Transcript: Nightly Business Report – June 8, 2017

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

(BEGIN VIDEO CLIP)

 

JAMES COMEY, FORMER FBI DIRECTOR: I was fired because of the Russia
investigation.

(END VIDEO CLIP)

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: The former FBI director gives
a motive but stops short of saying there was a crime. And Wall Street
watched intently.

BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Need a loan? Why more
people and small business owners are looking to Silicon Valley, not the big
banks.

HERERA: Call blocked. But those unwanted robocalls seem to keep coming.
What you and your telecom company can do to stop them.

Those stories and more tonight on NIGHTLY BUSINESS REPORT, for Thursday,
June 8th.

Good evening, everybody. I`m Sue Herera.

GRIFFETH: And I`m Bill Griffeth, in tonight for Tyler Mathisen, obviously
coming to you this evening from the New York Stock Exchange, where traders
spent most of this day just riveted by Washington, weren`t we all?

Wall Street did not appear too concerned about what the former director of
the FBI told lawmakers. In fact, towards the end of James Comey`s
testimony on the Russia investigation, the Dow actually hit a record high
before pulling back. The NASDAQ, though, did close at one today. Many
investors do not think the hearing produced a smoking gun that could harm
the president`s business-friendly agenda.

In the end, the Dow Jones Industrial Average added just eight points,
closed to 21,182. The NASDAQ gained 24 points and the S&P moved
fractionally.

So, while the drama wasn`t felt on Wall Street, there was plenty of it on
Capitol Hill.

Eamon Javers reports for us tonight.

(BEGIN VIDEOTAPE)

EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Today, former FBI
Director James Comey defended his integrity and integrity of the FBI, both
questioned by President Trump, even turning the table to question the
president`s intentions when asked why he compiled notes on his meetings
with the president.

COMEY: I was honestly concerned he might lie about the nature of his
meeting. So, I thought it really important to document. That combination
of things I had before, but it led me to believe I got to write it down and
I got to write down in a very detailed way.

JAVERS: Comey admitted giving the OK for portions of his notes to be
leaked to the press after President Trump tweeted that Comey should hope
there were no tapes of their conversations.

COMEY: The president tweeted on Friday after I got fired that I better
hope there`s not tapes. I woke up in the middle of the night on Monday
night, because it didn`t dawn on me originally, that there might be
corroboration for our conversation, there might be a tape.

My judgment was, I needed to get that out into the public square. So, I
asked a friend of mine to share the content of the memo with a reporter. I
didn`t do it myself for a variety of reasons. But I asked him to because I
thought that might prompt the appointment of a special counsel.

JAVERS: Before a hushed audience on Capitol Hill and tens of millions
watching across the country on TV, James Comey`s first public appearance
since being fired as FBI director by President Trump left the most
important question unanswered, on whether he thinks the president`s
behavior relating to the investigation of Michael Flynn amounted to
obstruction of justice. Comey deferred to the newly appointed special
counsel investigating Russia`s interference in U.S. elections.

COMEY: That`s Bob Mueller`s job to sort that out.

JAVERS: On whether he believes the president colluded with Russia —

COMEY: It`s a question I don`t think I should answer in an open setting.

JAVERS: The president`s attorney Marc Kasowitz fired back at Comey,
questioning his credibility, while embracing Comey`s confirmation that the
president himself was not under investigation.

For NIGHTLY BUSINESS REPORT, I`m Eamon Javers in Washington.

(END VIDEOTAPE)

HERERA: And the other big story is coming out of Great Britain. According
to exit polls, Theresa May`s Conservative Party may not have a majority in
parliament. There was shift and sharp reaction initially in the pound.

Wilfred Frost reports from a rainy London this evening — Wilfred.

WILFRED FROST, NIGHTLY BUSINESS REPORT CORRESPONDENT: Hey, Sue. Yes,
indeed, if this exit poll is correct, then we`re headed for a hung
parliament. That is when nobody wins an outright majority, a reminder that
there are 650 seats at play, 326 therefore needed to win an outright
majority. The conservatives predicted to get 314, 12 short of a majority,
17 less than they had before this whole process.

What next? Well, there`s no clear coalition partners for the
conservatives. So, either they will try and form a weak minority
government and all the uncertainty that comes with it, or Labor, who have
come second under Jeremy Corbyn and done well, gaining 34 seats to 266, try
and form a coalition with some other partners.

There are some possible partners as well. The Scottish National Party, the
Liberal Democrats, and the Greens could all reasonably be expected to come
to an agreement with the Labor Party. But that only totals 315 seats,
still short of the 326 to get a majority.

So, you could describe this as the perfect storm of uncertainty for
markets. That is the reason why, as you said, the pound fell initially
some 2 percent, Sue.

GRIFFETH: Let me ask you a question here, Wilf, if I may. Knowing that
Theresa May is a Brexit hard liner, what do the results mean for the Brexit
process going forward? It`s probably too early to know at this point. But
what do you think?

FROST: Well, it`s a great question. Certainly, she was framed as a Brexit
hardliner. The first takeaway you would have to say is that the intention
to begin Brexit negotiations in two weeks which was the case before today
looks fairly unlikely, because it`s not even sure we`ll have a firm
government by then.

The second thing is to say that if Theresa May goes ahead with a weak
minority government, then her hand will be a lot weaker than it would have
been if she hadn`t called an election, and certainly a lot weaker than she
wanted it to be by calling this election. The second eventuality, if Labor
did manage to get together a coalition, it would rely on parties like the
Liberal Democrats and the S&P that want to have a second referendum and
stop Brexit.

So, it`s interesting to see the reaction of the pound, which is down. Some
traders say if this result came about, in the long term, the pound could
rally if Brexit didn`t come about.

HERERA: Wilfred, thank you so much. Wilfred Frost reporting for us
tonight from London.

Bill?

GRIFFETH: So, with the news out of Great Britain and the James Comey
testimony now over, what does this mean for the markets and your
investments? What a day this has been.

Mark Luschini is chief investment strategist at Janney Montgomery Scott.

We`ll get to the Brexit or the U.K. vote in a minute. But first, to
Comey`s testimony today — no real smoking guns, or at least that seemed to
be the response of the markets. What did you make of that, Mark?

MARK LUSCHINI, JANNEY MONTGOMERY SCOTT CHIEF INVESTMENT STRATEGIST: I
would concur with that interpretation, Bill. The fact of the matter is, I
think the market let out a proverbial sigh of relief toward the end of the
testimony. And you saw that in the immediate aftermath of the conclusion
of Comey`s speaking, the market ran up to about plus 60, 65 points, which
it gave a good, if not all of it, back by the end of the day, but
nonetheless, the relief was we didn`t hear anything particularly new.
There was more regurgitation as to what`s already been out there, and as a
consequence, the market at the moment at least seems to have dodged a
bullet.

HERERA: So, Mark, what does this mean for the agenda for the Trump
administration, which is focused on some very business-intensive sectors,
infrastructure and things like that? Do those stocks then get kind of a
second wind?

LUSCHINI: Sue, I don`t know if we see an uptick that quickly, to see a
reassertion, if you will, of Trump trade. The fact is, we still have an
independent investigator looking into the Russian circumstances and probing
around the same things that were brought up in the course of Comey`s
testimony. So, it hasn`t necessarily gone away, it`s just been deferred or
at least de-heightened by way of the activity surrounding it. And so, it
will continue to lurk out there in the background.

In the meantime, we have an economy that is doing reasonably well in terms
of posting positive growth. But some of the economic data we`ve had over
the last two months has been comparatively soft, from what we saw earlier
in the year.

GRIFFETH: All right.

LUSCHINI: So, markets are unlikely to regain that economic sensitive
footing until we see better economic data to support why earnings should be
beneficial to those more interest-rate-sensitive sectors.

GRIFFETH: And quickly before we let you go, we know that since the Brexit
vote, the FTSE has been up appreciably, the stock market there in England.
But the pound has gone down. Now, we have these questions about the U.K.
vote results.

What happens now, do you think?

LUSCHINI: Bill, I think it`s complicated. I think the good news is, is
that Brexit is likely to continue going forward, because it was supported
by both Tories and Labor. But the fact is, you saw this parallel trade
between the pound strengthening and the strength in the FTSE. I think
that`s going to be unwound, because obviously the decay we`re seeing in the
sterling at least so far is indicative of the concern relating to the
inability to get a majority government, and in fact, we could see another
David Cameron with regard to Theresa May actually resigning, which would
create some chaos in government there.

So, I don`t think it`s necessarily a positive at this juncture by any
stretch of the imagination, particularly in the aftermath of the shock wave
associated with how wrong once again the polls were in assessing who is
going to walk away with the majority.

GRIFFETH: And we are seeing chaos in the currency markets tonight already.

Mark Luschini from Janney Montgomery Scott — thanks, for joining us again.

LUSCHINI: Thanks, Bill.

GRIFFETH: Meanwhile, the European Central Bank appears to be taking baby
steps toward cutting stimulus. Policymakers there today did not make any
changes to interest rates, but did deliver a modest change to their
guidance. The ECB moved to drop a reference to the possibility that
interest rates could move even lower in the future. But the president of
the central bank did express concern about inflation.

(BEGIN VIDEO CLIP)

MARIO DRAGHI, ECB PRESIDENT: Measures of underlying inflation remain low
and have yet to show convincing signs of a pickup as underutilized
resources are still weighing on domestic price and wage formation.
Underlying inflation is expected to rise only gradually over the medium
term.

(END VIDEO CLIP)

GRIFFETH: And while inflation does remain low, Mario Draghi added that the
growth in the Eurozone is exceeding expectations.

HERERA: Here at home, the House of Representatives votes to undo much of
the landmark banking law passed after the financial crisis. The vote to
replace the legislation known as Dodd/Frank was largely along party lines.
Republicans have argued that rules designed to prevent another meltdown
were hampering the economy by making it harder for community banks to
operate. The bill`s fate in the Senate is uncertain.

GRIFFETH: Still ahead, tech companies are invading new territory and it
has the nation`s big banks on the lookout.

(MUSIC)

HERERA: About 3 million potential first time homebuyers have been shut out
of the market over the past decade. According to a new study, tight
lending and a shortage of affordable homes in many markets has reduced the
pool of potential buyers. First time homebuyers are considered a key
component of housing demand. The results of the study suggest the market`s
recovery for the past few years could have been even stronger.

GRIFFETH: Nordstrom (NYSE:JWN) considers going private. And that`s where
we begin tonight`s “Market Focus”.

The retailer said that members of the Nordstrom (NYSE:JWN) family had
created a group now to explore the possibility of taking that company
private. Nordstrom (NYSE:JWN) also said no proposal has been made yet.
But investors seem to like the possibility and sent shares up 10 percent to
close at $44.63.

Alibaba sees revenue growth that blew past analysts` expectations. The
Chinese e-commerce giant said it expects sales to rise as much as 49
percent this year. Shares popped by 13 percent, close at $142.34.

J.M. Smucker (NYSE:SJM) saw sales fall as the maker of Jif Peanut Butter
said that there was weak demand for its coffee and its pet food products.
But cost cuts helped to offset that decline, and that allowed revenue to
top street expectations. Earnings also fell, but they came in ahead of
estimates at the same time. Shares off more than 1 percent for J.M.
Smucker (NYSE:SJM) to $128.51 — Sue.

HERERA: Bill, the drug maker Valeant said it would sell iNova
Pharmaceuticals` business for nearly a billion dollars as the company ramps
up its efforts to trim its debt load. The unit will be sold to a company
jointly owned by private equity firms Pacific Equity Partners and Carlyle
Group. Shares of Valeant rose nearly 9 percent to $13.26.

In a regulatory filing, clothing retailer Urban Outfitters (NASDAQ:URBN)
warned same store sales are falling in the high single digits. That`s a
steeper drop than what the street was expecting. And that news sent shares
lower by 10 percent to $16.35.

Yahoo`s shareholders approved the sale of the company`s core assets to
Verizon (NYSE:VZ) for $4.5 billion. And according to reports, Verizon
(NYSE:VZ) will lay off more than 2,000 employees at Yahoo (NASDAQ:YHOO) and
also at AOL (NYSE:AOL) as it works to combine those two units. Now, when
the deal closes next week, Yahoo (NASDAQ:YHOO) will change its name to
Altaba which primarily as the stakes in Alibaba and Yahoo (NASDAQ:YHOO)
Japan. So, shares of Yahoo (NASDAQ:YHOO) rose to — thanks to Alibaba`s
upbeat forecast that we just told you about — up about 10 percent to
$55.71.

GRIFFETH: Traditional banks are facing some tough competition from the
likes of tech companies, of all things. According to “The Financial
Times”, companies like Amazon (NASDAQ:AMZN) and transaction processing
companies PayPal and Square are issuing consumer and small business loans.

Ben McLannahan wrote about it for the Financial Times. He joins us tonight
to talk about this.

You know, you have to pity the banks, they had the financial crisis, then
they had Dodd/Frank. They`ve got low interest rates they`re facing, and
now this.

BEN MCLANNAHAN, FINANCIAL TIMES REPORTER: Yes. (INAUDIBLE)

GRIFFETH: Yes, Amazon (NASDAQ:AMZN) in particular. I mean, why is it that
they are getting into this business and why are they have been so
effective?

MCLANNAHAN: Well, it`s hard to say for now whether they`re being effective
or not. They`re certainly been quite big. It`s been a reasonably quiet
effort so far, about six years in they`ve built a loan book worth about $3
billion. And they`ve done that by taking advantage of all the terrific
data they`ve got on all the businesses that they sell and their goods
through their platform. It`s about half the units that Amazon
(NASDAQ:AMZN) ships worldwide is delivered by these sort of third party
businesses.

And what Amazon (NASDAQ:AMZN) has done, cleverly, is take a look at all the
sales, the sales histories, the sales projections, the seasonal deeps and
so on, and has judged certain pockets of these businesses to be worth of
credit. So, it`s given them offers of tens of thousands of dollars.

HERERA: It`s also, is it not, because the Amazons of the world and other
tech companies are not as restricted or as restrictive as the banks are
with their lending standards?

MCLANNAHAN: Yes, that`s a very good point. I actually talked to the head
of Amazon (NASDAQ:AMZN) lending, as they`re calling it. He didn`t actually
know which regulator he should have kept abreast of this. That`s a sign of
the regulatory vacuum these guys are operating in.

And you`re very right to observe that the big banks in particular have been
suffering. They say suffering under a punitive supervisory regime over the
past few years. That`s made them wary of lending to anyone that might
default, to anyone that might sort of sue them later for sort of wrong
advice.

GRIFFETH: Don`t they have to be chartered to make loans? How does this
work regulatory-wise?

MCLANNAHAN: Well, this is something I plan to do more reporting on. As I
said to the guy yesterday, I asked him, what`s the supervisory situation
here? Do you have state by state banked license, are you federally
chartered? The answer is no.

I suspect it`s because they`re not actually creating money. They`re just
recycling their own cash deposits. So, that`s entirely within board.

I think the fact that the regulators haven`t kept a close eye on this has
been a boost to Amazon`s fledgling business.

HERERA: Do you have a gauge as to how predominant this might eventually
become?

MCLANNAHAN: Well, $3 billion in six years isn`t bad going. $1 billion of
that has been within the past 12 months. So, that`s a very much an
acceleration of the pace here.

And as you said earlier, it`s not just Amazon (NASDAQ:AMZN). Square is
doing it, the payments processing company. PayPal has two separate
businesses. PayPal credit to consumers and PayPal working capital, that`s
to small businesses. Together, we`re probably talking about $10 billion,
which is a tiny pinprick in the context of J.P. Morgan Chase with its $2
trillion balance sheet, but as I say, there`s a sharp pace of acceleration.

GRIFFETH: Right. Yes, Amazon (NASDAQ:AMZN) started as a small pinprick as
well at one time.

MCLANNAHAN: That`s right. $18, now it`s worth a thousand.

GRIFFETH: Ben McLannahan from “The Financial Times,” thanks for joining us.
Very interesting.

HERERA: Coming up, the rise of robocalls. What the industry is doing
about them and how you can make them stop.

(MUSIC)

GRIFFETH: We`ve all been there. You run to pick up the phone and instead
of a friend or a family member, it`s that pause and then a recorded voice
trying to sell you something or collect a debt that you don`t even owe.
Robocalls like those are on the rise, I didn`t have to tell you that,
despite a government crackdown. Just this week, the FTC announced $280
million in civil penalties against Dish Network including for some
robocalls.

So, why are the calls still rolling in?

Andrea Day has our story.

(BEGIN VIDEOTAPE)

ROBOCALL: Hello! This is Rachel at cardholder services. It is urgent
that you contact us.

ANDREA DAY, NIGHTLY BUSINESS REPORT CORRESPONDENT: It`s a robocall, an
automatically dialed call bothering millions of Americans on a daily basis.

ALEX QUILICI, YOUMAIL CEO: There`s about 30 billion robocalls a year now.

DAY: And o annoying, Alex Quilici, developed an app to try to stop the
madness.

QUILICI: It`s a pitch from Emily the travel spammer or a fake Microsoft
(NASDAQ:MSFT). There`s nothing worse.

ROBOCALL: This is an important notice regarding your automobile.

UNIDENTIFIED MALE: I get probably I would say ten calls a day.

DAY: The government`s do-not-call list was supposed to stop these pesky
telemarketers. So, why does it seem like it`s getting worse?

QUILICI: The do not call registry actually works for legitimate
businesses. The problem is all the people who don`t respect it, who are
the scammers who could care less.

DAY: That`s right, the new technology we love to use has also made it
super easy for scammers.

QUILICI: And unfortunately it works. People fall for the scams enough to
make it worthwhile.

DAY: We sat down with the Federal Trade Commission, the agency behind the
do not call list. The FTC says consumers lose $350 million every year
falling for robo rip-offs.

JANICE KOPEC, FTC STAFF ATTORNEY: The FTC investigates unwanted calls and
we do try and track down where these calls are coming from and bring law
enforcement action to stop them.

DAY: But according to the FTC, most robocalls come from overseas, where
scammers try to stay outside the reach of regulatory authorities and blast
out calls for next to nothing.

Last year, the FTC received nearly 3.5 million complaints about the calls.
That`s up 60 percent from 2015.

The Federal Communications Commission or FCC also regulates telemarketers
and sets rules for providers, telling us, quote, unwanted calls including
illegal robocalls and telemarketing calls are the top consumer complaints
the FCC receives each year.

UNIDENTIFIED FEMALE: I`ve never seen anything like this.

DAY: The technology has made it easier to spoof calls where it looks like
the calls are coming from your bank or someone nearby.

UNIDENTIFIED MALE: Now, they`re coming in from my own area code.

DAY: So, how can we end it? The FCC is testing letting providers block
calls that are likely scams. And according to the trade group that
represents most landline providers —

KEVIN RUPY, USTELECOM VICE PRESIDENT OF LAW & POLICY: We can return
trustworthiness to the caller ID information, and the industry is working
on standards on that front.

DAY: CTIA, the wireless carriers trade group says, it`s united in its
efforts to defeat robocalls. These efforts collectively stop more than a
million robocalls every day.

But for now, Quilici says his free app could help.

QUILICI: YouMail plays an out of service greeting to any number we think
is a bad guy.

DAY: His biggest tip, don`t talk to strangers.

QUILICI: Everybody has to get out of the habit of picking up the phone and
answering if it`s a number you don`t know.

DAY: And there`s a way that you can help. When you get robocalls, write
down the numbers and share them with the FTC. Just go to
complaints.donotcall.gov. They will pass them along the apps like YouMail
so they can block the calls for you.

I`m Andrea Day for NIGHTLY BUSINESS REPORT.

(END VIDEOTAPE)

HERERA: The big phone companies like T-Mobile, Verizon (NYSE:VZ), and AT&T
(NYSE:T) are taking steps to flag and block those robocalls. But is that
enough? Is there more they can do?

Roger Cheng is the executive editor at CNET, and he joins us now.

Roger, good to see you. I guess that is the question.

Is there more they can do? And if so, what?

ROGER CHENG, CNET EXECUTIVE EDITOR: You know, they`ve actually taken quite
a number of steps to block robocalls. It`s up to — I don`t know if
they`ve done as much as they possibly can, but they`ve definitely taken a
step in the right direction. Most carriers have programs in place to
automatically detect and block some of these robocalls. Of course, they
can`t get to all the calls, which is still a problem, as legitimate
telemarketers still will get through.

So, you know, it`s not 100 percent yet. But there is sort of a concerted
effort. The FCC has something called the robocall strike force, as
dramatic as that sounds, sort of a group of these phone companies have
gotten together with the FCC to fight robocalls.

GRIFFETH: And just the other day, Roger, I noticed there was a message on
our home phone, we have a landline, yes, we`re dinosaurs. But the phone
never rang and it was a robocall. Now I read they`re able to send a
message without even ringing these days, right?

CHENG: Yes, the new trend, the new disturbing trend is ringless voicemail
or ringless robocalls, your phone doesn`t ring or rings once, and all of a
sudden, you`ve got a voicemail that pops up. In fact, the company is
actually trying to argue that because you`re not being technically called,
they shouldn`t be falling under these consumer production rules. The FCC
is arguing or is considering that proposal now. The attorney generals of
New York, Kentucky, Connecticut, have already, you know, expressed their
desire that the FCC squash this attempt. But, yes, there`s definitely
still aggressive attempt to get more robocalls into our homes.

HERERA: Yes, Bill is not a dinosaur, because I have a landline as well.

But does it work the same way, or is there an advantage if you are only a
wireless consumer versus one with a landline?

CHENG: If you`re a wireless consumer, you have a few more options. As I
said, T-Mobile, AT&T (NYSE:T), all the major wireless carriers have
programs in place. Some of them are automatic. Some of them you have to
opt in, that automatically detect some of these robocalls.

But they obviously don`t do enough to catch all of them. I know my wife, a
majority of her calls now are robocalls. They`re from telemarketers. The
best advice is to not pick them up. She`s pretty smart about it, if she
doesn`t recognize the number, she`ll just hang up really quickly.

HERERA: She won`t, yes. I guess that is the best advice.

Roger, thank you. We appreciate it. Roger Chang with CNET.

GRIFFETH: I solved it, I don`t even answer the phone when I recognize the
number. I just don`t answer the phone. If it`s important, they`ll leave a
message.

HERERA: All right. That`s NIGHTLY BUSINESS REPORT for tonight. I`m Sue
Herera. Thanks for joining us. We want to remind you, this is the time of
year your public television station seeks your support.

GRIFFETH: I`m Bill Griffeth. Thank you for your support, by the way.
Have a great evening. We`ll see you tomorrow.

END

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