SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Trade tensions. The White
House could announce steep tariffs tomorrow but they may not apply to every
TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Ready to retaliate. The
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,
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.
(BEGIN VIDEO CLIP)
SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: The president will
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.
(END VIDEO CLIP)
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,
- 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
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.
BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: It was another tough
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.
KAYLA TAUSCHE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Gary Cohn`s
departure comes as a sharp disagreement with the president over tariffs on
steel and aluminum emerged. The president suggested conflict is good.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I like conflict. I like
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.
SEN. CHARLES SCHUMER (D-NY), MINORITY LEADER: The White House is getting
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.
WILLEM MARX, NIGHTLY BUSINESS REPORT CORRESPONDENT: The war of words over
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
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.
(BEGIN VIDEO CLIP)
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.
HANK BURNETTE, FORMER BETHLEHEM STEEL CEO: Levels of imports and the
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
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.
(END VIDEO CLIP)
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.
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?
JASON WARE, CHIEF ECONOMIST & CHIEF INVESTMENT OFFICER, ALBION FINANCIAL:
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?
MICHAEL YOSHIKAMI, DESTINATION WEALTH MANAGEMENT FOUNDER & CEO: I`d be
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
YOSHIKAMI: Thank you.
WARE: Thank you.
MATHISEN: All right. It`s time to take a look at some of today`s upgrades
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.
PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT: Mexico`s auto
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
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.
Phil LeBeau, NIGHTLY BUSINESS REPORT, Chicago.
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.
JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: The bad news is
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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