Transcript: January 26, 2018

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

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: One more time. The major
averages once again climbed to all-time highs as the S&P 500 sees the most
record closes in a single month in more than 20 years.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: America is open for
business. And we are competitive once again.

(END VIDEO CLIP)

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: In a high stakes speech,
President Trump tells heads of state and global business leaders that
there`s never been a better time to invest in the U.S.

MATHISEN: And ga-ga over growth. As the global economy picks up steam,
our market monitor has some great investment ideas for you.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Friday,
January 26th.

HERERA: Good evening, everyone. And welcome.

What a way to end the week. It was a melt up into the closing bell, which
drove stocks to all-time highs.

The S&P 500 had its best day since March, lifted by continued optimism that
economic growth around the world is on an upswing and a new batch of strong
earnings. Of the S&P 500 companies that have reported profits so far, 80
percent have topped expectations. Today, shares of Intel (NASDAQ:INTC)
helped lead the way with a double digit gain following its strong quarter
that we told you about last night.

So, here are the closing numbers. The Dow Jones Industrial Average rose
223 pints to finish at 26,616. The Nasdaq climbed 94. And the S&P 500
added 33.

For the week, all of the indexes saw gains of more than 2 percent.

MATHISEN: While the rising stock market was not lost on President Trump
when he addressed attendees at the World Economic Forum in Davos,
Switzerland. He talked about the economy, and growth, and in a widely
anticipated and high stakes speech told investors and CEOs across the globe
that America is open for business.

Michelle Caruso-Cabrera is in Davos tonight.

(BEGIN VIDEOTAPE)

MICHELLE CARUSO-CABRERA, NIGHTLY BUSINESS REPORT CORRESPONDENT: President
Trump is on a full-court press to convince executives from around the world
to invest in the United States. In an interview with CNBC here in Davos,
Trump reiterated how pleased he is about the corporate tax cut, what it`s
doing for American competitiveness and he`s so happy that it`s leading to
bonuses for workers as a result.

TRUMP: I think the tax plan has been better even than we thought. What
did happen that nobody considered is that AT&T (NYSE:T) started, but they
immediately followed — hundreds of companies are giving thousands and
thousands of dollars to their workers.

CARUSO-CABRERA: He repeated that message again today to a crowd of more
than 1,000 people. There have been two types of Trump speeches, the State
of the Union speech, the softer Trump. And there`s on the floor of the
U.N., the rocket man combative Trump.

This speech today was definitely the former. He catered to the crowd and
softened his America first message.

TRUMP: America first does not mean America alone. When the United States
grows, so does the world. American prosperity has created countless jobs
all around the globe, and the drive for excellence, creativity, and
innovation in the U.S. has led to important discoveries that help people
everywhere live more prosperous and far healthier lives.

(APPLAUSE)

CARUSO-CABRERA: No one walked out, as some had threatened. If anyone
boycotted, you couldn`t tell because every seat was full. And despite all
the complaints that we heard from many of the people here about Donald
Trump, the second he took the stage, the cameras went up. One journalist
noted on Twitter that all them, quote, global elites were behaving like
they were at a Britney Spears concert.

For NIGHTLY BUSINESS REPORT, I`m Michele Caruso-Cabrera, Davos,
Switzerland.

(END VIDEOTAPE)

HERERA: Investors today may have been a little disappointed when they saw
that the first reading of real gross domestic product for the fourth
quarter wasn`t quite as strong as hope. The report showed that the economy
slowed at the end of last year. But a closer look also revealed something
else.

Steve Liesman explains.

(BEGIN VIDEOTAPE)

STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: U.S. economic growth
in the fourth quarter registered a bit below economists expectations, but
the details of the report were stronger than the headline. Gross domestic
product rose 2.6 percent as an annual rate for the three months ending 2017
down from 3.2 percent in the prior quarter. But it was the third quarter
in a row of above trend growth. And that could mean more jobs but also
higher interest rates ahead.

TONY CRESCENZI, PIMCO: The jobless rate is most likely to continue to move
down yard because growth is moving above potential. For bond market, this
means the Federal Reserve will have to continue to raise interest rates,
just as it did three times in 2017. It`s highly likely to raise interest
rates three times in 2018.

LIESMAN: The GDP report shows strength in consumer and business spending
with higher oil prices propelling investment in the energy sector. Higher
stock prices seem to motivate consumers to spend more of their income than
they had been in the past. Taking away from growth was a sharp decline in
inventories and a surge of imports. They are unlikely to continue to drag
as heavily on the economy this year.

While President Trump didn`t get the 3 percent figure he`s made so
important, his treasury secretary suggested it may be too soon to look for
it, that`s because the tax cuts and the higher deficit spending from the
tax cut bill have yet to hit the economy.

STEVEN MNUCHIN, TREASURY SECRETARY: I think we`re going to see short-term
aberrations in any quarter. I think we`re very comfortable with I`ve been
saying is our objective is sustained GDP over the long term. So, we`re not
concerned about any one quarter which can be revised up or down.

Relative to where everybody else was talking in the beginning of the year,
2.1 and 2.2, I think people now expect we`re getting to 3 percent GDP.

LIESMAN: Three percent is the number that matters only politically.
Economically, the important question is if the U.S. is growing at or above
the economy`s 2 percent potential. That was the case in this report and
for much of last year. It`s not a bad bet that above trend growths looks
set to continue this year as well.

For NIGHTLY BUSINESS REPORT, I`m Steve Liesman.

(END VIDEOTAPE)

MATHISEN: Meantime, orders for long lasting durable goods increased in
December by the most in six months. Bookings for goods designed to last at
least three years increased nearly 3 percent, and that was a lot more than
economists expected.

Overall, orders for durable goods have risen in four of the last five
months, a positive sign for the industrial part of the economy.

HERERA: Lawmakers are now turning their attention to immigration. While
politicians go back and forth over the details, the business community is
paying very close attention, simply because of the impact that immigration
has on the economy.

Ylan Mui has more.

(BEGIN VIDEOTAPE)

YLAN MUI, NIGHTLY BUSINESS REPORT CORRESPONDENT: Washington`s battle over
immigration also has big complications for the economy. The White House is
proposing a path to citizenship for 1.8 million undocumented immigrants who
were brought here as children. And that could immediately boost economic
growth by $23 billion a year according to one estimate.

Legal immigrants also make up a growing share of the U.S. labor force. In
1980, just about 7 percent of workers in America were foreign born. A
generation later, that number is nearly 17 percent.

JEREMY ROBBINS, NEW AMERICAN ECONOMY: Immigration is not a panacea that`s
going to cure all of our economic ills. But having young people who are
hard working, who are driven in the economy, is only good for America and
for our American workers.

MUI: That`s why major corporations are getting behind a deal that would
allow some immigrants with protected status to stay in the U.S.
permanently. In exchange, the White House is requesting $25 billion for a
border wall, limits on sponsoring family members for citizenship, and an
end to the visa lottery. Some worry those measures wind up reducing
immigration in the long run and harming economic growth.

President Trump has pledged that economic growth will hit 3 percent or more
while he is in office. And solving the immigration puzzle could help him
make good on that promise.

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

(END VIDEOTAPE)

MATHISEN: So, in terms of trade, what policies would be in the best
interests of the United States?

Here to discuss that and also offer insight into what the latest GDP figure
means for the economy is Beth Ann Bovino. She is S&P Global`s chief U.S.
economist.

Let`s start, why don`t we, Beth Ann, with the subject of the GDP growth
numbers, which came in a little less than some had expected, but better
than we began 2017. We ended on a higher note there. What do you look —
is there anything we should be worried about in that number? Does it
signal anything?

BETH ANN BOVINO, S&P GLOBAL CHIEF U.S. ECONOMIST: Well, a couple points.
First, it was about — it was in line if what we expected. We were looking
at 2.7. We were close to that reading.

One of the reasons why we thought that was because the trade numbers were
coming in so lousy and we thought that was going to be a drag, inventories
and trade. And they both were a drag. But inventories are interesting,
partly because businesses emptied their shelves because of the holiday
season. And now they have empty shelves, they have to fill them up again.
That we see as positive.

The other thing that people don`t — might not have noticed is that the
domestic final spending rating, incredibly strong. I think it was over 4
percent. And that means the domestic side of the equation is looking
robust, all good news.

HERERA: Let me turn you to trade because the president signaled that he
may not be completely done with TPP. What does that mean to you? And what
does it portend, perhaps, for the NAFTA negotiations?

BOVINO: Yes. That`s — we think this kind of softer tone that the
administration is taking is actually a positive sign. We will see if it
lasts. I mean things certainly do go up and down these days.

But we do see that as a positive sign. We think that might actually give
NAFTA, which is in negotiations, I think their sixth round, a little bit
more chance. Our baseline is that NAFTA will stay in place although with
some changes. We think this actually gives it a little bit more of a push
to hold that.

Another thing to take into account, President Trump mentioned some
interesting, going back to TPP. There, given that the administration had
just put some tariffs on I guess washing machines and solar panels,
affecting China, particularly China, but other Asian economies as well.
You know, getting involved with TPP, it might be good to have a few more
allies in the region. So, that could be a positive there as well.

MATHISEN: So, your baseline scenario is that we will stay in NAFTA. What
if we don`t? Is that going to be good for the U.S. economy and workers or
not?

BOVINO: We have written about that in the past. We do see the baseline
that we do stay in NAFTA but again it`s up and down here. We see that if
indeed the U.S. does pull out of NAFTA, all three countries will be hit,
Canada, Mexico and the U.S., U.S. the least. But what we can expect is,
yes, maybe some factories will come back to the United States. But that
lost competitive edge that we think that the U.S. gained from these
basically, the supply chains that helped make things much more smoothly
operating could hurt our business, our competitiveness, and that would
actually mean less business and probably fewer jobs.

MATHISEN: All right. Beth Ann, thank you for clearly explaining that.

BOVINO: Thank you.

MATHISEN: Beth Ann Bovino with S&P Global.

HERERA: And it`s time to take a look at some of today`s upgrades and
downgrades.

Starbucks (NASDAQ:SBUX) was removed from Goldman Sachs (NYSE:GS) conviction
buy list. The firm is maintaining its buy rating on the stock, but also
cutting its price target to $68 from $73. Goldman cites dairy and coffee
inflation as key risks. Starbucks (NASDAQ:SBUX) shared closed at 57.99.,
down more than 4 percent.

Bed Bath & Beyond (NASDAQ:BBBY) was downgraded to underweight from neutral
over at JPMorgan (NYSE:JPM). The firm cites concerns over growth. It`s
also worried about margin erosion as management doubles down on its price
match guarantee. The price target was cut to $18 from $21. And the shares
closed at $22.53 down 2 percent.

MATHISEN: Heading the other way, Whirlpool (NYSE:WHR) upgraded to
outperform from market perform at Raymond James. The firm notes the
prospects for price hikes and improved washer margins. The price target on
the stock now $200 a share. Shares agitated closer to that mark, closing
at $189.97. That`s up 1.5 percent on the session today.

KB Home (NYSE:KBH) was upgraded to neutral from underperform at Buckingham
Research Group. The firm cites the recent decline in the stock and says KB
is on track to meet or exceed its 2019 goals. It maintains a $34 price
target but shares closed below that level, down nearly 2 percent at $33.16.

HERERA; Still ahead, why Wynn Resorts (NASDAQ:WYNN) lost billions in
market value in today`s trading in just a matter of hours.

(MUSIC)

HERERA: A surprise ruling against Boeing (NYSE:BA). The International
Trade Commission voted in favor of Canada`s Bombardier in an ongoing trade
dispute. The commission ruled Boeing (NYSE:BA) was not harmed by
Bombardier and its all new C-Series jet. Boeing (NYSE:BA) claimed that
Bombardier unfairly benefited from government bailout subsidies and that
those subsidies allowed Bombardier to sell its new jet to Delta at absurdly
low prices, quote. The vote effectively shelves two tariffs, totaling
nearly 300 percent that the commerce department wanted to impose on
Bombardier.

MATHISEN: New York, New Jersey, and Connecticut are triple-teaming up to
sue the federal government. The states challenging the recently passed tax
law and its caps on state and local tax deductibility. The governors say
the law unfairly targets their states. New York`s governor contends that
the federal law is illegal and that it violates states` rights.

HERERA: Earlier this week, we told that you the CEO of SunPower
(NASDAQ:SPWRA) was concerned about the impact solar tariffs would have on
his business. Today, SunPower (NASDAQ:SPWRA) said it was putting a $20
million U.S. factory expansion on hold unless its panels receive an
exclusion. SunPower (NASDAQ:SPWRA) is based in California. But as we
reported, it does most of its manufacturing outside of the United States.
The tariffs take effect on February 7th.

MATHISEN: Earlier in the program we told you how the rise in durable goods
orders is a positive sign for the industrial sector of the economy.
Honeywell`s quarterly results are no different. They confirm that. The
industrial company raised earnings outlook for the year and recorded better
than expected profits. That helped send the stock to a new high.

Morgan Brennan now with more on what`s working at Honeywell and in the
sector overall.

(BEGIN VIDEOTAPE)

MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: After a flurry of
earnings this week, the industrial sector`s message, growth. Take
Honeywell which beat estimates and raised guidance. The maker of jet
engines and thermostats is welcoming demand across its segments. And
despite a nearly $3 billion tax related charge last quarter, it`s betting
reform will boost business even further.

DARIUS ADAMCYZK, HONEYWELL CEO: I think it`s going to be good for U.S.
business. For us, we certainly see a much greater level of bullishness on
the part of our customers which should translate into continued investment.
And you are right, their CapEx is our revenue and we expect some level of
investment to accelerate.

BRENNAN: Honeywell is increasing its 401(k) match for employees and it
plans to bring most of its overseas cash back home. It isn`t alone.
Caterpillar (NYSE:CAT), 3M (NYSE:MMM) and United Technologies (NYSE:UTX)
all posted strong results this week, raising guidance and unveiling capital
spending plans. Some companies are prefunding pensions and others are on
the prowl mergers. Experts say the growth is across the board as even hard
hit companies like business jets begin to take flight.

SCOTT DAVIS, MELIUS RESEARCH CHAIRMAN AND CEO: It`s been a great quarter
so far and I think most what`s most exciting is the outlook for 2018 is
exceptional. I think the tax act is real. People are spending money in
the industrial world and I think it`s going to be a great year.

BRENNAN: But there are exceptions, General Electric (NYSE:GE) perhaps
being the biggest. The Dow`s oldest component missed expectation this week
and disclosed two SEC investigations, sending that stock to multi-year
lows.

Overall though, the sector seeing some big moves, be it 3M (NYSE:MMM) or
Deere or Caterpillar (NYSE:CAT) or Boeing (NYSE:BA). Analysts say stocks
are getting pricey but profits are catching up.

DAVIS: We like the valuish names. Stocks haven`t gone up much at all.
Things like G.E., for example. But we also like Emerson. We like IIT. We
like Rexnord. You know, there`s some great — Honeywell is an interesting
story here.

BRENNAN: But earnings season isn`t over yet. And more will be revealed
next week, when Boeing (NYSE:BA), Lockheed Martin (NYSE:LMT), Siemens and
others also add to the sector`s story.

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan.

(END VIDEOTAPE)

HERERA: Investors in Wynn Resorts (NASDAQ:WYNN) take money off the table
on a report alleging sexual misconduct by founder Steve Wynn. That is
where we begin tonight`s “Market Focus”.

“The Wall Street Journal” reported that former employees reported they had
been sexually harassed over a number of years by Wynn. The report added
Steve Wynn paid more than $7 million to settle claims he had engaged in
sexual misconduct with a former manicurist. Steve Wynn denied those
claims. Shares finished the day, though, 10 percent, to $180.29.

AbbVie said a more favorable tax rate and robust sales of its best-selling
arthritis treatment Humira prompted the pharmaceutical company to raise its
profit estimates for 2018. The new guidance came after AbbVie reported
earnings and sales that rose more than expected. AbbVie shares jumped 13
percent to $123.21.

And Colgate-Palmolive (NYSE:CL) said weaker pricing and an increase in
packaging cost pressured margins in the latest quarter. The company
reported a drop in profit and revenue as sales slowed in North America.
Colgate also warned the growth would be challenged for the rest of the year
due to global uncertainty. The shares were off nearly 5 percent to $73.56.

MATHISEN: AstraZeneca said its experimental inhaler treatment for chronic
obstructive pulmonary disease known as COPD showed significant improvement
in patients and hit the majority of its trial goals. The company said it
may apply for approval of the medication in the U.S. and Europe next year.
But for now, it hopes to have the medication green-lighted in Japan and
China. Shares up 1 percent to $36.63.

The hedge fund Pershing Square Capital run by billionaire investor Bill
Ackman has reportedly taken a stake in Nike (NYSE:NKE). It bets the sports
apparel maker will continue to be a dominant player in its space. While
the size of the stake is unknown, reports say Ackman plans to take a
backseat on its investment and won`t push for changes at the Oregon
company. Nike (NYSE:NKE) shares up a fraction at $68.04.

And FedEx (NYSE:FDX) says it will spend more than $3 billion on wage hikes,
employee bonuses and capital investment all because of the new tax law. As
part of the move, FedEx (NYSE:FDX) will contribute $1.5 million to help
fund its pension plan. Shares rose marginally to $268.85.

HERERA: It is time now for this week`s market monitor. He says as the
global economy improves, now it is time to invest in foreign companies
whose stocks are likely to outperform. It is his first time on the program
so let`s welcome John Merrill, founder and chief investment officer of
Tanglewood Total Wealth Management.

Welcome. Nice to have you here.

JOHN MERRILL, TANGLEWOOD TOTAL WEALTH MANAGEMENT FOUNDER & CIO: Great to
be here, Sue.

HERERA: Let`s start with your first pick, which is the Vanguard Total
World Stock Index. Less the U.S., meaning minus the U.S. it is an ETF.
You say this is a great place to start, and I guess Total World says it
all.

MERRILL: Exactly. If you want to participate in the global stock rally
which has been in effect now for at least 18 months, this is a great place
to start, because it covers every stock that is not a U.S. stock. So, as a
building block, for your base for international investing, I think it`s a
great place to start.

MATHISEN: Second one is Vanguard Emerging Market Index. Here again you
take the idea that it`s better to be invested in the whole shore front of
stocks rather than try to pick the individual winners. Why do you favor
this approach? Because some people think that this is the area, emerging
markets, where a smart stock picker can outperform the index.

MERRILL: You know, Tyler, I really don` don`t disagree with that. I think
in the emerging market space that you can. But for most people who don`t
have the tools of a wealth manager like ourselves, you know, it is a lot
easier to make sure that you cover it and not make some missteps in this
area by covering a broad market index.

And Vanguard index is a great index. We own it. We also own active funds
in that area because I definitely agree with you.

HERERA: From the broader approach with the first two ETF picks, now we are
kind of narrowing it down to technology with the iShares Technology Sector.
Basically you say it`s changing — technology is changing every aspect of
our life. Why do you like this particular Tech Sector SPDR?

MERRILL: Well, because it covers it, you know, from a market cap
standpoint, it covers the whole technology sector. And I think technology
really marries well with your international investing. The thesis of a
global stock market rally mainly because most of the tech giants are
centered in the made to. In fact, the broad Vanguard Index VEU only has
6.3 percent technology.

So, if you want to own the companies that are really changing the world and
changing every aspect of it and leading the changes in almost every sector,
you know, this is the place you have to do it.

MATHISEN: John, thank you so much for joining us. We are jealous that you
are out in beautiful San Diego. But somebody has to do it. Someone has to
do it.

MERRILL: That`s right.

HERERA: John Merrill with Tanglewood Total Wealth Management — thank you
so much.

MATHISEN: All right. Coming up, what three of the finalists for Amazon`s
second headquarters all have in common.

(MUSIC)

MATHISEN: Dell (NASDAQ:DELL) Technologies reportedly considering going
public. The move could help the company raise cash and reduce its debt
load. Four years ago, Michael Dell (NASDAQ:DELL) took his namesake PC
company private in one of the biggest leveraged buyouts the tech industry
had ever seen. The company also reportedly considering a deal with its
majority owned VMware.

HERERA: The city of Tacoma, Washington, saw the biggest rent increase last
year. According to Trulia, rents rose nearly three times the national
average to about $1,800 a month. Tacoma is only 30 miles from Seattle,
where companies like Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) and
the influx of worker have helped drive rents higher.

MATHISEN: Well, three of the 20 finalists now for Amazon`s massive new
headquarters project are in or near the nation`s capitol. And that has
prompted a lot of speculation that CEO Jeff Bezos who already owns “The
Washington Post (NYSE:WPO)”, plus a home in town, has already made up his
mind.

But for all the region`s pros, there is no shortage of cons.

And Scott Cohn is in Montgomery County, Maryland, tonight.

(BEGIN VIDEOTAPE)

SCOTT COHN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Montgomery County,
including communities like Rockville and Bethesda is rich and vibrant,
joining northern Virginia and the District of Columbia, three Amazon
(NASDAQ:AMZN) finalists within about a 40-mile radius of the nation`s
capitol. In a field of just 20 contenders, they have to like those odds.

But Maryland`s governor is taking no chances, asking the legislature this
week for $5 billion in incentives because just locating near Maryland isn`t
enough.

GOV. LARRY HOGAN (R), MARYLAND: It will have more of an impact on our
state if they are located here. And I believe we have a better story to
tell.

COHN: Maryland`s workforce is one of the best educated in the nation, with
the largest concentration of tech and science workers. Montgomery County
is one of the most affluent in the nation.

Maryland officials won`t say what sites they are offering, but one possible
location the former White Flint Mall, a regional shopping center torn down
a couple of years ago, replacing a one-time brick and mortar retail Mecca
with the retailer of the future.

Not to be outdone, Virginia`s new governor, Ralph Northam, is pointing to
one of the best business climates in the nation and a world class labor
pool in its own right. And the District of Columbia itself has a higher
percentage of college graduates than any state.

D.C.`s mayor is angling for the prize.

MAYOR MURIEL BOWSER (D), WASHINGTON, DC: We know that we have the talent
pool, the livable and walkable communities. The great arts and culture
themes that the employees say they want and Amazon (NASDAQ:AMZN) says it
wants.

COHN: But all the contenders have problems. Chief among them:
infrastructure. Roads are congested and crumbling. Traffic in parts of
the region among the worst in the country. And crime and other quality of
life issues could make it harder to attract new talent to an expensive
place to live.

Then again, Amazon`s CEO Jeff Bezos has a home here, and he owns the
“Washington Post (NYSE:WPO).” The hope here is that he might not mind
dividing his time between Washington state and Washington, D.C.

For NIGHTLY BUSINESS REPORT, I`m Scott Cohn in Montgomery County, Maryland.

(END VIDEOTAPE)

HERERA: Can`t wait to see.

Before we go here`s another look at the record day on Wall Street. The Dow
rose 223 points. The Nasdaq climbed 94. S&P 500 added 33. The gains for
the week overall for all three, better than 2 percent.

MATHISEN: Wow.

HERERA: Pretty darn solid.

MATHISEN: What a month it`s been. And it`s not even over.

HERERA: I know. That does it for us tonight. I`m Sue Herera. Thanks for
joining us.

MATHISEN: I`m Tyler Mathisen. Thanks from me as well. We`ll see you on
Monday.

END

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