Transcript: Nightly Business Report – November 8, 2017

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

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Deal breaker? AT&T`s proposed
mega acquisition of Time Warner (NYSE:TWX) just hit a major snag. And it
came from the Justice Department.

Doing the math. The GOP`s tax bill numbers don`t add up. And that could
prove to be a major obstacle.

Open enrollment. When choosing your benefits for next year, you don`t want
to make any costly mistakes.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Wednesday,
November 8th.

Good evening, everyone. Welcome. I`m Sue Herera. Tyler Mathisen is off
tonight.

An $85 billion merger hangs in the balance. AT&T (NYSE:T) has reportedly
been told by the Department of Justice that it needs to sell Time Warner`s
group of cable channels that includes CNN to get that deal approved. That
could prove to be a big stumbling block to a transformative deal that was
first announced more than a year ago. Shares of Time Warner (NYSE:TWX)
were pushed lower on the news but shares of AT&T (NYSE:T) were higher.

Julia Boorstin takes a look at the latest twist in this proposed tie-up.

(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: The Justice
Department has reportedly called on AT&T (NYSE:T) and Time Warner
(NYSE:TWX) to divest Turner Broadcasting including CNN or to sell DirecTV,
in order to secure approval for the deal.

The DOJ issuing the following statement, saying, quote: The department is
committed to carrying out its duties in accordance with the laws and the
facts. Beyond that, the department does not comment on any pending
investigation.

AT&T`s CEO Randall Stephenson saying, quote: Throughout this process, I`ve
never offered to sell CNN and I have no intention of doing so. The report
from CNBC`s Andrew Ross Sorkin and David Faber comes after AT&T`s CFO John
Stevens said the timing of the deal is now uncertain. A reversal after the
company said last month that the deal was still on track to close by the
end of this year.

Stevens as well as AT&T (NYSE:T) CEO Randall Stephenson have defended the
legality of the deal because it`s a vertical merger. Stevens saying a
vertical merger like this one hasn`t been blocked in over 40 years.

ADONIS HOFFMAN, FORMER FCC CHIEF OF STAFF: To have at the 11th hour this
development is troubling. If it`s a highly politicized transaction or
development, we now see the development of the Trump effect.

BOORSTIN: Now, investors are watching to see what will transpire and what
this could mean for other media deals in the works such as the pending
Sinclair Tribune deal.

For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Los Angeles.

(END VIDEOTAPE)

HERERA: On Wall Street, stocks inched higher. The small gains were enough
to send the major indexes to new highs. The world`s most valuable publicly
traded company, Apple (NASDAQ:AAPL), hit a major milestone. Its market cap
closed above $900 billion for the first time ever.

Here is a look at the closing numbers. The Dow Jones Industrial Average
rose six points to 23,563. The Nasdaq added 21. And the S&P 500 was up
three.

Since the election of Donald Trump one year ago, the S&P 500 has risen more
than 20 percent.

Bob Pisani takes a look at the markets climbed higher.

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: It`s been a year since
President Trump was elected and he has often claimed credit for the roughly
20 percent gain in the market since then. How true is that?

Well, the short answer is, he should get partial credit. That partial
credit is based on the perception that tax cuts will add to earnings and
that Trump is part of the more business-friendly environment.

Now, after the election, the market came to believe that a combination of
tax cuts, infrastructure spending, and regulatory reform would give an
added boost to corporate profits. The S&P rose roughly 6 percent in the
first month after Trump`s election. And that was certainly very real. But
more important for stocks since then, record corporate earnings. Even more
importantly, the market believes the record earnings will continue for the
next few quarters.

Second, global growth has returned. Many countries have returned to growth
after years of stagnation. As a result, the U.S. stock market is up 20
percent since Trump`s election. But the whole world is up 20 percent,
including Hong Kong, South Korea, India, Japan, Germany.

Finally, there`s a relatively benign Federal Reserve. There`s no reason to
believe that incoming Fed Chairman Jay Powell will mark a radical departure
from this policy.

Bottom line: give the president some credit for the rally, but only some.
How much? Art Cashin at UBS says, at most, Trump can claim responsibility
for 25 percent of the rally.

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

(END VIDEOTAPE)

HERERA: And as Bob just mentioned, the prospect for tax reform has helped
lift stocks. But the Republican plan is running into some obstacles.

Ylan Mui is in Washington.

(BEGIN VIDEOTAPE)

YLAN MUI, NIGHTLY BUSINESS REPORT CORRESPONDENT: Republicans are racing to
make progress on tax reform before the week is out. In the House, though,
members are facing tough math as the cost of their tax plan rises to $1.7
trillion over a decade, according to the Congressional Budget Office. And
that would violate the special rules that Republicans want to use to fast
track this legislation.

Congressman Mark Walker of North Carolina, who heads the influential
Republican Study Committee, says he`s confident this bill will get passed
and that his members feel a sense of urgency particularly after Democrats`
big win in the elections last night.

REP. MARK WALKER (R), NORTH CAROLINA: It`s a wake-up call for Republicans
not to straddle the fence on these issues. If you look at the people who
supported Donald Trump and his past presidency election, it was — it was
because he was very clear on his issue, when it comes to repealing
Obamacare, when it comes to delivering on tax reform, infrastructure, these
are things that Republicans must lead on and not be passe in.

MUI: Making the numbers work is even harder in the Senate. This plan
can`t cost more than $1.5 trillion over 10 years, and it can`t add to the
deficit in the years after that. So, there`s still a lot of debate over
whether Republicans will be able to lower the corporate rate to 20 percent
immediately and permanently. Democratic Senator Chuck Schumer also slammed
reports that this bill would get rid of the very popular state and local
tax deduction.

SEN. CHUCK SCHUMER (D), NEW YORK: We are saying to our Republican
colleagues, if you continue to try and eliminate the state and local
deduction, you`re going to kill suburban legislators who are already in
trouble because the suburbs don`t seem to like Donald Trump. So, we say to
our Republican friends on this tax bill, as Clint Eastwood said, want to
pass this tax bill? You want to hurt the suburbs? Make our day. Make our
day.

MUI: Democrats are proposing linking the corporate tax rate to worker
wages. If households don`t get the $4,000 pay raise that Republicans have
promised, the corporate rate would jump back up to 35 percent. Well,
tomorrow is an important mile marker for Republicans. The House Ways and
Means Committee is set to vote on its version of the tax bill. And the
Senate Finance Committee will release its own plan as well.

Then, it`s a sprint to get it to the president`s desk by Christmas.

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

(END VIDEOTAPE)

HERERA: Jeff Bush joins us now to discuss how a shorter time frame for
getting tax reform done could play out in the days and weeks ahead. He is
a partner with “The Washington Update”.

Jeff, welcome back. Nice to see you again.

JEFF BUSH, PARTNER, THE WASHINGTON UPDATE: Nice to see you, Sue.

HERERA: Handicap this all for us. Ylan really laid it out beautifully.
Do you think they`ll be able to do it? And what are the obstacles as you
see them?

BUSH: Well, I think she certainly laid it out perfectly. I think that`s
the exact issue. I think the election results from yesterday is a momentum
play towards getting something done yet this week.

But you can`t deny the numbers. The numbers state that it must not exceed
$1.5 trillion over that 10-year mark and right now, the CBO is scoring it
higher than that. So, they`re going to have to make some changes.

In addition to that, we anticipate the Senate plan coming out tomorrow.
And early reports are that there are going to be some pretty significant
differences between the House and the Senate plan, which will have to be
reconciled.

HERERA: And how much more complicated does that make this whole process?

BUSH: Well, it certainly does. You would think that the gang of six,
after working on this for nine months, would have had time to reconcile
those before the bills came out of committee, but it doesn`t appear to be
the case. So, that is concerning for the Republicans, that there is
disparity in those two bills. Obviously, those have to be reconciled
before it can hit the president`s desk for signing.

HERERA: Now, the election results of yesterday, does that give momentum to
one side or the other in this whole process, or not?

BUSH: I think short term, as I mentioned, it`s a momentum for the
Republicans to say, a wake-up call to try to get something done.
Obviously, they were feeling a tremendous amount of pressure anyway.

Now, the Democrats certainly should celebrate the results of last night but
they need to put that in perspective as to what that really meant last
night. They won the governor`s office in a blue state, in a purple state
that`s been huing more towards blue anyway.

So, I think it is certainly a big evening for the Democrats, but I`m not
necessarily putting that forward to 2018.

HERERA: What about the market and its reaction to it? If we see a stall,
as you mentioned, the Senate plan is going to come out, then they have to
reconcile. There are going to be differences. Are you anticipating
increased volatility in the market as that reconciliation process goes
through? Or perhaps not?

BUSH: Oh, I think definitely, Sue, I think there will be. Any time you`re
doing a large piece of legislation, and certainly tax reform is a huge
piece of legislation, that bill will go through a period of life and death
throughout that process. That in essence means more volatility in the
marketplace.

HERERA: Which means we`ll be talking to you again soon. Jeff, thank you
very much.

BUSH: I look forward to it.

HERERA: I do too. Jeff Bush with The Washington Update.

Meantime, the Trump administration announced new business and travel rules
for Cuba. The White House says the rules are designed to steer business
away from the Cuban military and intelligence services, and to the Cuban
private sector. The rules also make it harder for Americans to travel
independently to Cuba.

President Trump arrived in China, the main stop in his first official trip
to Asia. The U.S./China economic relationship at the top of the agenda, of
course, but so is the still-developing personal relationship between the
leaders of the world`s two largest economies. Eunice Yoon is in Beijing.

(BEGIN VIDEOTAPE)

EUNICE YOON, NIGHTLY BUSINESS REPORT CORRESPONDENT: The dinner at the
Forbidden City is just one way the Chinese hope will make President Trump
feel a little bit more special compared to previous presidents. Today, the
first families tour the Forbidden City. They had afternoon tea and watched
a performance of Peking opera in a visit that the U.S. ambassador said
would be personal.

Despite the important agenda to talk about North Korea and trade, the
Chinese state media was focused on the intimate relationship between
President Xi and President Trump. President Trump showed President Xi a
video of his granddaughter reciting Chinese songs and poems. And President
Xi, according to the state press, said her performance was an “A” plus.

The Chinese media has been upbeat about President Trump`s visit, stressing
the importance of finding common ground, including on trade. At a signing
ceremony today, U.S. Commerce Secretary Wilbur Ross said that the two
presidents would look to narrow the U.S. trade deficit, inking deals worth
$9 billion. China retailer JD.com pledged to import $2 billion worth of
American goods, including American beef. The vice premier who also
attended said the deals would contribute overall to U.S./China stability.

President Trump`s trip is stirring up debate on Chinese social media with
many people eager to see if he`s going to tweet, since Twitter is blocked
in China.

For NIGHTLY BUSINESS REPORT, I`m Eunice Yoon in Beijing.

(END VIDEOTAPE)

HERERA: Still ahead, now is the time to make some very important personal
finance decision. And you don`t want to make any mistakes.

(MUSIC)

HERERA: Billionaire investor Carl Icahn is under investigation. He has
been subpoenaed over his role advising the Trump administration on a
federal bio fuels program. Icahn sought to change the renewable fuel
standard, a change that would have benefitted CBR Energy. Icahn`s
associates hold an 82 percent stake in that company. Icahn has argued in
the past that he was acting in the interests of American energy security.
He stepped down from his advisory role in August.

Two of the biggest data breaches in recent memory were the subject of a
contentious hearing on Capitol Hill. The current and former CEOs of
Equifax (NYSE:EFX) testified as did the former CEO of Yahoo (NASDAQ:YHOO).
They started off apologizing, but that wasn`t enough for some lawmakers.

Aditi Roy reports.

(BEGIN VIDEOTAPE)

ADITI ROY, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Former
Yahoo (NASDAQ:YHOO) CEO Marissa Mayer took the hot seat today, under
subpoena, answering questions from the Senate Commerce Committee about the
company`s data breaches.

MARISSA MAYER, FORMER YAHOO CEO: Yahoo (NASDAQ:YHOO) is a victim of
criminal state sponsored attacks on its systems resulting in the theft of
certain user information.

ROY: She started with an apology for the 2013 breach that involved 3
billion or virtually all of the company`s users.

MAYER: As CEO, these thefts occurred during my tenure. And I want to
sincerely apologize to each and every one of our users.

ROY: Mayer, who testified before the committee, alongside Equifax`s
current and former CEOs, said Yahoo (NASDAQ:YHOO) learned about the 2013
breach last year, that Russian agents were behind the attack but questions
about how it happened still remain.

MAYER: To this day we, as I understand it, still have not been able to
identify the intrusion that led to that theft, just to say we have received
files from law enforcement that contained Yahoo (NASDAQ:YHOO) data. And we
verified that it came from Yahoo (NASDAQ:YHOO). We don`t exactly
understand how the act was perpetrated.

ROY: She and Equifax (NYSE:EFX) executives faced a tough grilling from
lawmakers who pressed them on how the companies are more secure after the
hack.

SEN. CORY GARDNER (R), COLORADO: Yes-or-no question. Does the data remain
unencrypted at risk?

PAULINO DO REGO BARROS, EQUIFAX INTERIM CEO: It`s going to be part of the
process. It has been reviewed.

GARDNER: Yes or no? Does the data remain unecrpyted, at risk?

BARROS: I don`t know at this stage.

GARDNER: You don`t know if — this is the reason why it was breached; is
that correct?

BARROS: There`s —

GARDNER: This data was unencrypted.

BARROS: Encryption is one formats of defense. We have several formats on
defense in place now that can prevent this to happen.

ROY: The hearing was just the latest of a handful of congressional panels
involving Equifax (NYSE:EFX), which is grappling with a breach involving
more than 145 million Americans, while all the executives talked about
measures taken to improve security, Mayer acknowledged with the rise of
state sponsored hackers, no company is safe.

MAYER: We describe this as an arms race. Hackers become ever more
sophisticated and we have to become sophisticated in turn. So —

UNIDENTIFIED MALE: So, would you have predicted a breach before it
occurred? Would you expect a breach? I assume the answer to that is no or
you would have been doing something more.

MAYER: We did not calculate percentages and/or predict a breach. I will
say, we took significant efforts and investment to increase our security.

ROY (on camera): Lawmakers also brought up their own suggestions,
including using encryption and digital identity verification measures.

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

(END VIDEOTAPE)

HERERA: Humana (NYSE:HUM) warns of slower profit growth and that`s where
we begin tonight`s “Market Focus”.

The health insurer said the return of a 3 percent industry-wide tax would
cause earnings in 2018 to fall below the company`s initial target range.
The company, which reported better than expected earnings, said it would
cut nearly 6 percent of its workforce through job cuts and early retirement
programs. Shares were off 5 percent to $243.48.

Regeneron Pharmaceuticals (NASDAQ:REGN) said stronger demand for its new
eczema drug and top selling eye treatment helped profits rise above
expectations. Sales also rose and topped estimates. Regeneron shares rose
more than 2.5 percent to $415.17.

ConocoPhillips (NYSE:COP) said that it would spend $5.5 billion annually
over the next three years on capital projects but only if oil prices remain
above $50 a barrel. The spending forecast was above analysts`
expectations. The oil and natural gas producer also said it created a plan
to weather any oil price volatility.

(BEGIN VIDEO CLIP)

RYAN LANCE, CONOCOPHILLIPS CHAIRMAN & CEO: We tried to put a plan in place
that is resonating (ph) across all the market prices, whether they`re to
lower and to participate in the upside. We took the market out of our
conversation. So, we`re trying to embrace volatility. We think you need
to work below $50 and even $40 a barrel, and you need to capture the upside
as you go to $60 and $70 a barrel. If the prices go to $60, we`ll going to
grow even more and take up some of that incremental demand.

(END VIDEO CLIP)

HERERA: The shares were fractionally higher to $53.52.

After the bell, 21st Century Fox reported revenue that topped expectations
while its profits were in line with estimates. The media giant says
results were helped by higher ad sales and an increase in cable programming
revenue. Shares were initially higher in the extended session. They also
finished the regular day up 1 percent to $28.09.

Open enrollment for health care benefits is here. And for some, it could
be costly, according to an Aflac (NYSE:AFL) survey. More than half
employees apparently found that bad choices cost them $750 a year or
roughly $62 a month.

We have Douglas Boneparth with us with some tips to help you avoid those
mistakes. He`s financial planner and president of Bone Fide Wealth.

Welcome. Nice to have you here, Doug.

DOUGLAS BONEPARTH, BONE FIDE WEALTH PRESIDENT & FINANCIAL PLANNER: Good to
see you again.

HERERA: What is the biggest mistake that people make when they go in to
doing their open enrollment?

BONEPARTH: It`s often the obvious one, and that`s actually forgetting to
enroll. It again may seem obvious, but letting the window slip by is
probably the biggest critical error that I see people make.

HERERA: And how frequent is that, do you think?

BONEPARTH: Well, I would say that the vast majority of people aren`t
missing out on this. It`s too important to their lives. You know, we`re
talking about your medical insurance. We`re talking about life insurance,
disability insurance, and benefits like that. But if you asked me what the
biggest error would be, you know, if life got the best of you and you just
simply didn`t modify or enroll in benefits.

HERERA: Yes, we all live busy lives and the time slips by.

BONEPARTH: Sure.

HERERA: How do you determine, now, with most plans, there are different
things you can elect in terms of putting money aside to fund your benefits
and things like that. Do people generally do that correctly or not?

BONEPARTH: Unfortunately, they don`t. And what really needs to be done to
make sure that you get a proper estimate of how to fund various plans,
whether it be a health care savings account or a flexible savings account
where you can put money from your paycheck pretax, is not doing a decent
job of estimating what their medical expenses are going to be, or dependent
care expenses in some cases are going to be in the preceding year. And
that is done by looking back at the year prior to see, what did I spend and
what might change in the year to follow?

HERERA: What about people who simply, and it`s an option in many plans,
you simply click on “keep what I have.” Is that a good idea or not?

BONEPARTH: Well, I think that if you had a good year and used your
benefits wisely, it`s going to keep you out of harm`s way. But this is the
time when you should reflect on the year you had when it comes to your
benefits and make adjustments. You don`t want to leave money on the table
in the form of tax savings. If you`re expecting another child or you`re
expecting to have, let`s say, surgery in 2018, you might want to modify
your benefits, assuming you didn`t have those items on your list in 2017.

HERERA: Or perhaps the plan its has changed and you`re just checking it
off, it might not be the same plan.

BONEPARTH: That`s a great point.

HERERA: What about insurance? I always found this a little bit confusing,
because there are various different types of insurance elections that you
can make? But you don`t really get a chance to look at the policy itself.

BONEPARTH: Yes, if you dig deep enough, you can find the specific policy
and coverages. And I would always encourage anybody to dig as deep as they
can to see what it is that they`re purchasing through their benefits.

But I think what makes it complicated is we`re not just talking about one
type of insurance policy. We have your health insurance. We have life
insurance. We have disability insurance. We have three forms of insurance
that you really want to get right.

HERERA: Indeed we do. OK, thank you, Doug, nice to have you here.

BONEPARTH: Thank you.

HERERA: Douglas Boneparth with Bona Fide Wealth.

Coming up, Amazon`s latest twist on convenience is being put to the test.

(MUSIC)

HERERA: Sears (NASDAQ:SHLD) is selling up to 140 stores to help fund its
pension obligations. The department store is facing mounting losses and
declining sales. The company is expected to use the proceeds from the sale
to shore up its pension plan that still supports about 100,000 people.
Sears (NASDAQ:SHLD) has already announced the closures of 400 stores this
year. It also reported a 17 percent drop in same store sales. The stock
fell in trading today.

And Target (NYSE:TGT) plans to close a dozen underperforming stores. The
company says the closures will take place in Michigan, Florida, Illinois,
and Texas. It comes as the retailer expands its portfolio smaller format
stores which the company says are more profitable.

Amazon (NASDAQ:AMZN) is viewed as one of the biggest threats to retail.
But now, the online retailer wants to literally open the door to a new type
of service — delivery. Not just to your doorstep but directly into your
home.

Deirdre Bosa put it to the test.

(BEGIN VIDEOTAPE)

DEIRDRE BOSA, NIGHTLY BUSINESS REPORT CORRESPONDENT: Jennifer Henry-Novich
is a blogger and works a full-time job at Ernst & Young. She`s got a busy
schedule and doesn`t have time to baby-sit packages. So she jumped at the
opportunity to test out Amazon`s new home delivery system that lets the
courier enter her house and place her packages right inside her home.

She was just one of three Amazon (NASDAQ:AMZN) customers that got to try
the service in advance. And so far, she`s found it a convenient way to
monitor her deliveries and make sure they get to her.

JENNIFER HENRY-NOVICH, AMAZON KEY CUSTOMER: So I never take my keys out of
my purse at this point. My car unlocks with a touch of the button. And
same thing with Amazon (NASDAQ:AMZN) key, I`m able to unlock my door with
my code, I`m able to lock my door with the push of one button, and it`s all
just integrated and seamless.

BOSA: Amazon (NASDAQ:AMZN) Key is now available in 37 cities. You need an
Amazon (NASDAQ:AMZN) Cloud Cam and a smart lock. The kit starts at $250.

The stakes are high. Bad experiences could damage the company`s reputation
and open it up to legal issues. But if it works, Amazon (NASDAQ:AMZN)
could be laying the groundwork for more sales and home services and take
command of the last inch of delivery while most retailers are trying to
control the cost of the last and most expensive mile of the supply chain.

Here is how Amazon (NASDAQ:AMZN) Key works. The courier approaches the
door and knocks or rings the doorbell to check if anyone is home. He then
scans the packages. Once Amazon (NASDAQ:AMZN) verifies he`s at the right
place, the door unlocks. The camera inside captures the entire thing. No
access codes or keys are ever provided to the driver.

Beyond package delivery, users can use Amazon (NASDAQ:AMZN) Key to set
codes for friends and family to get inside. Or they can soon set special
access codes for dog walkers or cleaning services.

The system is supposed to make our lives easier but it does come with
potential privacy and safety issues like pets escaping, accidents, or even
the potential to let thieves or worse into your home.

During delivery window, Amazon (NASDAQ:AMZN) recommends customers leave
their pets outside or cordoned off in another room to avoid such issues.
And some customers might worry about a camera that is always recording.
But Amazon (NASDAQ:AMZN) says the customer is the only one who sees that
video.

HENRY-NOVICH: You know, I am concerned about video. But at the same time,
you know, it`s so much easier to pick a lock that you purchase at Home
Depot (NYSE:HD) or Lowe`s and pick it with a couple of tools versus trying
to hack the Amazon (NASDAQ:AMZN) Key system.

BOSA: Ultimately, Amazon (NASDAQ:AMZN) is betting convenience will
outweigh those concerns and others.

For NIGHTLY BUSINESS REPORT, I`m Deirdre Bosa in San Francisco.

(END VIDEOTAPE)

HERERA: And finally tonight, the top places to retire. And they might not
be where you think.

According to Bankrate, Pittsburgh tops the list with its affordable cost of
living. Next is the Boston area, ranking high in health care. Los Angeles
is number three which scored high in the things to do category.
Traditional retirement areas like the Miami/Ft. Lauderdale region and Las
Vegas were rated 30th and 42nd respectively. But still a beautiful places.

That`s NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera. Thanks for
watching. Have a great evening. We`ll see you tomorrow.

END

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Business Report is not and should not be considered as investment advice.
(c) 2017 CNBC, Inc.

 

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