Transcript: Nightly Business Report – June 22, 2017

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

Republicans unveil their health care plan, but the opposition mounts
including within the GOP. And with a self-imposed deadline approaching,
can the bill get passed?

Airways wants a piece of American Airlines but the U.S. carrier is not
exactly thrilled. We`ll tell you why and what might be behind the Gulf
airline strategy.

BREWER: And digital dollars. Why big-name companies are fighting over the
likes of YouTube sensation.

All that and more for NIGHTLY BUSINESS REPORT. It`s Thursday, June 22nd.

And good evening, everyone. I`m Contessa Brewer, in tonight for Sue

GRIFFETH: And I`m Bill Griffeth here at the New York Stock Exchange, in
tonight for Tyler Mathisen.

The veil of secrecy was finally lifted today as Senate Republicans unveiled
their version of the repeal and replace health care bill. The draft ends
the Obamacare individual mandate and takes aim at federal support for
Medicaid. Naturally, not everyone is happy and the GOP wants the bill
passed by the 4th of July break.

Health care makes up about 16 percent of the overall economy, so any
legislation will have a big impact, and it was felt today on Wall Street.
The major insurers were higher, as you can see here, up fractions. But it
was really felt among the hospital stocks which all got a strong bump
today, especially attended health care, and even the pharma stocks for the
most par were several percentage points higher today.

Kayla Tausche has more on what`s in the Senate bill.


care bill met with vocal opposition from advocates for the disabled.

UNIDENTIFIED FEMALE: No cuts to Medicaid!

TAUSCHE: The Senate`s version titled “The Better Care Plan” includes deep
cuts to Medicaid. Over time, states would get less and less of the extra
money provided by Washington to insure more people.

Democratic Senator Elizabeth Warren blasted those cuts.

SEN. ELIZABETH WARREN (D), MASSACHUSETTS: Medicaid is the program in this
country that provides health insurance to one in five Americans, to 30
million kids, to nearly two out of every three people in a nursing home.
These cuts are blood money. People will die.

TAUSCHE: The opposition`s not just from Democrats, four conservative
lawmakers, Rand Paul, Ron Johnson, Ted Cruz and Mike Fee also found fault
with the draft, in part because it doesn`t cut enough.

SEN. RAND PAUL (R), KENTUCKY: We`re keeping the subsidies, we are boosting
the subsidies for stabilization or risk pools, and I think it looks a lot
like Obamacare actually.

TAUSCHE: Senate Majority Leader Mitch McConnell has a week to turn the
tide. For the bill to pass, only two of the Senate`s 52 Republicans can

In addition to the Medicaid changes, the bill differs from one pass by the
House last month by offering tax credits based on income, not age, and
upholding payments to insurers to offset the cost of those plans.

McConnell says the status quo is not an option.

working by nearly any measure. It has failed and no amount of 11th hour
reality denying or buck passing by Democrats is going to change the fact
that more Americans are going to get hurt unless we do something.

TAUSCHE: One option, take the vote the floor without the public support.
If it fails, lawmakers go back to the drawing board on a key campaign

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


BREWER: Well, as we mentioned, those health stocks have been on a tear.
So, should investors jump in or have you missed the boat?

Here to discuss it is Ipsita Smolinski. She`s the managing director and
health care policy expert at Capitol Street.

It`s great to see you today.

We saw a slew of doctors groups and medical groups come out against the
Senate version of this bill. So, what`s behind the momentum of the stock?

had a real rally and that started it all about a week ago with some great
clinical data, and then there was a draft executive order from the White
House that kind of alleviated investors` fears, then today, you had the
Senate health care bill which not only didn`t have anything on drug pricing
that was negative for the manufacturers, but it was also a better bill in
that it was more moderate than the House repeal and replace bill and had a
lot of goodies for the insurers and for hospitals.

You`ve got a Medicaid expansion that lasts about three years longer than in
the House bill. You`ve got $112 billion, with a “B”, in stabilization
dollars for the plans. Also, you have the industry taxes that go away.
So, there was a lot for the insurers and the hospitals to really like in
this bill.

BREWER: Ipsita, as you know, four different senators came public today
with their concerns about this bill, one of them Ted Cruz. He wants lower
premiums. Another, Rand Paul, he wants fewer subsidies.

You can`t have both of those. They would be at odds with each other, and
doesn`t that point to the difficulty of passing this complex kind of

SMOLINSKI: It does. You point out something really important. There are
the Rand Pauls of the world who want a one sentence repeal of Obamacare,
and then you`ve got other folks who want Medicaid to actually last a little
bit longer, some more dollars for opioid which is this public health
epidemic in the United States.

So, it`s going to be a very fine needle to thread. Let me say this, I
would not at all be surprised to see early next week a newer version of the
bill. We`ll get a CBO score prior to that on this version of the bill, and
there could be some amendments and what not to really get to that 50 votes,
51 vote threshold by the end of the week.

It`s not the end of the world if they have to do it after the July 4th
recess. I think the real issue is if they can`t get it done by the August
recess. At that point, I think they`re just going to have to bail and move
on to tax reform.

But I think that the Senate could get it done, send it back to the House,
and hopefully — I guess hopefully from the GOP perspective, ram it

BREWER: Ipsita Smolinski with Capitol Street — Ipsita, great to you see.
Thank you so much for the insight.

GRIFFETH: Well, that strong gain in health care stocks did help cap any
losses in the overall market today, although the losses weren`t much. To
point out, the Dow just fell by 12 points, closed to 21,397. The NASDAQ
managed a nearly 3 point rise, and the S&P was off just a point.

Oil prices, which have been sliding, they stabilized a bit today, gaining
21 cents, settled at $42.70 a barrel.

BREWER: It`s not only oil prices that are low, gas prices are now sitting
at a 12-year low for this time of year, giving consumers the opportunity to
spend that money elsewhere.

So, what might those gas savings be spent on?

Patrick DeHaan, senior petroleum analyst at GasBuddy is here to talk it
through with us.

AAA says this 4th of July holiday upcoming is going to be gangbusters. How
much of the savings on gasoline will be spent on more travel?

it. You think every penny the national average declines, it`s a $4 million
daily savings to the United States, and you are talking about gas prices
that are even under last year. This is a shock. We did not project this.

So, a substantial savings, $15 million a day being pumped into other areas
of the economy, mainly auto sales have been on a roll. Now, they`re
starting to cool off, but still the winner, as well as travel, airlines,
seeing record amounts of travelers as well, and entertainment. All of
those sectors really getting a boost from the extra money that motorists
are having in their wallets.

GRIFFETH: Yes, the last time we had lower gas prices like this, Patrick,
restaurants, we saw a direct correlation as the amount that was being saved
was going toward restaurants. People decided to eat out more, didn`t they?

DEHAAN: Yes, that`s exactly it. I think this time around since gas prices
are still relatively low, motorists may actually end up getting to their
destination for under what they budget, so you may not see the budget fast
food prices, the low price fast food be winning out on this. It could be
the fast casual or even the casual dining that sees more of a win. Anyway
you slice it, though, motorists walking away with a handful of money on the
nation`s busiest driving holiday.

BREWER: Patrick, when we saw gas prices skyrocketing up past 4 bucks a
gallon, we saw the sales of fuel conserving vehicles growing as well. Are
we seeing something opposite now because gas prices are so low?

DEHAAN: Very much so. In fact, back when the era of low gas prices
started back in late 2014, it only took really a month or two for Americans
to start ditching that attitude of fuel efficiency and going back to bigger
cars, and they`ve been doing that for the last two years. In fact,
crossovers have been very hot, and we`re seeing that according to
University of Michigan numbers on a monthly basis. The fuel efficiency of
newly-purchased vehicles is still below where it was in 2014 when gas
prices were very high.

So, clearly reflective of American`s attitudes of continuing to buy new
vehicles that are perhaps bigger.

BREWER: It`s just nice when you go to the pump to spend half of what you
spent just a couple of years ago.

Patrick DeHaan with GasBuddy — thank you.

GRIFFETH: Well, in the first of its two-part annual task, the federal
reserve said that all 34 of the nation`s largest banks made it through
their so-called stress tests, meaning that the banks met the Fed`s
threshold to survive a severe economic downturn like the 2008 financial
crisis, and next week`s second part is the one that Wall Street is really
keen on, that is whether the Fed allows the banks plans to declare
dividends or announce share buybacks. That will be coming up next week.

BREWER: And Tech Week continues at the White House with another summit of
industry leaders, including CEOs from companies like Verizon (NYSE:VZ),
AT&T (NYSE:T) and General Electric (NYSE:GE). And the leaders were eager
to talk drones with the president.

Eamon Javers was at the White House.


rolls on here at the Trump White House, the president hosted another large
group of CEOs today, this time a group of CEOs from the drone industry,
from the Internet industry and also venture capitalists who finance new

The president very much in his element surrounded by those CEOs.

great career, a great career. I was sad to hear it in one way, and in
another way I said, boy, what a good job.

And, Steve, it`s great to have you here by the way. Really good. You have
done a great job. I always say you have a hell of a lot of money for that
sale. I don`t think you have been given enough. I mean, I don`t think you
were ever given enough credit for the deal you did for your shareholders.

Well, I just have to say about Randall, the job you have done at AT&T
(NYSE:T), because it is like two companies you started and then it was made
very different by government, and now, here you are again. Really a tough
job, and I want to congratulate you. That`s not easy to do.

JAVERS: Each of the CEOs had an opportunity to present the president with
ideas on everything from drone technology and regulation to rolling out 5G
broadband across the country. Some had very specific ideas.

BEN MARCUS, AIRMAP CEO: What`s really important for us is that in the
prior administration this type of meeting didn`t happen until the end,
after — until after the rules were already decided. This administration
and their leadership is taking a different approach. They say we want to
hear from you before we get this wrong. We want to make sure we have the
rules set right, so I`m very encouraged by that.

JAVERS: The president had the opportunity to tout the successes of his
administration, particularly on rolling back harmful regulations to
business and also on touting the stock market`s success under his
leadership. He also got the opportunity to see a mini city demonstrating
5G roll out and even to play with an industrial drone.

For NIGHTLY BUSINESS REPORT, I`m Eamon Javers at the White House.


GRIFFETH: And as the White House works with leaders on developing emerging
technologies, one of the linchpins of the president`s campaign is re-
emerging. Workers at a Carrier furnace plant in Indianapolis are preparing
for a first round of lay-offs in less than a month, despite assurances from
President Trump that most of their jobs were safe. The agreement to keep
the plant open, which was announced three weeks after the election, was
supposed to be a signal that Mr. Trump was changing the economic
development game plan.

But as Scott Cohn reports from Indianapolis for us tonight, it hasn`t quite
worked out that way.


new day.

TRUMP: They`re going to have a great Christmas.

COHN: Fourteen hundred factory workers had been told their jobs were going
to Mexico. Now, the president-elect said 1,100 jobs would be saved at

TRUMP: So, the 1,100 is going to be a minimum number.

ROBERT JAMES, UNITED STEEL WORKERS LOCAL 1999: Well, I knew we were going.

COHN: Just an hour earlier, union leaders including Robert James had
gotten a different story from the company. Only 730 jobs, a little more
than half the factory workforce, would be saved.

JAMES: The other 400 along would the engineering building which was
something that we knew from the beginning that was staying and was not

T.J. BRAY, CARRIER EMPLOYEE: I just felt like it was political. It was
just, you know, he wanted to claim it as this big victory.

COHN: What happened? Technically, Mr. Trump was telling the truth. There
was a deal to save nearly 1,100 jobs. It just didn`t specify manufacturing
jobs. Less clear is what happened to his broader message, that this would
change the way companies decide where to do business.

TRUMP: And they can leave from state to state and they can negotiate good
deals with the different states and all of that, but leaving the country is
going to be very, very difficult.

COHN: But the CEO of Carrier`s parent company says nothing is really

GREG HAYES, UNITED TECHNOLOGIS CEO: Unless there`s a compelling business
reason, you know, moving from one state to another doesn`t make a heck of a
lot of sense.

COHN: Even workers are under no illusions.

BRAY: They can go down from $20 to $3 in another foreign nation, that`s
what they`re going to do. So, you`re not going to do it from going to
Indiana to Michigan or Indiana to Tennessee.

COHN: Proof critics say that the Trump strategy is flawed.

GREG LEROY, GOOD JOBS FIRST: It`s not like a throw-away line at Carrier in
which the main message was about saving jobs from flight to Mexico is going
to cause companies to do something irrational.

COHN: State officials here defend the $7 million in subsidies they`re
paying Carrier to stay.

high wage jobs is helpful to our economy.

COHN: But even they admit they prefer to pay companies to come to Indiana,
not pay them to stay.

For NIGHTLY BUSINESS REPORT, I`m Scott Cohn in Indianapolis.


BREWER: Up next, why American Airlines isn`t really happy with a possible
big investment in the company.


GRIFFETH: American Airlines says that Qatar Airways has expressed interest
in taking a 10 percent stake in the U.S. carrier. The possible investment
comes against the backdrop of U.S. Airlines expressing opposition to what
they claim are unfair subsidies provided to those Gulf carriers by their

Still, the news lifted many of the major airlines today with United being
the exception.

Phil LeBeau has more on what maybe behind the move and if it could change
how American Airlines is run.


scratcher. Qatar Airways wants to buy up to 10 percent of American
Airlines, even though the Persian Gulf carrier is regularly blasted by
American CEO Doug Parker for getting millions in subsidies from Qatar`s

Parker has said for years those subsidies are unfair because they pay for
Qatar to expand into the U.S., hurting American Airlines and threatening
the jobs of workers. In a statement to American employees, Parker said:
While anyone can purchase our shares in the open market, we aren`t
particularly excited about Qatar`s outreach and we find it puzzling given
our extremely public stance on the illegal subsidies.

Airline veterans are equally baffled.

ultimately, it wouldn`t be seen as a positive for American stock and a vote
of confidence for Mr. Parker.

LEBEAU: The Middle East airline says Qatar Airways believes in American
Airlines fundamentals and intends to build a passive position in the
company with no involvement in management, operations or governance.

So, what is Qatar CEO Akbar Al Baker up to? Some believe he`s hoping this
investment could convince regulators in Washington to soften their views of
the Persian Gulf carriers.

While Qatar Airways taking a stake in American Airlines may seem awkward,
don`t expect it to change how American views the foreign carrier. In fact,
Doug Parker says he intends to keep fighting Qatar`s expansion here in the



BREWER: Staples (NASDAQ:SPLS) may be going private and that`s where we
begin tonight`s “Market Focus”.

According to “Reuters”, the office supplies retailer is in advance talks
with private equity firm Sycamore Partners regarding a potential takeover
that could be worth more than $6 billion. Shares of Staples (NASDAQ:SPLS)
rose 6 percent to $9.20.

Consulting firm Accenture beat revenue expectations as the company saw
solid demand for its digital and cloud services. Accenture also raised its
earnings outlook for the year, citing a smaller than expected impact from
the dollar, but cut its sales forecast. Shares were off 4 percent to

And Swiss drugmaker Novartis said its heart treatment significantly reduce
the risk of cardiovascular problems in people who had previously
experienced a heart attack. The drug is already approved to treat rare
autoimmune diseases. The company said it plans to begin discussions with
regulators to begin the approval process. Novartis rose 4.5 percent to

GRIFFETH: Cost cuts helped Barnes and Noble (NYSE:NE) post a narrower than
expected loss. Revenue fell at the bookstore chain, but those results were
still ahead of estimates. The company says it expects same store sales for
the year to fall in the low single digits. Barnes and Noble (NYSE:NE) rose
more than 7 percent to $7 even today.

Cruise operator Carnival (NYSE:CCL) reported earnings that beat estimates
even as fuel costs rose. The company also saw sales grow and said it was
lifting its earnings guidance for the year due to a strong number of
bookings. Shares fell though by 1 percent to $65.69.

And Bed, Bath & Beyond posted earnings that missed estimates as the home
goods retailer faced higher costs and saw same-store sales that fell.
Revenue was flat and that was below analysts expectations as well. Shares
initially fell sharply in after-hours trade tonight, but did end the
regular session up a fraction at $33.74.

BREWER: Small business is very eager for tax reform, consistently at or
near the top of small business owners` concerns. The industry is eagerly
awaiting a real plan from the White House.

Well, North Carolina is one state that has given small business owners a
bit of a break, and some say that reform could be a good model for a
federal plan. In her latest installment of “Small Business Matters”, Kate
Rogers (NYSE:ROG) has more from Charlotte, North Carolina.


Carolina, small businesses like Melt In Your Mouth cupcakes are hoping for
federal tax reform under the new administration. Mother/son business
owners Julie and Michael Chambers said that they pay some 35 cents in taxes
on every dollar they make, and it`s one of the things that weighs most
heavily on their minds as they make decisions about when to hire and

MICHAEL CHAMBERS, CO-OWNER: We`re in the process of trying to open up two
new stores, and just paying the taxes on this one is taking a lot of
capital away that we could be spending, using on something else. It is
very important for us to get the tax burden off of our backs.

ROGERS: Their company is structured as an LLC, meaning they pay taxes at
the individual level.

UNIDENTIFIED FEMALE: Thank you so much. Have a great day.

ROGERS: The Chambers aren`t alone in their desire for change. In fact, a
recent CNBC Survey Monkey small business poll found taxes ranked the top
concern for 25 percent of small businesses as a whole.

North Carolina revamped its tax code in 2013, lowering both corporate and
individual tax rates and giving somewhat of a break to companies like Melt
In Your Mouth. President Trump`s blueprint for tax reform includes parity
or equality between large corporations and small businesses that file at
the individual level with a flat rate of 15 percent.

Earlier this week, House Speaker Paul Ryan reiterated the importance of
having an even playing field between large and small business else. Right
now, the top rate for corporations is 35 percent while the top individual
tax bracket is 39.6 percent, which doesn`t include additional taxes on some
businesses like the Medicare payroll tax.

HOUSE SPEAKER PAUL RYAN (R), WISCONSIN: Here in America, eight out of ten
businesses file their taxes as individuals. In fact, most of our jobs come
from these new and these small businesses, and under our crazy system,
successful small businesses pay a top marginal tax rate of 44.6 percent.
It`s crazy.

ROGERS: Jeremy Wanamaker, CEO of Charlotte`s WayPoint Solutions Group,
hopes Trump and Congress can work together to lower rates across the board,
saying he`d like to use his capital to grow his business.

through income was reduced, I could take that money, reinvest it in the
business, and reinvesting in the business means hiring more people, buying
equipment, doing something that impacts the economy as a hole.

ROGERS: While both charlotte-based businesses are hoping for tax reform,
neither is convinced it`s coming any time soon.

CHAMBERS: They`re pushing health care hard right now and I don`t see — if
they even manage to get that passed, I don`t see them having anything left
to be able to get any sort of meaningful tax reform pushed through.

Charlotte, North Carolina.


GRIFFETH: And coming up, the big business battles over YouTube stars.


BREWER: The Federal Communications Commission is proposing what it calls
an unprecedented fine of $120 million against a Miami man for making nearly
100 million fake robocalls last year. Those calls offered phony vacation
deals and used fake caller ID and tricked consumers into thinking the calls
were coming in locally.

GRIFFETH: Time for your daily Amazon (NASDAQ:AMZN) story. Amazon
(NASDAQ:AMZN) is reported looking to charge advertisers nearly $3 million
for ad packages that are set to run during the Thursday night NFL games
that it will be streaming on its Amazon (NASDAQ:AMZN) Prime service during
the coming season. “Reuters” says those packages will include 30-second
spots that will run during those 10 games. Amazon (NASDAQ:AMZN) paid $50
million to stream those games.

BREWER: And finally tonight, speaking of streaming, the eighth annual
VidCon is under way in Anaheim, California. It is where tens of thousands
of fans gather to meet their favorite content creators.

Julia Boorstin is there with a look at the battleground it`s become for
digital platforms and the ad dollars they`re fighting for.


zero for hundreds of YouTube`s biggest stars and the fans who love them,
which means it`s become a key place for brands like Disney (NYSE:DIS) and
Nickelodeon to set up shop, to connect with the teams here and to find
YouTube celebrities they can partner with.

TONY CHEN, CHANNEL FACTORY CEO: It`s unavoidable for advertisers to work
on YouTube.

BOORSTIN: Channel Factory software helps content creators and advertisers
on YouTube by pairing brands with content from some 5,000 creators
representing about 3 billion video views to assure them their ads are shown
in the right context.

Context and brand safety are more important than ever to the companies and
stars here at VidCon. Earlier this year, a number of big-name advertisers
boycotted YouTube after an expose revealed ads placed next to offensive

YouTube made changes and many brands have returned, but one analyst
estimates the boycott could cost YouTube as much as $750 million and some
creators are feeling the pain.

CHEN: Since three months ago, we`ve seen creators decrease in revenue as
much as 80, 90 percent. So, it`s a significant, you know, piece of their

ROSANNA PANSINO, YOUTUBE STAR: I wanted to make a video —

BOORSTIN: But stars particularly say content like baker Rosanna Pansino
who`s YouTube channel which has 8.5 million subscribers are seeing business

PANSINO: I have not seen any decline. My content from the very beginning,
because it`s baking videos and tutorials, are very family-friendly.

BOORSTIN: And the Internet stars here are starting to spend more time
creating for Facebook (NASDAQ:FB) and its Instagram, both ramping up
presence here with speakers and this Instagram installation. Though
Facebook (NASDAQ:FB) is still not driving ad revenue for creator the way
YouTube is.

KEATON KELLER, YOUTUBE STAR: I wouldn`t really say monetization has been a
big thing on there just yet. I`m hoping that it finally kind of catches up
to what YouTube is, but for the meantime, it`s probably going to be

BOORSTIN: Facebook (NASDAQ:FB) and Instagram aren`t the only one ramping
their presence, so are telco giants AT&T (NYSE:T) and Verizon (NYSE:VZ).
Mobile carriers are increasingly looking to digital video to drive data
usage and make their services appeal to this valuable demographic.

For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Anaheim, California.


BREWER: Well, it looks like a good time.


BREWER: That`s NIGHTLY BUSINESS REPORT for to night. I`m Contessa Brewer
. Thanks for watching. Nice to see you, Bill.

GRIFFETH: Yes, good night, fellow content creator. I`m Bill Griffeth.
Have a great evening, everybody. We will see you again tomorrow


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