
know, a lot of this rise in the equity prices since the Trump election has
to do as much with, you know, an idea of a cap on taxes and no more
regulation as it does with maybe, you know, how good the actual reforms
HERERA: Very quickly in the time we have left, Jimmy, what areas of the
market do you think still have some room to run?
LEE: Well, we always favor a globally diversified portfolio. But we`ve
allocated into emerging markets. We also think that technology sectors and
industrial sectors are good. And when interest rates start to finally
rise, financials will also rise with it, we believe.
MATHISEN: All right. Jimmy, thanks very much. Jimmy Lee joining us
tonight from Las Vegas, he`s with The Wealth Consulting Group.
HERERA: Still ahead, lawmakers pass a funding bill to keep the government
up and running. But the fight over spending may be only intensifying.
MATHISEN: United Continental`s CEO Oscar Munoz will testify before a
congressional panel next week. On Tuesday, lawmakers will ask him about
the forced removal of a passenger from a flight earlier last month. The
hearing`s goal is to determine what can be done to improve flying for
HERERA: Also in Washington, President Trump signed an executive order
aimed at expanding drilling in the Arctic. The order starts to reverse
some of former President Barack Obama`s actions and directs the interior
secretary to review locations for exploration that had been considered off-
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: This executive order starts
the process of opening offshore areas to job creating energy exploration.
It reverses the previous administration`s Arctic leasing ban.
(END VIDEO CLIP)
HERERA: The order has the potential to open oil exploration in areas off
Virginia, North and South Carolina, where drilling is currently blocked.
MATHISEN: On Capitol Hill, lawmakers voted to pass a short term spending
bill that averts a government shutdown at least for another week. But the
battle over the budget is far from over.
Kayla Tausche has our report.
UNIDENTIFIED MALE: The ayes appeared to have it. The ayes do have it.
The bill is passed.
KAYLA TAUSCHE, NIGHTLY BUSINESS REPORT CORRESPONDENT: With that, the
Senate passed the funding needed to keep the government operating for a
week. The challenge now, reaching a longer term deal that funds the
government through September, when its fiscal year ends. Democrats have
signaled there is more work to be done before they`ll support that.
REP. STENY HOYER (D), MARYLAND: I want to put my colleagues on notice and
the American people on notice, Mr. Speaker, that I will not vote for
SEN. CHUCK SCHUMER (D), NEW YORK: We`re willing to extend things for a
little bit more time in hopes that the same kind of progress can continue
to be made. But we still have a little bit of a ways to go.
TAUSCHE: The president`s budget calls for sharp increases in military
spending and steep cuts to environmental and diplomatic programs. The
White House offered two olive branches, withdrawing a request to fund a
controversial wall along the border with Mexico and continuing to make
payments for now to insurance providers for offering plans to low income
customers under the Affordable Care Act.
But it`s some smaller, extraneous provisions, emergency funds for Puerto
Rico, for example, that have the two sides at odds.
REP. TOM COLE (R), OKLAHOMA: It`s got to get done now. And there will be
some significant victories for the president. But there will also be a lot
of bipartisan compromises. That`s the way appropriations works.
TAUSCHE: House and Senate staffers are set to work through the weekend to
try and finalize a deal, to meet their own rules, an agreement should be
voted on by Tuesday before the short term measure is set to run out on
For NIGHTLY BUSINESS REPORT, I`m Kayla Tausche, Washington.
HERERA: Time Inc. takes down the “for sale” sign, and that`s where we
begin tonight`s “Market Focus”.
After evaluating interest from potential buyers, Time said that it will
stay an independent company and continue to pursue its strategic plan. The
publisher of “Sports Illustrated” and “Fortune”, among other things, said
it will focus on its digital business and initiate cost-cutting measures.
Time Inc. made headlines earlier this year after there were rumors the
company was seeking buyout offers. Shares today plunged almost 17 percent
Strong demand in the U.S. for pickup trucks and SUVs helped General Motors
(NYSE:GM) post a profit that grew and top estimates. The company
acknowledged currency headwinds negatively impacted results in some of its
foreign markets. But overall, sales still rose more than expected. GM
shares rose as well fractionally to $34.64.
VF Corp. reported a bigger than expected drop in revenue even as the
apparel company saw sales strength in its international business and
outdoor and action sports division which carries the North Face brand. The
company`s earnings were in line with estimates. VF Corp. shares fell more
than 5.5 percent to $54.63.
And a rise in sales helped Royal Caribbean top earnings expectations. The
cruise operator raised its outlook for the year and also launched a $500
million share buyback program. The company said its business is doing well
(BEGIN VIDEO CLIP)
RICHARD FAIN, ROYAL CARIBBEAN CHAIRMAN & CEO: The U.S. market is doing
well. The Canadian market is doing well. The Europe is going very nicely.
China has been a terrific success for us. In fact, throughout Asia, we`re
seeing Australia and all of Asia is just going very well.
So, there really is — in fact, I can`t remember a time when so many
markets all seemed to be lining up in a positive way.
(END VIDEO CLIP)
HERERA: Well, shares popped 6 percent to $106.60.
MATHISEN: Colgate saw a profit rise and beat estimates. But the company`s
revenue didn`t perform as well. The consumer products company reported
flat sales as weakness in North America hurt results. Colgate also said it
sees net sales for the year rising in the low single digit. Shares off
more than 1 percent at $73.04.
Goodyear faced higher material costs and weaker demand but still managed to
beat forecasts. The company said a drop in tire shipments, though,
contributed to weaker than expected revenue. Shares still rose more than 2
percent to $36.23.
And the enterprise software firm Cloudera saw its shares pop in their first
day of trading on the New York Stock Exchange, a clear day for Cloudera.
Shares of the company`s initial public offering were priced at $15 a share.
That was the high end of the anticipated range.
CEO Tom Reilly said going public was the right move.
(BEGIN VIDEO CLIP)
TOM REILLY, CLOUDERA CEO: With the proceeds from the IPO, that gives us
greater flexibility to look long term, look at this big market, and make
sure that we remain the market leader by making the right investments,
having the right partnerships.
(END VIDEO CLIP)
MATHISEN: Shares soared more than 20 percent on the day to $18.10, good
HERERA: Our market monitor joins us. He`s bargain hunting for some names
that he says are overlooked by the rest of the market. Last time he was on
over a year ago, he recommended Apple (NASDAQ:AAPL), which is up 49
percent. Bank of America (NYSE:BAC) is up 91 percent. Ford a little bit
of a hit, down about 6 percent.
Joining us now is Chris Cordaro, chief investment officer at
Good to have you back.
CHRIS CORDARO, REGENTATLANTIC CIO: It`s good to be here.
So, you think that these are overlooked stocks, in a market that has been
rising quite nicely from many stocks.
CORDARO: The market has been rising, but I think these are some hidden
values that people aren`t really paying attention to. You know, the tech
stocks are taking a lot of the big names. But these are ones that I think
will have some resiliency going forward.
HERERA: Total is one of picks that you have for us tonight. The big oil
CORDARO: The big oil — the big French oil company. I really like Total
because they`re a great buy right now. So, they`re selling at a real
bargain. But the best thing I like about them is, they`re — of all the
major oil companies, they are the most environmentally friendly by far.
I think in the long run, this is going to be put them in a much better
position. So, short run, they`re a great bargain. Long run, you know,
they realize they might be in the buggy whip business and cars are coming
MATHISEN: Energy stocks have not performed all that well so far this year,
as Bob Pisani reported earlier. This is a long term play.
CORDARO: Yes. This is a long term play, and that`s also looking at the
environmental aspect of them as well.
MATHISEN: It`s only a 91 percent gain in Bank of America (NYSE:BAC). What
are you doing wrong here? Come on, man.
CORDARO: Thanks for not harping on the Ford.
MATHISEN: Let`s turn to Comcast (NASDAQ:CMCSA) (NYSE:CCS), which, of
course, is the parent company of CNBC, which produces this broadcast. You
like it for a variety of reasons.
CORDARO: I like it, and what I really like it for is for the pipes. So,
Comcast (NASDAQ:CMCSA) (NYSE:CCS) delivers the broadband for over a quarter
of the country. And so, with that, that`s where they`re going to make
their money. That`s where they`re positioned.
You know, my kids don`t watch TV, they look on their computer. They watch
content on the computer.
HERERA: Except NIGHTLY BUSINESS REPORT.
MATHISEN: They`re watching tonight.
CORDARO: Maybe tonight.
HERERA: And, finally, we finish up with Oracle (NASDAQ:ORCL). It`s kind
of old guard tech, but you think there`s some unusual things that this
company is doing to execute.
CORDARO: Exactly. And this is one where I think it`s getting overlooked,
because Oracle (NASDAQ:ORCL) really does have a very strong cloud presence,
and they`re building it more and more. So, you have that backbone
infrastructure from Oracle (NASDAQ:ORCL) combined with what they`re doing
on the cloud.
I think this is one that the market is missing. I think if you look at the
cloud, this is one of the best bets to do it.
MATHISEN: Who is getting it right? The economy growing at 0.7 percent or
the market growing 5 percent, 6 percent, 7 percent so far this year?
CORDARO: Well, so, the market looks out the windshield, the GDP number is
looking in the rearview mirror. Looking out the windshield, what`s going
on is, we have disposable earnings going up 4 percent. We have consumer
confidence hitting 16-year highs. That`s going to translate into much
better growth later on in the year.
HERERA: All right. On that note, Chris, thank you so much for coming in
tonight, we appreciate it.
CORDARO: Great to be here.
MATHISEN: Thanks for being with us.
HERERA: Chris Cordaro with RegentAtlantic.
MATHISEN: Coming up, dollar and cents. A football pro turned financial
pro and his advice to avoid fumbling a financial windfall for some of those
HERERA: Here`s a look at what to watch for next week. On Tuesday, Apple
(NASDAQ:AAPL), the world`s most valuable publicly traded company, reports
earnings. On Wednesday, Federal Reserve policymakers make a decision on
interest rates at its two-day meeting wraps up. And on Friday, the monthly
employment report for April is released. And that`s what to watch for next
MATHISEN: Here`s a little-known fact about Amazon (NASDAQ:AMZN), the
company which has a $5 billion share repurchase program in place did not
buy back any of its shares in the first quarter. In fact, according to a
filing with the SEC, Amazon (NASDAQ:AMZN) hasn`t bought back any stock
since 2012 when it repurchased more than 5 million shares in an average
price of roughly $180 apiece.
The stock today closed around $925 a share, indicating that maybe the
company hasn`t needed to buy back its stock. That`s a record on the back
of its earnings that we told you about last night.
HERERA: It is day two of the 2017 NFL draft. And the National Football
League is making some dreams come true. For some young top athletes from
around the country, giving the multimillion dollar deals to play football
for the teams they love.
But if you`ve never had this much money before, how do you manage your
Charles Way, a former football player himself and now managing director at
Purple Bridge Management, has some financial advice.
It`s good to see you. Welcome.
CHARLES WAY, PURPLE BRIDGE MGMT MANAGING DIR: It`s great to be here.
HERERA: It is a very exciting time for these young men, you know? They`ve
been dreaming about pro-football and here they are.
But it must be a little daunting and maybe even frightening for them when
they get these multimillion dollar contracts in some cases.
WAY: It is. You have to think about it — you worked all your life for
this very moment, and now, you`re going to be thrust with tons of
responsibility, not only on the football field but off the football field
as well. It can be quite complicating.
MATHISEN: A lot of these guys, some of them aren`t even college seniors
who are getting drafted — they`re underclassmen as well — I suspect are
very unprepared for the financial responsibilities they`re going to have.
Do the teams, does the NFL give them any assistance to teach them how to —
how to manage money responsibly? Do they screen any of the agents or
financial advisers who these guys might be approached by?
WAY: Yes, definitely. It started way back in the early `90s, when teams
started to think about, are these guys actually prepared to handle this
money had they leave? And so, it kind of evolved over the course of the
years. And recently, now, the clubs are taking more responsibility of
educating their players when they come in.
And the great thing about the evolution of this financial literacy program
is that some teams are taking it even one step further and educating their
families as well.
HERERA: Yes. I was going to say, that`s a key component, because in some
cases, they will be supporting the entire family. What do you counsel
them? What`s the best piece of advice that you give them when you talk to
WAY: You know, when you first get into the league, it`s really about
establishing yourself as a player. And so you don`t need to be worrying
about your finances. So, really, what we tell them is, preserve your
wealth. You don`t need to get into anything fancy.
And first of all, you don`t understand, most of the players coming in don`t
understand intricacies of finance. So, we tell them, look, focus on
football, put your money in a safe place. And once you make it, after year
three, year four, then you`ve become established, then you can start
thinking about some sophisticated ways to manage — to invest your money.
MATHISEN: Is the biggest risk to these young guys that they spend it too
quickly? Because let`s be frank here, the average NFL career is what, four
WAY: It`s between three and five years. And that is the concern. But
you`ve got to understand, think about it, is any college graduate ready for
the real world?
WAY: And so, we`re just adding a few zeroes to make things complicated.
So, I think it`s important for us to understand that and work with them as
they grow and go through the process.
HERERA: Uh-huh. Are they willing to let you do that? Do they take the
WAY: Most players do. And I think it`s because of the approach the NFL
and National Football League Players Associations have is that we want to
engage them, and we want to, you know, continually tell them that this is
for your life after football. We want to establish a great foundation so
you don`t have to worry about —
HERERA: If they get hurt or can`t play.
WAY: Exactly. And you can take your time in finding that next career.
HERERA: Charles, thank you so much.
WAY: You`re welcome.
HERERA: Charles Way.
MATHISEN: Fellow UVA.
WAY: That`s right.
HERERA: That`s right. Purple Bridge Management.
That does it for us on NIGHTLY BUSINESS REPORT. I`m Sue Herera. Thanks
for joining us.
MATHISEN: I`m Tyler Mathisen. Thanks from me as well. Have a great
weekend, everybody. We`ll see you Monday.
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