Transcript: Nightly Business Report – September 12, 2017

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

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Three out of three. The Dow,
the S&P 500, and the Nasdaq all close at records, as the bank stocks rise
and the treasury secretary talks up tax reform.

It`s an official. The national debt passes $20 trillion for the first time
in history.

Reinventing the phone. Apple (NASDAQ:AAPL) is making big changes to its
flagship product, including the price.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Tuesday,
September 12th.

Good evening, everyone, and welcome. I`m Sue Herera. Tyler Mathisen is on
assignment with a report tonight from a major investor conference in New
York.

But we begin this evening with records being set on Wall Street. All three
of the major indexes — the Dow, the S&P 500, and the Nasdaq — closed at
records. Financials rose. And there was optimism about tax reform. And
that enthusiasm put investors in a buying mood.

So, here are the closing numbers for you. The Dow Jones Industrial Average
gained 61 points to 22118. Its gains were capped however by a decline in
the shares of McDonald`s (NYSE:MCD) following a downbeat research note.
The Nasdaq was up 22. And the S&P 500 added eight.

But ask anyone who invests in this market and they may have a different
take on stocks and where they may be headed. The same is true of well-
known investors like Omega advisers Leon Cooperman and Tiger Management`s
Julian Robertson, who says stocks are in a bubble.

(BEGIN VIDEO CLIP)

JULIAN ROBERTSON, TIGER MANAGEMENT FOUNDER: The market, as a whole, is
quite high on a historic basis. And I think that`s due to the fact that
interest rates are so low that there`s no real competition for the money,
other than art and real estate. And so, I think that`s why the valuations
are so high.

LEON COOPERMAN, OMEGA ADVISORS CHAIRMAN & CEO: The stock market is on a
fair but full valuation. That doesn`t mean it`s overvalued, but rather I
think it`s priced to appreciate in line with earnings of 5 to 6 percent.

(END VIDEO CLIP)

HERERA: Those two investors spoke today at the Delivering Alpha Conference
presented by CNBC in New York.

Also in attendance was Treasury Secretary Steven Mnuchin. And as Tyler
Mathisen tells us, it was his comments that tax reform is a top priority
that helped gives stocks a lift.

(BEGIN VIDEOTAPE)

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Hi, Sue.

Delivering Alpha is the foremost conclave of people in the institutional
investing, hedge fund, and private equity worlds. And we began today
hearing from Treasury Secretary Steven Mnuchin. He was frankly optimistic
about the probability of getting something done on tax reform before the
end of the year, but less optimistic about what the ultimate corporate tax
rate will be.

STEVEN MNUCHIN, TREASURY SECRETARY: The president has made it clear since
the campaign, ideally he`d like to get it down to 15 percent. I don`t know
if we`ll be able to achieve that given the budget issues. But we`re going
to get this down to a very competitive level.

MATHISEN: The man who leads the largest private equity fund in the world,
Stephen Schwarzman, shares Mr. Mnuchin`s optimism about getting something
done in terms of a tax cut and tax reform, but he also shares Mr. Mnuchin`s
view that getting the rate down to 15 percent is going to be a heavy lift.

STEPHEN SCHWARZMAN, CHAIRMAN & CEO, BLACKSTONE GROUP: I`m optimistic that
the worst we`ll do in that area is a tax cut, somewhere between 25 and 28
percent.

MATHISEN: As for economic growth, Ray Dalio, who runs Bridgewater, the
largest hedge fund in the country, said that he thinks we`re in a kind of
2.5 percent zone for growth. Here`s why.

RAY DALIO, FOUNDER, BRIDGEWATER ASSOCIATION: We`re probably in a 2.5
percent growth environment. I mean, the real question is to some extent
whether you can unleash the productivity by some of the changes that a pro-
business environment can produce. I think there was more hope for that.

MATHISEN: And speaking of growth, Jamie Dimon of JPMorgan (NYSE:JPM) Chase
says that that 2.5 percent growth, he doesn`t view that as a new normal.
Here`s why.

JAMIE DIMON, CHAIRMAN & CEO, JPMORGAN CHASE: If we did things right, we
would be growing at 3 percent. But this growth, by the way, had over the
last eight years has averaged a little bit less than 2 percent. It`s half
of the norm, OK? So, it`s a long recovery, but it`s half of what we would
have had in a normal recovery.

MATHISEN: All in all, Sue, a big day of big thought and big insights from
the Delivering Alpha Conference here in New York City. It was a day where
we heard from the treasury secretary and some of the really top people in
the world of hedge funds, private equity, and institutional investment.

(END VIDEOTAPE)

HERERA: Thank you so much, Ty.

Well, one thing that could have ramifications for tax reform is a
breathtaking milestone for the federal government. The national debt has
now surpassed $20 trillion for the first time in history.

Ylan Mui is following the story for us from Washington.

Good to see you, Ylan. So, why are we crossing the $20 trillion mark right
now?

YLAN MUI, NIGHTLY BUSINESS REPORT CORRESPONDENT: This actually goes back
to the deal that President Trump cut with Democrats last week when he
agreed to raise the national debt ceiling. The U.S. debt actually jumped
by about $300 billion, almost overnight, and that`s what pushed us across
the line to reach this new record high of $20 trillion for the national
debt.

HERERA: So, what does that mean for the prospect of tax cuts, big or even
small?

MUI: Well, as you said, $20 trillion is a really eye-popping number. And
it could make it tougher for some Republicans who have run as fiscal hawks,
run on concerns about deficits and the debt, to agree with and go along
with the prospect of some big tax cuts.

However, key conservative Republicans like the Freedom Caucus have said
that they are willing to stomach increasing the deficit, adding to the
national debt, if it means getting big tax cuts because they believe that
can really jump economic growth.

HERERA: You know, the president worked with Democrats on the debt ceiling.
Is he going to be working on tax reform in the same way, reaching across
the aisle?

MUI: Well, I think what President Trump made clear is that if he doesn`t
feel like his party is delivering what he wants, he is willing to strike a
deal elsewhere. And so, what you`re seeing is the president tonight
hosting a dinner at the White House with three key red state Democrats, as
well as several influential members of the Senate Finance Committee which
does handle tax writing. So, maybe they`ll be able to reach some sort of
bipartisan consensus, at least amongst those members.

HERERA: All right. Ylan, thank you so much. Ylan Mui in Washington for
us tonight.

Well, financials today were among the biggest gainers. Rising bond deals
could help banks make more money on the difference between what they pay to
get deposits and then charge to lend. But at the same time, some
executives are warning that trading conditions during the third quarter
were not going to be all that good.

Bank of America (NYSE:BAC) sees revenue from trading will likely decline 15
percent. JPMorgan`s chief says analysts are taking down their trading
revenue estimates by about 20 percent. And Goldman Sachs` president said
conditions for fixed income trading have not improved since the beginning
of the year.

On the economy, we learned today that America`s middle class had its
highest earning year ever last year. According to the U.S. Census Bureau,
median household income was more than $59,000 in 2016, surpassing the
previous record of $58,000 set in 1999. The figure is adjusted for
inflation. The census said the uptick in earnings occurred because more
people found full-time or better paying jobs.

And the number of job openings in the country also hit a record. The most
recent report from the Labor Department suggests a slowdown in job growth
last month was an aberration. But other economists say that report shows
that experienced workers are in short supply.

Still ahead tonight, the most valuable publicly traded company in the world
is making big changes to its flagship product.

(MUSIC)

HERERA: The upscale department store chain Nordstrom (NYSE:JWN) may be
close to going private. According to late day reports, the Nordstrom
(NYSE:JWN) family has chosen a private equity firm to help in the process.
A formal bid could be submitted in the next few weeks and that sent the
stock sharply higher in afterhours trading.

Apple (NASDAQ:AAPL) showcased its latest iPhones in a much anticipated
product unveiling held at its new campus at Cupertino, California.

Josh Lipton has the details of the company`s latest iteration of its 10-
year-old signature gadget.

(BEGIN VIDEOTAPE)

TIM COOK, CEO, APPLE: We do have one more thing.

(CHEERS)

JOSH LIPTON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): And with
that, Apple (NASDAQ:AAPL) introduced the world to the iPhone X. CEO Tim
Cook borrowing the famous phrase from his predecessor in an event today in
the Steve Jobs Theater, on Apple`s new spaceship-like campus. Cook called
at it biggest leap forward since the original iPhone, along with a $999
price tag.

Apple (NASDAQ:AAPL) unveiled a slew of new features on the iPhone x,
including facial recognition, camera upgrades, and no more home button,
plus wireless charging, a feature already offered by Samsung and others.
The flagship phone was shipped November 3rd, a little later than usual,
leading to some concerns about supply chain constraints ahead of the
holidays, although in line with Apple`s previous guidance.

COOK: IPhone 8.

LIPTON: Apple (NASDAQ:AAPL) also introduced an iPhone 8, an 8-Plus, which
will be available later this month.

(on camera): The iPhone is critical to Apple`s business. It represents
about 60 percent of the company`s revenue, big contributor to the campus
you see right behind me here, which was built for a reported $5 billion.
But the iPhone wasn`t the only product announced today.

COOK: Apple (NASDAQ:AAPL) TV has changed the way we experience television.
Now, we`re at the next major inflection point, one that has the most
stunning visuals ever, that are ideal for the large TV screens that are
coming into our living rooms. This will bring cinematic quality to
virtually everything that you watch.

LIPTON (voice-over): The watch is also breaking free, in a sense, as a new
version of the watch will have a cellular connection built in, allowing you
to untether from your iPhone. Apple`s stock dipped slightly on today`s
event announcements, in a sentiment a bit more bullish.

We should know soon enough, only 105 shopping days until Christmas.

For NIGHTLY BUSINESS REPORT, I`m Josh Lipton from Cupertino, California.

(END VIDEOTAPE)

HERERA: Sage Therapeutics` epilepsy drug disappoints, and that`s where we
begin tonight`s “Market Focus”.

The biotech firm said its experimental medication to treat a severe form of
epilepsy that currently does not have any approved treatments did not
perform much better than the placebo during a study trial. That news sent
shares of Sage Therapeutics lower by nearly 14 percent to $76.40.

Starboard Value CEO Jeffrey Smith speaking at CNBC`s Delivering Alpha
Conference called drugmaker Perrigo (NASDAQ:PRGO) one of his firm`s best
investments. The activist investor who also has had members put on
Perrigo`s board said Perrigo (NASDAQ:PRGO) is well-positioned for growth.

(BEGIN VIDEO CLIP)

JEFFREY SMITH, CEO, STARBOARD VALUE: To recap why Perrigo (NASDAQ:PRGO) is
compelling to us, you have a company that is undervalued, has a leadership
position in a market with consistent, defensible growth. There`s an
opportunity to improve that growth with e-commerce platforms and potential
partnership with Amazon (NASDAQ:AMZN). There`s a potential for substantial
margin improvement in Europe. There`s potential for the separations of the
businesses.

(END VIDEO CLIP)

HERERA: Shares of Perrigo (NASDAQ:PRGO) took off on Smith`s remarks. They
rose about 4.5 percent to $89.01.

Progress Software (NASDAQ:PRGS) hiked its quarterly dividends after
reporting preliminary results that topped expectations. The software maker
raised its dividend to 12 percent to 14 cents a share. Progress up nearly
6 percent to $36.38.

Anthem said it is still determining which Obamacare markets it will sell
its plans in next year. The health insurer said it is in talks with some
state officials regarding its participation. Insurers have until September
27th to finalize where they will offer coverage in 2018. The shares fell
about 3.5 percent to $189.24.

Just days after forming, Dow Du Pont is making changes to its original plan
to break up into three separate companies post-merger. The chemicals giant
said it made those adjustments to allay some shareholder concerns over how
the company would operate.

(BEGIN VIDEO CLIP)

ANDREW LIVERIS, CEO, DOWDUPONT: Pure-play market verticals, where you can
offer world-beating, best in breed, growth capabilities of customers is
what this realignment enables us to do, we were about 80, 90 percent right
the first time round, but the way Ed described it, will listen to
investors, we did our work and these actually create game-changing, market-
driven companies in the future.

(END VIDEO CLIP)

HERERA: The shares rose 2.5 percent to $68.52.

Thirty-six senators are calling on federal agencies to investigate the sale
of Equifax (NYSE:EFX) securities shortly after that company learned of a
massive cyber breach and before that breach was made public. As we`ve been
reporting, up to 143 million Americans were impacted. And they`re now
worried about their personal data. Questions are also arising about
loosely-regulated credit bureau industries.

Aditi Roy has our story.

(BEGIN VIDEOTAPE)

ADITI ROY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Ashley Power is worried
about someone stealing her online identity. She`s one of up to 143 million
Equifax (NYSE:EFX) customers who could be impacted by the company`s massive
cyber breach.

ASHLEY POWER, CONSUMER: I think it`s scary, actually, because basically a
company that is supposed to protect us and our information, if they`re not
doing that, then like who can we trust, right?

ROY: She`s not alone. Less than a week after the credit bureau announced
a massive data breach involving up to half the country, more fallout from
lawmakers. In a letter to Equifax (NYSE:EFX) CEO Richard Smith, House
Finance Committee Chair Orrin Hatch and ranking member Ron Wyden are
demanding answers from the company, asking for a timeline of events and
which executives knew what and when, including the three who sold shares
after the breach was discovered. Equifax (NYSE:EFX) maintains the
executives did not know about the cyberattack when they sold the shares.

The letter also asks the company about an arbitration waiver that consumers
agreed to by signing up for an identity protection package it`s offering
customers affected by the breach. The company said the waiver did not
apply to the cybersecurity breach and has since taken the waiver language
off the Website.

Equifax (NYSE:EFX) has lost more than $3.5 billion in market cap or 21
percent of its value in the first two trading days since the breach was
made public. And the incident is also prompting many consumer groups to
question the relative lack of regulation in the credit bureau industry,
compared to banks, which operate on charters and licenses and face constant
monitoring by regulators.

The class action suits are also piling on, with the company reportedly
facing more than two dozen suits from plaintiffs. The highest profile ones
include one filed by celebrity lawyer Mark Geragos, and it`s seeking nearly
$70 billion in damages, which would make at it largest class action suit in
U.S. history. Another suit filed in federal court in Atlanta where the
company is headquartered cites gargantuan failure to secure and safeguard
consumers. One of the lawyers in that case is former Georgia Governor Roy
Barnes.

As those cases make their way through the system, consumers like Power are
now wary of going online.

POWER: It just makes me question everything I put online.

ROY: As far as what customers can do, consumer groups are urging people to
get credit freezes so no one can open an account in your name. Make sure
you get that freeze with not just Equifax (NYSE:EFX) but the other two
credit bureaus as well as, Experian and TransUnion. The cost depends on
the state you`re in and can be between $5 to $10 per freeze.

For NIGHTLY BUSINESS REPORT, I`m Aditi Roy, San Francisco.

(END VIDEOTAPE)

HERERA: So, let`s turn to Gail Hillebrand for more on not only the Equifax
(NYSE:EFX) date breach, but whether you should be worried about other
potential things out there when it comes to your credit. She is the
associate director for the Consumer Education and Engagement Center at the
Consumer Financial Protection Bureau.

Welcome, Gail. It`s a pleasure to have you here tonight. Thanks for
joining us.

GAIL HILLEBRAND, CONSUMER FINANCIAL PROTECTION BUREAU: Thank you.

HERERA: Let me — let me start out with the basic question that Aditi Roy
posed in her report. Do you think the country`s credit bureau industry is
adequately regulated?

HILLEBRAND: We share the same deep concern that members of the public are
expressing about this data breach and we will certainly be looking into it,
along with many others in federal government who were doing so.

HERERA: But do you think that there needs to be more regulation or tighter
regulation?

HILLEBRAND: It`s clear there`s something to be looked at here. And there
are a lot of people in Washington who are going to be doing that.

HERERA: All right. Let`s talk about the credit freeze issue. First of
all, do you think that we have an issue with Experian or TransUnion? And
what should a consumer do or an investor do, for that matter, if perhaps we
see the same sort of situation develop there? And do you think we might
see that?

HILLEBRAND: So, data is valuable to criminals, and people are trying to
steal it. So, I can`t tell you what will happen with the other bureaus,
but if you`re an individual who is worried about the potential for this
data breach or any future one, to have someone open accounts in your name,
the credit freeze is your best option if you don`t need to be active in the
credit market, if it`s going to be easy and simple for you to lock people
out from opening new accounts in your name. If you put the freeze on, and
you are about to get a car loan or something elsewhere you need your
credit, you will then have to take steps to remove it when you want to use
your own credit.

But it does stop thieves from opening an account in your name because the
creditor cannot see your file, they will not open your account. That`s
your best protection. You have two other things you should also do or
think about doing. One is the fraud alert, that`s a lighter form of
protection, it does tell creditors, check if it`s me before you open an
account in my name.

And, finally, unfortunately, everybody needs to do this, check your
accounts. Make sure that nobody is putting charges on your accounts. And
check your credit reports to make sure no accounts are being opened in your
name. If you find an account you don`t expect, you can dispute that and
should do so.

HERERA: As I understand it, and correct me if I`m wrong, credit freezes
protect you from what`s called pure identity theft, when somebody sets up a
new account in your name. But it does not necessarily protect you from
people putting charges on your credit cards or accessing your bank account.
Is that correct?

HILLEBRAND: That is absolutely right. The credit freeze stops new
accounts. The only way to address charges to your credit card, your bank
accounts, is to watch those account statements very closely. You should
look at all your statements every month and you should raise a question if
anything is on there that wasn`t you, even if it`s small, because sometimes
a crook will try a small transaction and come back later for a bigger one.

HERERA: Right. Gail, thank you so much, I know we`ll be talking to you
soon.

HILLEBRAND: You`re very welcome.

HERERA: Gail Hillebrand with the Consumer Financial Protection Bureau.

And while Americans are wondering whether their personal information has
been compromised in want Equifax (NYSE:EFX) breach, there is a new threat
you need to watch. It is your cellphone number. That number is now
becoming a key to your identity. Think of it as a new Social Security
number. And anyone can use it to find tons of your personal information.

Andrea Day has that story.

(BEGIN VIDEOTAPE)

ARCHIE AGARWAL, CEO, THREATMODELER: The most shocking thing was how
quickly I found it.

ANDREA DAY, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Just a few
minutes. That`s how long it took this guy to track down intimate details
about our producer.

(on camera): And that was all with just a cellphone number?

AGARWAL: Just a cell number.

DAY (voice-over): We blurred out most of the images, but he found reams of
information.

AGARWAL: I found date of birth. I found where she went to school, her
family story, what property they own, what parking tickets she has. This
is a street view of her house right now.

DAY: And all without knowing her name.

(on camera): A security risk?

AGARWAL: It`s a huge security risk. Nobody wants to change their cell
number today. And so, cell number has become an integral part of your
identity. That`s where the problem starts.

DAY (voice-over): Full disclosure, Archie Agarwal is a cybersecurity
expert. But he says tracking down the info doesn`t take much.

AGARWAL: No experience at all.

DAY (on camera): Where do you start with somebody`s cell number?

AGARWAL: So, the best place to start is Facebook (NASDAQ:FB).

DAY (voice-over): We won`t show you details, but —

AGARWAL: Most people don`t realize that Facebook (NASDAQ:FB) by default
makes your phone number accessible to everybody through their search.

DAY: He says Facebook (NASDAQ:FB) allows you to limit it to just friends
but there`s no way to stop friends from finding you by your phone number.
If you try to remove your number, Facebook (NASDAQ:FB) limit some features.
Facebook (NASDAQ:FB) tells us your phone number has, quote, a setting on
who is able to search for you using that info and that adding a mobile
phone number to your account helps keep your account secure and makes it
easier to connect friends and family on Facebook (NASDAQ:FB).

AGRAWAL: This information is very incriminating, right? I mean, if you
look at it from a job perspective, you have to give your cell number when
you apply for a job. Within five minutes, I know everything about you
without even seeing whether you qualified for the job, I can just reject
you.

DAY: And he says that`s just the beginning.

AGRAWAL: I have your online identity. I have pretty much everything. I
own you, basically.

DAY (on camera): And his advice? Treat your cell number as something even
more important than your social. Only give it out when you absolutely need
to. And for the record, he uses a number from Google (NASDAQ:GOOG) and
changes it at least once a year. He wouldn`t even give us his real number.

For NIGHTLY BUSINESS REPORT, I`m Andrea Day.

(END VIDEOTAPE)

HERERA: Wow.

Coming up, a critical artery of Florida`s economy reopened today. We will
take you on a tour of the port of Tampa.

(MUSIC)

HERERA: Travelers plans to temporarily suspend its share repurchase
program while it assesses losses from Harvey and Irma. Late last night,
the property and casualty insurers said it estimated catastrophe pretax
losses in the range of $375 million to $750 million. Shares of travelers
finished the day fractionally lower.

Millions of people in Florida are still without power following Hurricane
Irma. And FEMA administrator Brock Long says it could take week for power
to be restored.

(BEGIN VIDEO CLIP)

BROCK LONG, FEMA ADMINISTRATOR: We have been working with our partners at
the Department of Energy to pre-stage power crews not only in Florida but
all over the southeastern United States. But let me reiterate, you know,
it takes a long time for this infrastructure to come back up. It may take
multiple days if not weeks in some areas, as we`ve been saying before the
storm hit.

(END VIDEO CLIP)

HERERA: The head of FEMA also said the hurricane destroyed about a quarter
of the homes in the Florida Keys.

But the port of Tampa reopened today after sustaining only minor damage
during hurricane Irma. That is to getting commerce and the Florida economy
moving again.

Carl Quintanilla takes us on a tour of this critical piece of Florida
infrastructure.

(BEGIN VIDEOTAPE)

PAUL ANDERSON, CEO, PORT OF TAMPA BAY: You cannot predict what a hurricane
is going to do.

CARL QUINTANILLA, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Paul
Anderson runs Florida`s biggest physical port, which receives lumber, coal,
steel, even orange juice and gas. When he opened the port, truckers who
had sheltered in place hustled to get to their rigs and fill up.

ANDERSON: My motto is you hope for the best and prepare for the worst.
And we did. We did hurricane exercises at least once a year.

QUINTANILLA: The fuel came from tanks on land that had already been filled
up so as not to be empty and crushed by Irma.

ANDERSON: Think of a Coke can that was empty in the wind versus one that`s
full. And it`s very similar. They`re rated to handle high wind and
hurricanes. But they have to have fuel in them.

QUINTANILLA: Each truck holds 40,000 gallons. That`s enough to fill a
station`s 10,000-gallon tank. When it comes to Irma, Anderson says it`s
clear that Tampa really did dodge a bullet.

ANDERSON: We`re having this conversation right here now because that storm
moved very much at the last minute, 40 miles. It changed everything for
Tampa, for the bay, for millions of people and for our ability to get fuel.

QUINTANILLA: For NIGHTLY BUSINESS REPORT, I`m Carl Quintanilla.

(END VIDEOTAPE)

HERERA: The port of Tampa is the biggest one in Florida. It generates
nearly 100,000 jobs and delivers some $15 billion in annual economic
impact.

And that is NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera. Thanks
for joining us. Have a great evening, everybody. We`ll see you right back
here tomorrow.

END

Nightly Business Report transcripts and video are available on-line post
broadcast at http://nbr.com. 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.

 

This entry was posted in Transcripts. Bookmark the permalink.

Leave a Reply