Transcript: Nightly Business Report – September 28, 2017

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

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Big push. The White House
hits the ground running to sell the Republican tax reform plan.

BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Emergency aid. It is
making its way to Puerto Rico. But once it`s there, it sits, unable to get
where it needs to go.

HERERA: New apology. Equifax (NYSE:EFX) makes a peace offering to
consumers. But retirees need to take a few extra steps in the wake of the
massive breach.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Thursday,
September 28th.

Good evening, everyone. I`m Sue Herera.

GRIFFETH: And I`m Bill Griffeth, in for Tyler Mathisen tonight. I`m
coming to you this evening from the New York Stock Exchange.

And it was here today that the S&P 500 closed at another new record high.
And while it may not be as well-known as the Dow Jones Industrials, it is
considered more representative of the whole market, since it is made up of
500 companies as compared to the Dow`s 30. Small cap stocks also hit all-
time highs today, as did a leading indicator of the economy, that would be
the Dow Transportation Average.

When all was said and done, the Dow Industrials gained 40 points, closed at
22381, the Nasdaq was up a fraction. And the S&P 500 rose three, enough
for that new all-time high — Sue.

HERERA: And, Bill, in Washington, Republicans were out in force, selling
their tax plan. But there was some pushback.

Ylan Mui is in our nation`s capital.

(BEGIN VIDEOTAPE)

YLAN MUI, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): The
Republican tax plan is out. And now the hard work of selling it begins on
Capitol Hill.

The House Ways and Means Committee will get the first crack at writing a
bill. And White House economic adviser Gary Cohn said there`s one number
the president is not willing to negotiate. A 20 percent corporate tax
rate.

GARY COHN, NATIONAL ECONOMIC COUNCIL DIRECTOR: We would have liked to
start lower and given ourselves some negotiating room. We are at 20.
Twenty is a bright line test for us. The president said it. He said it
yesterday. And he`s been very clear about it.

We are not going over 20. Twenty is the top of what we`re willing to go on
the corporate tax rate.

MUI: House Speaker Paul Ryan has said he would be willing to go as high as
the mid-20s in the past. But today, he promised that Republicans would hit
that target.

REP. PAUL RYAN (R-WI), HOUSE SPEAKER: When we pulled the border adjustment
from our bill in the middle of the summer, that created a pretty big
revenue haul. And we spent the next three months rewriting the whole
thing, reworking all of the numbers and making sure that we can get to 20
percent, which we can. And we`re very excited about that.

MUI: But Democrats and many experts are slamming this tax plan as a
budget-busting giveaway to large corporations and wealthy households.

The Center for a Responsible Federal Budget estimates that the tax
framework would cost $2.2 trillion over the next decade. House Democratic
Leader Nancy Pelosi said that alone should raise alarms for Republicans who
had long called for fiscal discipline.

PELOSI: I also wonder what happened to the deficit hawks in the Republican
Party, because they seem to be an endangered species.

MUI (on camera): Republicans want to use special rules known as
reconciliation to get tax reform done and to unlock that process, they
first need to pass a budget. The House will vote on its version next week,
and the Senate will mark up its own proposal as well. Both sides will need
to agree to get tax reform off and running.

For NIGHTLY BUSINESS REPORT, I`m Ylan Mui in Washington.

(END VIDEOTAPE)

GRIFFETH: Well, the economy accelerated in the second quarter, recording
its quickest rate of growth in more than two years. It turns out the gross
domestic product increased at a rate of 3.1 percent, that`s an annual rate,
during the April to June period. It was revised slightly higher from the
previous report.

Economists say that the destruction caused by Hurricanes Harvey and Irma
could be a drag, though, here on the third quarter growth.

HERERA: And, Bill, those recent hurricanes showed up in the weekly jobless
claims report. The number of Americans applying for benefits rose more
than expected last week, at least partially, reflecting job losses due to
Hurricane Harvey and Irma. The claims fell last week in Puerto Rico. But
the full impact is unclear because Hurricane Maria disrupted the collection
of data.

GRIFFETH: The Trump administration is temporarily waiving a century-old
shipping law that says all shipments between two U.S. ports must be carried
on U.S. flagged vessels. Some say that that could help facilitate relief
efforts in Puerto Rico in the wake of Hurricane Maria. But on the storm-
battered island itself, a lot of supplies have arrived, but it`s proven
very difficult to get them where they need to go.

Our Contessa Brewer is in San Juan for us tonight.

(BEGIN VIDEOTAPE)

CONTESSA BREWER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Giant ships are
waiting in line, with more than a thousand cargo containers aboard, loaded
with supplies. But look around, there`s no room to unpack them from the
ships and put them in the terminal yard. They are packed with lifesaving
supplies. But those supplies are not getting to the people who desperately
need them.

JOSE PACHE AYALA, CROWLEY PUERTO RICO VP: The people of Puerto Rico are
fighting hard. But there`s no way we`re going to be able to do this by
ourselves. We need much more support from the federal agencies right now.

BREWER: The vice president for Crowley, one of the biggest shippers in
Puerto Rico, is frustrated. His yard is jammed, way over capacity, with
more ships waiting to unload.

AYALA: We also asked the distributors and the trucking company that in a
way that it is possible to please come and start moving the cargo here,
because we need to make room in order to receive the cargo that is on its
way.

BREWER: But trucking companies can`t contact their drivers because cell
service is out to most of the island. Drivers can`t get to work because
they can`t find gas for their cars or roads are blocked by debris. And if
they can get to work, they still need diesel to operate the delivery
trucks.

Down here on the ground, the trucks are moving, but only 4 percent of the
containers are making it off the lot. These are all refrigerated units.
They require generators. Every one of these generators requires fuel.
Inside is food and medicine crucial for the island. And Crowley is going
through 4,000 gallons of fuel every single day for these operations at the
terminal. Diesel is the crucial link in this supply chain.

The food and beverage association said 266 supermarkets are ready to open
but don`t have the diesel to run their generators. Walmart, Super Mercado
Econo, a huge supermarket chain here, and V. Suarez, a food distributor,
are trying to figure out how to get hundreds of containers out of these
yards to the stores.

FEMA has been making emergency fuel deliveries a priority. But gas
stations can only stay open for a few hours because of demand, despite fuel
rationing. The airport needs fuel because generators are powering air
traffic control, TSA security checkpoints and computers for the airline
agents.

For many of those on this island, food is running short. Half the homes on
the island don`t have running water, much less electricity. And in some
cases, lives are the on the line.

These people are your family. These people are your neighbors. I know
that you`re so concerned about what`s happening in other parts of Puerto
Rico. When you look over this crowded yard, does this make you mad?

AYALA: It makes me sad and frustrated. Just to see that we have here all
these goods and that people out there are just begging, anxious, in the
need of such important supplies, and they are all sitting here in this
yard.

BREWER: FEMA Administrator Brock Long says his agency is working with the
Department of Defense, with the governor of Puerto Rico, and the mayors and
other agencies on logistics. But right now, this is a supply chain that is
broken and desperately in need of repair.

For NIGHTLY BUSINESS REPORT, I`m Contessa Brewer in San Juan, Puerto Rico.

(END VIDEOTAPE)

HERERA: And Southwest Airlines (NYSE:LUV) expects to lose $100 million in
revenue in the third quarter because of the recent hurricanes and also the
earthquakes. In a filing with the SEC, the airline said it had to cancel
approximately 5,000 flights during the current quarter because of the
natural disasters in the Caribbean and also in the U.S. and it`s not just
Southwest.

Bob Pisani has more from the New York Stock Exchange.

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: Companies are start to
crunch the numbers in the wake of Hurricanes Harvey, Irma, and Maria. So,
today, Southwest Airlines (NYSE:LUV) and Sherwin-Williams (NYSE:SHW) both
said revenues could be lower in the third quarter. They join a growing
list of companies affected in one way or another by the storms.

So, FedEx (NYSE:FDX), CarMax (NYSE:KMX), AutoZone (NYSE:AZO), D.R. Horton
(NYSE:DHI), all mentioned operations took a hit from the storms, along with
Marriott, Gap (NYSE:GPS), as well as Newell Brands. Harvey alone may have
cost up $108 billion in damages. That`s according to initial estimates
from Moody Analytics.

A recent CNBC analysis revealed that all the big hurricanes live on in
earnings commentary for several quarters following their landfall in the
U.S.

So, are the warnings enough to materially affect S&P 500 earnings for the
third and fourth quarter? It`s not entirely clear yet, though some
industries like airlines may see a more substantial impact. But right now,
it seems to be somewhat minimal overall. Of course, we`re still waiting
for insurers to shed more light on their losses and we`ll probably get
comments from retailers and other airlines. So, this could change.

But the preliminary data is a relief to market watchers, as if the earnings
have been on an upswing since the fourth quarter of 2016 after a year and a
half of declines. So, the markets have remained in record territory
largely because traders continue to believe that earnings are still growing
and not at a peak. A strong economy coupled with the prospects of tax cuts
are the key to earnings growth in 2018.

Some think the rebuilding efforts may provide an additional benefit.
Edmunds, which tracks car sales for example, said they expect to see an
incremental boost in vehicle sales in September and lifting the overall
auto markets in the months to come.

For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock Exchange.

(END VIDEOTAPE)

GRIFFETH: The new interim CEO at Equifax (NYSE:EFX) apologized to
consumers for the poor response by his company to the data breach that
affected 143 million Americans. In an op-ed that ran in “The Wall Street
Journal” this morning, he acknowledged that Equifax (NYSE:EFX) compounded
the problem with insufficient support for consumers.

So, now, Equifax (NYSE:EFX) is offering a new service allowing people the
option of locking and unlocking access to their Equifax (NYSE:EFX) credit
files at will and, importantly, this new service will be offered free of
charge for life.

HERERA: And we told you what the experts recommend you should do if you
suspect your data has been breached and what small businesses owners should
do. But what about retirees?

Reed Fraasa, a financial planner at Highland Financial Advisers, joins us,
and has some special tips on that.

Good to see you, again, Reed.

REED FRAASA, FINANCIAL PLANNER, HIGHLAND FINANCIAL ADVISORS: Good to see
you, Sue. Thank you.

HERERA: So, we`ve talked on this program about the credit freeze, about
getting a monitoring agency. But retirees are in a different category.
And that they are getting payments from the government on a routine basis,
things like that.

What should retirees be thinking about at this point?

FRAASA: You know, retirees are extremely vulnerable. They`re typically
not as computer savvy. They — many of them have gotten involved with
Facebook (NASDAQ:FB) and e-mailing their families and things like this.
And they`re just not as familiar with some of the protocols to follow.

So, we educate our clients on this. But, you know, the main thing is that
the protection you have is really with you. I mean, you have the power in
you to protect you from outside by being very suspicious of contact through
e-mails, Phishing is a very common type.

So, when you get an e-mail from a company that looks like it came from a
company you may do business with, they typically don`t reach out to you
asking you for information. Phone calls, another type of phishing that
comes to people, seniors, telling them that there has been a security
breach, they say they`re from Apple (NASDAQ:AAPL) or Microsoft
(NASDAQ:MSFT), and we`re investigating your neighborhood.

HERERA: Right.

FRAASA: Things like this. They don`t do that. People need to be very
shrewd about using this.

Another thing is —

GRIFFETH: Reed?

FRAASA: Yes, Bill?

GRIFFETH: I`m sorry. We just showed a graphic here that showed limit the
use of yours Social Security number. For example, you say don`t give it to
medical providers. I know that often, all they want is your birth date,
that`s very important. But sometimes, they do ask for that Social Security
number. Why not give it to them?

FRAASA: Yes, they need your birthday typically and your medical ID to look
up and contact the insurance company. Many of them, I just — I wonder if
they just haven`t updated their forms today. Many times, I do not give it,
my Social Security number. If they really need it, they`ll ask for it, and
they can explain it.

But it seems like that`s one area where our Social Security number, we just
never thought about it and we give it out. But it`s not something you
should be as free to do anymore.

HERERA: As I mentioned earlier, frequently, seniors and retirees get
payments, Social Security payments, Medicare payments. I would assume that
they should really monitor and make sure that those payments are coming in
as they normally do.

And if they`re not, maybe that means that someone else has gotten access to
them. So, Medicare and Social Security seem to be two things that seniors
should take a look at.

FRAASA: Yes, absolutely. And that`s just monitoring your bank accounts.
Most financial institutions today have put in two-factor authentication
which is an extra layer of protection. If you have a cellphone, they`ll
text a code before you log on. You really need to find advantage of that
and use that, because it`s an important extra layer of protection.

That way, somebody — it`s very hard for somebody to go in and change your
address. Social Security has — Administration, their online is extremely
difficult for someone to break in. But these are things that consumers
need to be aware of. And seniors, as they explore the Internet and things
like this, they need to be extremely shrewd.

HERERA: OK. On that note, Reed, nice to see you again.

FRAASA: You, too. Thank you.

HERERA: Reed Fraasa with Highland Financial Advisers.

Bill?

GRIFFETH: Still ahead, teens, an app, and playing the stock market. Is
that a good combination?

(MUSIC)

GRIFFETH: Twitter said today that it found about 200 accounts linked to
Russian-backed Facebook (NASDAQ:FB) pages that sought to spread
misinformation. During a meeting with congressional investigators, the
company said that Russian-backed news site RT spent more than $270,000 on
ads last year during the election. Twitter plans to review its political
advertising disclosure policy, and it will crack down on any future
suspicious activity.

HERERA: Sin stocks. They`re in sectors whose activities are frowned upon
by some. But this time of year, are they just what your portfolio needs?

Landon Dowdy shines a spotlight on that sector.

(BEGIN VIDEOTAPE)

LANDON DOWDY, NIGHTLY BUSINESS REPORT CORRESPONDENT: So-called sin stocks
like alcohol, cigarettes, and gaming stocks, typically heat up as the
weather cools down. And looking back since 2010, analytics firm Kensho
points to these names to watch as we approach year-end Corona and Casa
Noble (NYSE:NE) Tequila maker, Constellation Brands (NYSE:STZ), posting
average fourth quarter returns of 12.5 percent.

Booze really buzzes this time of year.

SONIA VORA, MORNINGSTAR EQUITY ANALYST: It tends to be a time of gift
giving, and other holiday events. Normally, there`s an aspect of
conspicuous consumption here where people are buying gifts, of brands that
they think, you know, are higher value or, you know, perceived to be higher
quality. It tends to be a good season, especially for spirits and wine
makers, because of that.

DOWDY: Also on tap, Boston Beer (NYSE:SAM) Company posting average returns
of 20 percent. Meanwhile, analysts credit China`s golden week holiday in
October with driving strong traffic to Macau, helping boost gaming stocks.
One beneficiary, MGM Resorts (NYSE:MGM) posting returns of 13 percent. Las
Vegas Sands (NYSE:LVS) also seeing big gains, up more than 9 percent.

And if tobacco is your thing, cigarette maker Reynolds American (NYSE:RAI)
lighting it up with an average return of 8 percent in Q4.

The general view here is portfolio managers want to move into less risky
assets at the end of the year. And cigarette makers are often coveted by
dividend investors. So, as we head into the final quarter, these vice
stocks can keep you warm all winter long.

For NIGHTLY BUSINESS REPORT, I`m Landon Dowdy.

(END VIDEOTAPE)

GRIFFETH: BlackBerry`s push into software picks up momentum. And that is
where we begin tonight`s “Market Focus”.

The tech company`s profit and sales topped expectations, thanks to strength
in its software and its services businesses as the company transitions from
hardware to software related endeavors. The CEO said that he expects bumps
along the way but he`s still optimistic.

(BEGIN VIDEO CLIP)

JOHN CHEN, CEO, BLACKBERRY: In Q4, we also had a good quarter. As I said
at that time, we expect to see more good quarters than that. I think this
is not a straight line up, I want to be, you know, cautious of that. But
we are building some very solid fundamentals in the business. We`re coming
around to become a good software company, and good earnings.

(END VIDEO CLIP)

GRIFFETH: Shares of BlackBerry higher by 13 percent today to $10.47.

Meanwhile, video streaming company Roku began trading on the Nasdaq today
after pricing its initial public offering at $14 a share. That was at the
high end of the expected price range. And that pricing values Roku at
nearly $1.5 billion. Shares, though, took off in their debut, look at
that, up 67 percent, closing at $23.50.

But a drop in pharmacy transactions caused same store sales and revenue to
disappoint at Rite Aid (NYSE:RAD). The retail chain did report a stronger
profit. But that was thanks to a one-time fee the company received
following its failed merger with Walgreen`s. Rite Aid (NYSE:RAD) shares
fell about 11 percent to close at $2.03.

HERERA: Chevron (NYSE:CVX) has a new CEO. The energy giant said Michael
Worth will become chairman and chief executive early next year, replacing
John Watson, who is retiring. Worth previously ran Chevron`s pipeline and
chemicals businesses. Chevron (NYSE:CVX) shares rose 17 cents to $117.62.

After the bell, KB Homes said higher average selling prices helped its
results which topped estimates. During the period, the builder also
delivered more homes than Wall Street was expecting. Shares initially rose
in after-hours trading and also finished the regular session up almost 3
percent to $22.22.

GRIFFETH: The startup brokerage Stockpile is bringing fractional share
investing mainstream and hopes it can persuade teens and millennials to buy
pieces of big name stocks in more than 1,000 companies and funds by opening
an online account or using the company`s app.

Avi Lele, the CEO of Stockpile, joins us now to tell us why he thinks this
is a good idea, because you run the company.

So I`m buying pieces of shares, but you do it — you can buy a card that
you can give to somebody as a gift with fractional shares on it or you open
an online account with your company. Is that how that works?

AVI LELE, CEO, STOCKPILE: That`s exactly right. You can wait until
grandma or your favorite aunt or uncle gives you a Stockpile gift card,
good for Nike (NYSE:NKE) or Tesla stock, for example. Or you just can come
into our brokerage, and open an account in about three minutes. It`s a
free account, and you can start buying fractional shares of stock.

And the whole idea is, when you`re young, you`re told start investing
early. That`s — you can`t time the market, but if you start investing
early, you`ve got a very good shot, especially if you diversify and if you
do this regularly over time, to build some serious wealth.

The problem is that when you want to start early, you don`t have the
knowledge or the money to do it. And so, what we`ve done is broken down
those barriers and made it possible for you to buy pieces of stock,
fractions of stock so that even though Amazon (NASDAQ:AMZN) is $1,000 a
share right now, you can come in and buy $100, and by a tenth of a share or
even less.

HERERA: It`s obviously targeted at least in part to people who have
perhaps not been able to participate as you just mentioned in the market,
but also millennials who have been a little bit stock averse in the past.
But how does it — is it linked to a regular brokerage account? Because
you have to be 18 to open that. So, do you have access to the Fidelities
of the world and the Vanguards of the world and the like, or not? Just
explain how that works.

LELE: It`s more than just linked to a brokerage. We are a brokerage. So,
we are an SEC and FINRA registered brokerage. And we`re just like a mini
Fidelity or ETRADE. So, you can come in and open a brokerage account, just
like you would anyplace else.

We`ve just made the process simple and streamlined so that you can get it
done in three minutes and start purchasing your stock that very day. It`s
a very engaging experience.

I`ll show you what my daughter`s account looks like. If you can see that,
you`ll see it`s a very visual experience. And she owns stocks that she
kind of knows something about.

GRIFFETH: Right, right.

LELE: Nike (NYSE:NKE), Tesla, Alphabet, Facebook (NASDAQ:FB).

HERERA: Things she uses, yes.

LELE: That`s right. She put in $25 in each of six stocks and she`s got a
horserace going and she`s kind of asking me, why is Disney (NYSE:DIS) down
and how come Tesla is doing so well? And so, it opens up all kinds of
great conversations.

GRIFFETH: Once they got money in the market, then they start paying
attention. That`s for sure.

Avi Lele of Stockpile —

LELE: They have skin in the game.

GRIFFETH: That`s exactly right. Thanks for joining us tonight.

LELE: Thanks. Thanks so much.

GRIFFETH: You bet.

HERERA: Coming up, want to take a sneak peek inside the most expensive
home in America? Well, look no further. We`ll take you there.

(MUSIC)

GRIFFETH: The number of millionaires on the planet is now at a record.
According to Capgemini, there are 16.5 million high net worth individuals
around the world, thanks primarily to a rising stock market. The world`s
wealthiest people collectively hold now more than $63 trillion in wealth,
and they are on track to exceed $100 trillion by the year 2025.

HERERA: And you`d have to be very wealthy to purchase the largest and most
expensive home ever listed in this country. The house is in Los Angeles`s
Bel Air neighborhood.

And our Robert Frank takes us on an exclusive tour.

(BEGIN VIDEOTAPE)

ROBERT FRANK, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): If this
super modern ultra-luxe smart house looks too incredible to be real, that`s
because it`s not, yet. This is an animated rendering of what`s expected to
be the largest and most expensive mansion in the entire country. A mind-
boggling 100,000 square feet at the record-shattering asking price of half
a billion dollars.

It`s an estate so unique it`s been dubbed “The One”. And this is what it
looks like today.

NILE NIAMI, REAL ESTATE DEVELOPER: I don`t care who you are or how much
money you have. You can never build this house again.

FRANK: Super developer Nile Niami showed us around the prime Bel Air
property where “The One” has steadily been taking shape since 2013. And
it`s possibly the most desirable site for a home on the planet. And our
cameras are the only ones that have been allowed in.

(on camera): Is this the best view in all of Los Angeles?

NIAMI: For sure, yes. In one eye line, you have from downtown L.A. to the
ocean to the Getty. This is the best.

FRANK (voice-over): But the breathtaking views are just about the only
thing that come naturally here. The rest is being built from the ground
up, with top of the line material, including a virtual mountain`s worth of
marble. When it`s complete in 2018, this mammoth structure will include a
glass encased library, four-lane bowling alley, 40-seat movie theater, an
indoor/outdoor nightclub, and, of course, a room full of jellyfish,
illuminated by black light, because why not?

Speaking of one of a kind water features, the gorgeous grounds will include
four infinity pools with built-in conversation pods. Plus the largest
indoor pool in California, and a moat that circles the entire four-acre
property.

(on camera): We`re standing in the moat.

NIAMI: It will feel like the house is floating on water.

FRANK (voice-over): The only question, who will be the one to write the
record breaking check for this colossal estate?

NIAMI: I think there`s a lot of people out there with a lot of money.
They want something that no one else can have. This is it.

FRANK: For NIGHTLY BUSINESS REPORT, I`m Robert Frank in Los Angeles.

(END VIDEOTAPE)

GRIFFETH: And from one mansion to the owner of another very famous one, in
case you hadn`t heard, Hugh Hefner, the man who built the Playboy
entertainment empire died yesterday at his home, the Playboy Mansion. He
was 91.

Hef was a controversial figure to be sure, but one who was inseparable from
the brand that he created. He found his company back in 1953 with $600 of
his own money and built the magazine into a multimillion dollar
corporation.

HERERA: And that is NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera.
Thanks for joining us.

GRIFFETH: I`m Bill Griffeth. Have a great evening. See you 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