Transcript: Nightly Business Report – March 7, 2018

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





House could announce steep tariffs tomorrow but they may not apply to every




European Union will fight back if tariffs are enacted and that could ripple

through the American economy and the global markets.


HERERA:  South of the border.  Why car imports from Mexico are not slowing



Those stories and more tonight on NIGHTLY BUSINESS REPORT for Wednesday,

March 7th.


MATHISEN:  Good evening, everyone, and welcome.


As a heavy snow fell on Wall Street, trade concerns clouded the stock

market.  There are reports tonight that the president will make official

his plans to levy tariffs on steel and aluminum imports as early as

tomorrow where the White House says there could be exemptions.





sign something by the end of the week and there are potential carve-outs

for Mexico and Canada based on national security and possibly other

countries as well based on that process.




MATHISEN:  And those words alleviated some concerns about an all-out trade

war which Wall Street does not want to see and stocks finished the day off

their lows.  The Dow Industrial Average did however fall 82 points to 24,

  1. It had been down about 300 points, maybe more midday.  The Nasdaq

ended with a gain of about 24, almost 25, and the S&P 500 essentially flat

down 1/3.


But investors won`t know all of the details about the tariffs until they

are announced and it`s a real concern for investors.


Bob Pisani explains.





day for traders.  Stocks meandered for most of the day over a number of big

issues that traders are having a hard time figuring out.  Who`s going to

replace Gary Cohn?  How does China play out?  How does NAFTA play out?


This is not something your average portfolio manager has an edge figuring

out.  Traders want to focus on earnings and global growth.  Two factors

that could quantify.  But in this environment, you have to become a trade



The most important people now are trade policy wonks.  Nobody`s talked to

them for ages.  So, it`s hard figuring out things.


The tariff story is a big problem for the stock market because it upsets

the main narrative that the global economy`s expanding and earnings are at

record high.  A trade war will reduce growth and it will endanger that

whole growth story.


So, with so much event rick trading is a light.  Stocks are meandering

around or fell in narrow range, the S&P 500 really did not break out until

later in the day when White House Press Secretary Sarah Huckabee Sanders

said that Canada and Mexico might be exempt from tariffs.


The president is expected to make a formal announcement as soon as tomorrow

possibly at noon.


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




HERERA:  As we mentioned, stocks fell sharply midday over concerns of a

possible trade war which were amplified by the departure of White House

economic adviser Gary Cohn, which we told you about last night.  He is seen

as pro-free trade and business-friendly, and his resignation let investors

with a lot of questions.


Kayla Tausche reports from Washington tonight.





departure comes as a sharp disagreement with the president over tariffs on

steel and aluminum emerged.  The president suggested conflict is good.



having two people with different points of view.


TAUSCHE:  But the division became untenable as Trump moved to make a spur

of the moment decision on tariffs which Cohn had argued would drive up

costs and anger allies.


Commerce Secretary Wilbur Ross said today the president could still tweak

the final decision.


WILBUR ROSS, COMMERCE SECRETARY:  He has a willingness to give an exemption

to Canada and to Mexico provided that we work things out in NAFTA.


TAUSCHE:  Crunching tariff numbers just one of the National Economic

Council`s jobs.  While Gary Cohn was its public face, roughly a dozen high

level officials work behind the scene.  Their reach extends from crafting

the administration`s approach to major summits like the G7 and APEC to

writing the infrastructure proposal that has since stalled on Capitol Hill.

With Cohn`s exit, an exit from the team he handpicked may follow.


An infrastructure event today, Chuck Schumer suggested the agenda has

already suffered from turnover.



hallowed out and the number of people capable of doing things, doing real

things, whether you agree or disagree ideologically is getting smaller and



TAUSCHE:  The White House effects to formalize the tariffs before the end

of the week.  Complicating the choice, some in the running like Larry

Kudlow or White House economist Kevin Hassett also oppose tariffs.


The job of NEC director does not require a Senate confirmation so the

president could act quickly if he chooses.


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




MATHISEN:  European Union officials will also pay close attention to what

the president officially decides on trade and as Willem Marx reports from

Brussels, the bloc already bristling is ready to respond.





trades and tariffs continued on both sides of the Atlantic Wednesday with

the European commissioner for trade, Cecilia Malmstrom, outlining potential

moves that the Europeans might make in response to potential proposals from

the Trump White House.


It was a three-pronged approach that she described in which initially they

would try and work with non-European allies to reverse any U.S. government

decision under the World Trade Organization rules, that was because she

said they weren`t buying the reason given by the Trump White House that

essentially this was an issue of national security given European

relationships with the U.S. when it comes to security itself.


The second element of the approach would be to try and protect European

steel producers from steel products that might be diverted from the U.S.

into Europe by trying to erect their own safeguard measures.  And the

third, targeting specific U.S. products.  There was a detailed list that

was sent around to European heads of state and government earlier this



Maelstrom would not comment on the specific of these products but they do

include food and drink, agricultural as well as specific steel products.

That totals around 2.8 billion euros, that`s around $3.5 billion, and she

said that was equivalent to the economic damage she expected the Europeans

to absorb from these steel and aluminum tariffs.


None of this concrete yet but she did say that any response the Europeans

did make would be firm and proportionate and indeed unlike the U.S. she

said, by the book.


For NIGHTLY BUSINESS REPORT, I`m Willem Marx in Brussels, Belgium.




HERERA:  The head of the Atlanta Fed says trade tariffs could hurt the U.S.

economy if they are enacted and in theory dampen the need for interest rate

hikes.  Raphael Bostic said levies could offset any economic momentum from

fiscal stimulus but he also added that it was important for the central

bank to take a wait-and-see approach since there are no concrete details

right now.


MATHISEN:  And ahead of the president`s official announcement, a number of

CEOs have come out both for and against potential tariffs.


Here`s some of what several of them had to say.




DAVID FARR, EMERSON ELECTRIC CEO:  I don`t like the concept of putting

tariffs.  If you want to do surgical actions go ahead and do surgical

actions.  Put doing broad tariffs like peanut butter is not good for any



STEVE SADOVE, FORMER SAKS CHAIRMAN & CEO:  If you get into a trade war with

retaliatory action it could dampen the effect and hurt the momentum that we

have right now and people are very worried about it.



circumstances of imports are threatening not only our internal economy but

our national security.


JACK FUSCO, CHENIERE CEO:  Steel and aluminum tariffs were just wrapping

you up a $30 billion construction effort so we doesn`t think it`s going to

have a meaningful impact on our business.  Just as an American, I would

hate to see any type of long-term trade war with any of our customers or

counter partners.


ROBERT KAPLAN, DALLAS FED PRESIDENT & CEO:  Our trading relationship with

Mexico and Canada is critical to U.S. competitiveness and U.S. jobs.  It`s

so clearly in the interest of the United States to have strong trading

relationships with both of those countries.  I`d be optimistic about how

this actually gets implemented.


SCOTT JONES, NOVA STEEL PRESIDENT:  I kind of agree with the Trump

administration`s doing and I think we would have chosen option number two,

which is targeted tariffs with some quotas, although we`re not too keen on

the quota but we would have accepted that.


AMIN ASSER, SAUDI ARAMCO CEO:  We do have plans for expansions in the U.S.

We heard about the tariffs and we`re still planning to proceed.


SERGIO MARCHIONNE, FIAT CHRYSLER CEO:  I`m suggesting we stop playing tit

for tat and we get a block pressure to go back down to normal, and we sit

down at the table and find a way to resolve this issue.  I don`t think we

have to escalate this into a full blown trade war.




HERERA:  Well, let`s turn now to our next guest for more on how potential

are tariffs and turmoil in Washington could impact the economy and markets.

We have Michael Yoshikami.  He is the founder and CEO of Destination Wealth

Management, and Jason Ware is the chief economist and chief investment

officer at Albion Financial.


Gentlemen, welcome.


Jason, let me start with you.  What are you going to be watching for

tomorrow with the president as he makes this announcement and if indeed,

tariffs are imposed, how damaging do you think they will be either to the

market or to the economy?



So, that`s the critical question, right, and, you know, what we`re looking

for tomorrow is just some more specifics around the plan.  What we have so

far is just this high level painting with broad strokes type of description

of what these tariffs might look like.  So, getting some details around

that is important.


But to address the second question which I think is a more important

question is what the potential`s impact on the economy.  You know, that

really depends.  You know, are we talking about tariffs on steel and

aluminum, full stop, that`s the end of story, there`s no additional goods

that are going to be coming down the pike.  There`s no additional tariffs

that will be added by the administration.  We don`t get any reactive

policies from our trade partners and indeed we might have some carve- outs

for Mexico and Canada.


If that`s the end of then the impact, the negative impact on the economy is

probably rather limited.  However, if this escalates into disputes become

ugly and he we see that our global trading partners start to have, you

know, reactions to these policies that are damaging to the basically the

fabric of global trade and this is just one of many policies to come, then

I think that`s where the real economic fallout happens.


MATHISEN:  Michael, early today, the market was selling off and the

explanation from some was that it was in reaction to the departure of Gary

Cohn who is perceived to be one of the globalists within the White House,

an anti-protectionist.  It seems to me that it was more what he stands for

than the man himself that was a concern here.


How worried would you be as an investor if Gary Cohn`s departure results in

the person who takes over for him being a hard line protectionist hawk?



worried.  I think that Gary Cohn was a moderating force and I think as you

correctly state, more of a free trade business-friendly appointment.  I

think it was widely applauded when he was appointed to the position and if

he moves out of that position, whoever replaces him is going to be the one

that really is going to set the tone for how the administration is going to

move forward in terms of trade policies.


This may be just a warning shot.  It might be just aluminum and steel, get

everyone`s attention and now maybe that helps us at the negotiating table.

Again, if it becomes more of a trend, this is just the first industry

that`s going to be impacted, that`s problematic.


I don`t think anybody should really be surprised that we`re seeing Gary

Cohn leave.  I mean, it was clear that he was very much against these

policies and I think it was inevitable that he would level and inevitable

the market would shudder a bit when he did.


HERERA:  Jason, if indeed, let`s assume that these trade tariffs are put in

place, how soon do you as an economist expect to see some sort of impact be

it minimal or more than that in economic growth?


WARE:  So, you know, again, difficult to predict.  I wish I had a real

clean answer there for you.  I think these things typically filter through

the economy with a bit of a lag.  That said, the plans for expanding if

you`re in the steel industry or aluminum industry might be more immediate.


I mean, we`ve already seen a number of CEOs come out and say, you know, if

these are enacted we plan to expand or we plan to hire, but I think the

backside of that and the more troubling side of that is what happens to the

industries that use steel and aluminum as inputs.  Their cost go up and how

are they going to respond to rising costs.  And the reality is that there

are far more people employed in those industries and indeed export

industries than there are in steel and aluminum.


So, the ripple through the economy will take time, but on balance, it`s

likely to be a net negative given what I just described.  So it`s something

that bears watching.


MATHISEN:  Michael, quick answer here.  You put money, real money, to work

every single day.  Are you doing anything different today in light of all

that`s happened over the past 30, 35 days than you were in late January?


YOSHIKAMI:  Well, we certainly in terms of trade policy, we`re looking at

companies that are going to be impacted down stream by these types of

behaviors.  I think the impact on the economy is going to be — it`s going

to take time for that to filter through.  The impact on psychology, both

the market as well as CEOs that are looking at spending in terms of

infrastructure spending, in aluminum, steel and whatever down stream

industry might be, I think that impact is going to be real or immediate,

and it`s something we certainly factor in to our strategies.


HERERA:  Michael, thank you very much for joining us.  Jason, thank you as



Gentlemen —


YOSHIKAMI:  Thank you.


WARE:  Thank you.


MATHISEN:  All right.  It`s time to take a look at some of today`s upgrades

and downgrades.


Deutsche Banks says General Electric (NYSE:GE) is one of the companies that

could be hurt the most if the Trump administration`s tariffs are enacted.

The analyst maintains his sale rating on that stock.  In response, GE says

forget about it.  The report it says is completely ungrounded.  The company

says the impact would be minimal.  Shares of GE fell fractionally to



Netflix (NASDAQ:NFLX) saw its rating cut the hold from buy at Stifel.  The

analyst says the stock price is risen too far too fast, as simple as that.

However, the firm lifted its price target on the stock, to $325, that`s

roughly where shares are right now.  Shares of Netflix (NASDAQ:NFLX) did

fall 1 percent today to $321 and change.


HERERA:  At least 14 analysts raise their target prize on Autodesk

(NASDAQ:ADSK).  One such firm was RBC which pointed to the software

company`s better than expected quarterly results and also its subscription

business.  RBC put $156 price target on that stock.  Autodesk (NASDAQ:ADSK)

shares gained 14 percent to $137.70.


Match Group`s price target was hiked to $50 a share by Jefferies.  The

analyst says the stock which has risen more than 150 percent over the past

year could go even higher, but he adds that stock is not cheap.  Match

Group shares were up 3 percent to 43.81.


MATHISEN:  And coming up, with all the talk of tariffs and NAFTA, U.S.

automakers have a big stake in cars made south of the border.  A look at

how Mexican auto production is faring.




HERERA:  A new survey from the Federal Reserve describes inflation

pressures as moderate.  The Beige Book which is an anecdotal look at the

economy across the country points to tightness in the labor market and an

increase in wage growth.  The Central Bank said the economy overall was

growing at a modest to moderate pace.  The report is expected to bolster

the case for an interest rate increase when policy makers meet later this



MATHISEN:  The labor market remains robust.  Private sectors employers

added 235,000 jobs in February.  This according to the payroll processor

ADP.  That was more than economists expected.  The gains led by leisure and

hospitality and the retail sectors as consumer spending increased.


HERERA:  Well, the trade deficit increased to a more than nine-year high in

January.  The Commerce Department reports that the trade gap rows 5 percent

to more than $56 billion.  That was more than the expected short fall with

China which widen sharply.


MATHISEN:  Well, while the U.S. threatens to slap a tariff on steel and

aluminum imports, it is also threatening to rip up the North American Free

Trade Agreement and if NAFTA goes away or is radically altered, it would

have a major impact, especially for automakers.  Despite the threat of

Mexican made autos being slapped with a tariff, auto production south of

the border is not slowing down.


Phil LeBeau has more.





production is surging, up more than 6 percent this year.  That may come as

a surprise given the heated rhetoric from President Trump who has

threatened to slap a border tax on cars and trucks built south of the

border and sold in the U.S.


Trump`s biggest complaint, as Mexico`s auto production has shot up to

nearly 4 million vehicles a year, so have auto imports.  Last year, GM

exported more vehicles to Mexico than any other automaker and it has no

plans to shift production from Mexico to the U.S.


MARY BARRA, GENERAL MOTORS CHAIRMAN & CEO:  I believe that when you look at

the complexity and the long lean business that we`re in, those shifts just

aren`t economical.


LEBEAU:  The fact is GM makes a huge profit in pickup truck that it imports

from Mexico.  But it`s not just GM.  Fiat Chrysler has also increased

production south of the border, while Audi recently opened a plant there

and soon, Mercedes and BMW will do the same thing.


All of this as negotiators from the U.S., Canada and Mexico are struggling

to find a way to rework NAFTA, a trade pact that even the automakers

believe should be updated.


BARRA:  When you think about NAFTA 25 years ago and you think about the

technology that`s in the car today, I think there`s rules and things we can

modernize with tracing, et cetera that will make less of administrative

burden but still accomplish what the administration and the three countries



LEBEAU:  Further complicating the NAFTA talks is the question of what

happens if the Trump administration imposes a tariff on imported steel and

aluminum.  Does that mean that vehicles built in Mexico would be hit with a

tax when they`re shipped to the U.S.?  If so, that could finally slow down

the flow of vehicles built south of the border.






HERERA:  ExxonMobil (NYSE:XOM) says earnings could double by 2025 and

that`s where we begin tonight`s “Market Focus”.


The oil giant told investors that if oil prices remain around the current

$60 a barrel price, the company could see profits grow more than 100

percent by 2025.  Exxon said key drivers of growth are expected to come

from foreign and domestic exploration projects as well as some plant

expansions.  The shares fell 2.5 percent to $74.26.


Dollar Tree (NASDAQ:DLTR) reported a rise in sales and profits during the

holiday quarter but the results didn`t meet expectations.  The discount

retailer is also forecasting full year profits below estimates.  Dollar

Tree (NASDAQ:DLTR) shares were off more than 14 percent to $89.25.


Abercrombie and Fitch (NYSE:ANF) is beginning to see its sales pick up.

The clothing retailer reported same store sales that rose for the first

time in five years as results benefited from fewer stores and stronger

demand.  The company has been closing stores and renovating others and

improving its online systems.  The shares rose nearly 12 percent today to



MATHISEN:  Well, strong bourbon and whiskey sales help results top

expectations at Brown Foreman.  The maker of Jack Daniels also reaffirmed

its full year outlook for sales growth.  But the company is wary of being

caught up until a trade dispute.  A European official last week cited

Kentucky bourbon as a possible target of retaliation if the president`s

steel and aluminum tariffs take effect.


Brown Foreman shares fell more than 5 percent to $52.89.


After the bell, the casino operator Caesar`s reported a quarterly profit

that was helped by the new tax law.  The company also saw sales rise across

all of its divisions.  Shares initially rose in extended hours and also

finished the regular day up 1 percent at $12.50.


Also out after the bell, Costco`s rise in same store sales that came in

slightly below analyst`s estimates.  The wholesale retailer also delivered

a profit miss but overall revenue was better than expected.  Shares

initially higher in after-hours then they dipped just a bit.  They ended

the regular day down 2 percent at $187.36.


HERERA:  Coming up, the gender gap in the workplace and how to close it.




HERERA:  Amazon (NASDAQ:AMZN) is taking aim at Walmart in a move to court

lower income shoppers.  The online retailer is offering a new discount of

more than 50 percent on its prime membership to Medicaid recipients.  The

goal, according to the company, is to give more people access to the

digital economy.  Some also say that by targeting this demographic, Amazon

(NASDAQ:AMZN) can continue to grow in the U.S.


MATHISEN:  And ahead of the International Women`s Day, two new surveys

examine the gender gap in the workplace and how to close it.


Julia Boorstin has our report.





when it comes to women in the workplace, things are much worse than people

think, but on the upside, there are plenty of solutions to help close the

gaps.  Misperception about the gender gap are massive according to a new

survey by the organizers of International Women`s Day conducted by IPSOS.

People vastly underestimate how long it will take to achieve equal pay

between men and women based on the current pace of change.


CHRIS JACKSON, IPSOS:  Understanding the misconceptions in the pay gap are

important because right now Americans sort of feel like its getting better

and feel like it`s going to be something that`s going to disappear in their

lifetime in the next 10 years.  The real answer is that the pay gap`s not

going to disappear until pretty much all of us aren`t working any more.


BOORSTIN:  And it extends to corporate leadership as well.  Survey

responders believe nearly a fifth of the world`s top 500 companies have

female CEOs, while in reality, the actual figure is just 3 percent.


So, what will it take to change that ratio?  Another survey is out today

from Accenture with recommendations on what policies companies can

implement to help close the gap.  Accenture finding companies that are

transparent are likely to achieve workplace equality much faster.


That means leaders should communicate about everything from the gender

breakdown across their ranks to their specific goals around hiring and

closing the gender gap.


One surprise is that just improving maternity leave can actually hold women

back in their careers but encouraging men to take parental leave actually

improves women`s advancement.


And women are more likely to advance if they`re involved with the women`s

network, with over 80 percent of respondents say their company does not.

An added benefit, changes that help women such as the flexibility to work

from home should benefit everyone.


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




HERERA:  And that does it for us tonight.  I`m Sue Herera.  Thanks for

watching. And we want to remind you.  This is the time of year your public television

station seeks your support.


MATHIKSEN:  And I`m Tyler Mathisen.  We thank you for your support and we

will also see you tomorrow.


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