Transcript: Nightly Business Report – June 8, 2018

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Sue Herera and Bill
Griffeth.

BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Arctic chill. The G7 meets
in Quebec, but as trade tensions with the U.S. mount, the world will be
watching. Will the president get a frosty reception?

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: New boss. Verizon`s deal-
making CEO retires, replaced by an executive who could reshape the Dow
component`s future.

GRIFFETH: Reclaiming the crown. In the race to build the world`s most
powerful computer, the U.S. is back on top.

Those stories and much more tonight on NIGHTLY BUSINESS REPORT for this
Friday, June the 8th.

HERERA: Good evening, everyone, and welcome.

Well, things were a little chilly north of the border. World leaders
gathered in Quebec for a meeting of the G7, a summit of the major
industrialized nations. Historically, global issues are discussed.
There`s usually no drama and little tension. But this year, it`s different
and it`s because of mounting trade tensions between the U.S. and some of
its closest allies.

Kayla Tausche is in Quebec City for us tonight.

(BEGIN VIDEOTAPE)

KAYLA TAUSCHE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Blue skies and
smiles belied the discord behind the scenes in Charlevoix, tensions boiling
over among allies of the United States after President Trump imposed
tariffs on steel and aluminum imports citing national security risk. U.K.
Prime Minister Theresa May called for an immediate rollback. Europeans
pushed the U.S. to abide by world trading rules that have been in place for
over 20 years.

As world leaders met, companies pushed for action. In the U.S., the
Business Roundtable urged engagement, not friction with allies. In Canada,
executives like Peter Simons, the CEO of Canada`s oldest family-run
business, worries leaders are missing the opportunity to move forward.

PETER SIMONS, LA MAISON SIMONS CEO: My greatest fear is that we don`t have
any historical perspective and we continue to apply ideas past that —
ideas that are obsolete to modern day problems.

TAUSCHE: The G-7 family feud follows a string of defeats for European
leaders, failing to keep the U.S. in the Iran nuclear deal and the Paris
climate accord.

Before leaving, President Trump added a new curveball for the one-time
group of eight, bringing Russia back into the fold.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Russia should be in the
meeting. It should be a part of it. You know, whether you like it or not,
and it may not be politically correct, but we have a world to run and in
the G-7, which used to be the G-8, they threw Russia out. They should let
Russia come back in, because we should have Russia at the negotiating
table.

TAUSCHE: Russia was expelled in 2014 after invading Crimea. European
officials say the U.S. should strengthen the G-7 instead of adding new
challenges. Canada`s foreign ministers said Russia continues to flout the
rules of liberal democracies.

CHRYSTIA FREELAND, CANADIAN FOREIGN MINISTER: There are no grounds
whatsoever for bringing Russia with its current behavior back into the G-7.

At the end of the G-7, countries traditionally issue a joint communique, a
pledge towards shared priorities. In the past, free trade has been among
them. Freeland said that joint pledges to the works and a White House
official said it`s still the hope the U.S. signs on.

For NIGHTLY BUSINESS REPORT, I`m Kayla Tausche in Quebec City, Canada.

(END VIDEOTAPE)

GRIFFETH: Meanwhile, the U.S. pork industry finds itself in the middle of
the tough talk on trade percent tariffs imposed by China have not been
followed by terrorists from Mexico, and that is starting to squeeze
American farmers.

Jane Wells is in Des Moines, Iowa, for us tonight.

(BEGIN VIDEOTAPE)

JANE WELLS, NIGHTLY BUSINESS REPORT CORRESPONDENT: America`s hog producers
have a beef with the trade war.

RANDY SPRONK, SPRONK BROTHERS FARMS: Every time we get a free trade
agreement, our exports are growing. And so, you know, exports are a very
important part of my business.

WELLS: This is one industry that has a trade surplus. Last year`s exports
reached record volumes which may be one reason why it`s now being targeted
with retaliatory tariffs by some of its biggest international customers.

If you think of the pork industry like a pig, more than a quarter of it is
exports and percent of that is Mexico and China. That`s the problem.

Mexico is America`s largest international buyer by volume of American pork,
second-largest by the amount of money it spends, $1.5 billion last year.
And China is right behind it.

NATE BROWN, VITA PLUS CORP. SALES MANAGER: Our producers depend on global
markets and we need those global markets to be successful as an industry.

WELLS: There are a lot of Trump supporters here at the World Pork Expo,
and despite the tariffs, you`d be hard-pressed to find anyone expressing
anger at the president.

UNIDENTIFIED MALE: Sure, it`s going to be a difficult time. We`re going
to take one for the team here, but I really believe that will survive
through and be stronger as we come out of this.

RAY RICE, OKLAHOMA HOG FARMER: I think probably, sure, it`s going to have
some effect. But, you know, on the other hand, we need we need fair play
in this deal straight across the board. So I guess I support our president
on that, on that policy.

WELLS: Still, tariffs may make U.S. pork less competitive at a time when
supplies are up and production is at record levels. With less bacon going
abroad, more of it, will stay home, prices will go down and at least
that`ll be good news for consumers this summer.

For NIGHTLY BUSINESS REPORT, Jane Wells, Des Moines, Iowa.

(END VIDEOTAPE)

GRIFFETH: By the way, “Reuters” is reporting that Mexican authorities will
allow you as farmers to sell some pork to Mexico through import quotas
despite the tariffs.

HERERA: On Wall Street, investors were able to shrug off some of the
tensions surrounding the G-7, sending stocks to a higher close on the last
trading day of the week. The Dow Jones Industrial Average gained 75 points
to 25,316, the Nasdaq added 10, and the S&P 500 was up eight.

For the week, the major indexes were all solidly higher. The Dow posted
its largest weekly gain in three months.

GRIFFETH: Big changes are coming to Verizon (NYSE:VZ). The Dow component
has picked its next CEO, he`s a technology expert who could reshape that
company`s future. That news sent shares of Verizon (NYSE:VZ) up slightly
in today`s trade.

Julia Boorstin takes a look now at the man who will lead the nation`s
largest wireless carrier.

(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: A changing of the
guard at Verizon (NYSE:VZ). Lowell McAdam will hand the reins over to
Verizon`s chief technology officer Hans Vestberg on August 1st, showing how
the leading wireless carrier is prioritizing its technology, its next-
generation wireless network 5G, to stay ahead of rivals.

Vestberg, formerly the CEO of Ericsson, joined the company last year to
oversee the build-out of verizon`s fiber infrastructure and 5G.

Here`s what Tim Armstrong, the CEO Verizon`s Oath division, all of its
digital content and ad businesses, said about the appointment.

TIM ARMSTRONG, OATH CEO: Impact is great, because it`s really about 5G and
Verizon`s been a leader in 1G to 4G; 5G is really where the world`s going
in today`s announcement with Lowell stepping up to executive chairman and
Hans coming in as CEO really tells you how serious we are about 5G, and
building out the next layer of connected consumers.

For us, this is a just a pure signal, a pure leadership sign that Verizon
(NYSE:VZ) is going to be the leader in 5G.

BOORSTIN: Outgoing CEO McAdams saying of Vestberg that the board wanted
somebody to be innovative with a fresh set of eyes. This comes as Verizon
(NYSE:VZ) loses wireless subscribers to its number three mobile carrier, T-
Mobile, which is positioning itself as lower-cost with more perks. It
recently announced a merger with the number four carriers Sprint.

Vestberg saying that was unprecedented changes in the way users interact in
the digital world, the companies racing ahead to remain at the forefront of
technology, connectivity and mobility.

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

(END VIDEOTAPE)

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

Pfizer (NYSE:PFE) shares were initiated with an overweight rating in new
coverage at Canter Fitzgerald. The analyst expects Pfizer (NYSE:PFE) to
have respectable earnings growth despite the effect of losing exclusivity
for certain products. The price target is $45. The stock finished
slightly higher to $36.67.

The same analysts initiated coverage of Eli Lilly (NYSE:LLY) with an
overweight rating. The firm cites growth prospects for some key drugs.
The price target is $100. The shares rose a fraction to $86.08.

GRIFFETH: Dow component Chevron (NYSE:CVX) was initiated with a buy rating
in new coverage at Mizuho Securities. The analyst there expects the
company`s annual oil production to grow, thanks to what he calls Chevron`s
mega asset areas. Price target, $145. That stock was pressured though
today by decline in oil prices. It fell fractionally to $126.44.

Domino`s Pizza`s rating was cut to hold from buy at Maxim. The analyst
cites the stock`s valuation and the potential for higher labor costs as
well. That price target now, $270, and that`s where the stock closed
essentially today at $270.04.

HERERA: Still ahead, why our market monitor says small cap energy stocks
could offer some big returns.

(MUSIC)

GRIFFETH: Argentina has agreed to a $50 billion loan from the
International Monetary Fund. The deal requires Argentina to cut its fiscal
deficit and lower its inflation rate. The loan amount was larger than
expected. It is more than double what is usually granted in similar
arrangements. The agreement though is being viewed by some as a vote of
confidence in Argentina`s reforms.

HERERA: A number of Democratic senators are calling for an investigation
into President Trump`s tweet before last Friday`s employment report. In
that tweet, the president said he was, quote, looking forward to the
report, which he had already viewed.

The senators questioned whether the president`s tweet could have signified
a positive report, potentially allowing for market manipulation. But they
want the Bureau of Labor Statistics, the SEC, and the CFTC and the White
House Council of Economic Advisers all to look into that matter.

GRIFFETH: Elsewhere, the Trump administration said today it will no longer
defend the Affordable Care Act from a challenge filed by 20 states,
resulting in yet another new blow to the health law. The White House
believes that the law`s individual mandate is unconstitutional and that
parts of the law are invalid and the Justice Department is seeking to
strike down key elements of the act.

This latest legal filing creates more uncertainty for insurers who are
trying to set rates for next year.

HERERA: The world`s fastest computer can do in a second what it would take
you and I billions of years to do. And the company behind this super
computing machine is a name familiar to investors.

Dominic Chu is in Oak Ridge, Tennessee, for us tonight.

(BEGIN VIDEOTAPE)

DOMINIC CHU, NIGHTLY BUSINESS REPORT CORRESPONDENT: Which country has the
best supercomputer? You`d likely say it was the United States and for
years we did until we lost that crown to China. But that changed today
when the U.S. reclaimed the title here at the Oak Ridge National Laboratory
in Tennessee.

Thanks to Summit, that`s the name the Energy Department has given this
latest pinnacle of human achievement. Summit is the collaboration between
it, IBM and Nvidia and the chiefs of all three gathered to discuss.

GINNI ROMETTY, IBM CEO: This is a great symbol of our ability to change
how the world works and together, we`re going to solve what are some of the
most important problems. This was not illustrative. We are going to work
on Alzheimer`s and finding the cures, we are going to look at new materials
for energy.

CHU: A big driving force behind the development of Summit is to maintain
American superiority in technology, something that government is very
focused on.

RICK PERRY, ENERGY SECRETARY: This competition is real. It`s not going
away. The Chinese have the two fastest computers in the world. The Swiss
are next, and I think the Japanese and we`re in fifth place. But with this
opening today, we`re going to move back up to the number one spot.

CHU: This is the epicenter of Summit. All of these computer banks fill up
a room roughly the size of two tennis courts, and all of those computers
require a lot of cooling power. So there`s roughly 22,000 gallons of water
flowing through here to cool all of these systems. That`s roughly how much
water there is in a residential swimming pool.

And, by the way, there is enough fiber-optic cable running through these
computers to stretch a hundred and eighty miles. For reference that`s
roughly the distance between Knoxville and Nashville, Tennessee.

But this isn`t just about who has the most computing power. Some CEOs have
their eyes on an even bigger goal.

JENSEN HUANG, NVIDIA (NASDAQ:NVDA) CEO: This is not the space race. This
is the race to knowledge.

CHU: Knowledge is power and the summit supercomputer is the first of its
kind built specifically for artificial intelligence applications.

For NIGHTLY BUSINESS REPORT, I`m Dominic Chu, Oak Ridge, Tennessee.

(END VIDEOTAPE)

GRIFFETH: Philip Morris is hiking its dividend and that`s where we begin
tonight`s “Market Focus”.

The cigarette makers said that it was raising its quarterly dividend six
and a half percent to $1.14 a share. The new yield on that dividend will
be just under six percent as a result. Shares of Philip Morris rose more
than two percent today to $79.42.

General Electric (NYSE:GE) is leaving its dividend unchanged at least for
now. The company said that it would pay shareholders 12 cents a share for
the current quarter, the same as last quarter. GE as you may remember cut
its dividend in half last November, and there have been fears recently that
the company which is in the midst of a turnaround would have to cut it once
again — but not right now.

Shares of GE rose 1 percent today to $13.93.

And E.U. regulators are reportedly on track to green-light Comcast
(NASDAQ:CMCSA) (NYSE:CCS) bid for European TV company Sky. “Reuters” says
that the approval will come without concessions as a matter of fact.
Comcast (NASDAQ:CMCSA) (NYSE:CCS) shares finished up a fraction $32.08.

And just as a reminder, Comcast (NASDAQ:CMCSA) (NYSE:CCS) is the parent
company of CNBC, which produces this program.

HERERA: Apple`s supplier Dialog Semiconductor is reportedly in talks with
the touch screen technology maker Synaptics (NASDAQ:SYNA) about a potential
merger. The news was first reported by Bloomberg. A separate report from
CNBC says Synaptics (NASDAQ:SYNA) rejected an offer from Dialogic
(NASDAQ:DLGC) in March, which valued the company at $59 a share, and that a
new deal would likely be at a higher price.

Shares of Synaptics (NASDAQ:SYNA) climbed 10 percent to $47.17.

And shares of Stitch Fix continued to rally today after the clothing
subscription service blew right past Wall Street estimates after the bail
last night. Today, shares finished up 26-1/2 percent to $24.88.

GRIFFETH: This week`s market monitor says he is putting his money to work
in small cap energy names that he believes are mostly isolated from ongoing
trade tensions. He also thinks that they could end the year 20 percent
higher.

Last time he was with us was a year ago, in June of 2017. At that time, he
picked Amazon (NASDAQ:AMZN) which over the last year is up 68 percent. The
iShares Dow Jones U.S. Regional Banks ETF which has grown by 19 percent in
the last year, and the First Trust (NYSE:FFA) Stocks European Select
Dividend ETF, which is higher by 6 percent in the last year.

We welcome back Steve Dudash, the president of IHT Wealth Management.

Good to see you again. Welcome back.

STEVEN DUDASH, PRESIDENT, IHT WEALTH MANAGEMENT: Nice to see you, Bill.

GRIFFETH: The small cap energy, are you just trying to avoid trade
tensions by going with these?

DUDASH: I mean, listen, we`re in a trade war. It`s not fun to talk about
and we`re in the early innings of a trade war and we can debate the
politics of it, but the reality is we have to organize our portfolios
around it and like we were talking about before, last year.

We`ve been talking about jumping in small caps for 15 months now, and if
you would have done that, you`d been up over 8 percent over what the market
did last year, and we both know the market was killing it last year, and
that`s because they are better suited for this political environment we`re
in and we just have to accept that, and so we`re trying to take advantage
of that and try to avoid some of the pitfalls that are probably going to
come in the next year or two as the war, you know, progresses.

HERERA: All right. So we gave us three picks let`s start with Parsley
Energy. Why do you like it?

DUDASH: Yes. OK, Parsley Energy of the three, it`s the most generic to be
honest with you. It`s a fracking play, and you could pick a several in
that same sector. But energy prices, like we`ve been talking about, are
going to be hitting the 60s, 70s for quite some time. We were out there
when it was in the 20s saying that`s not a realistic number, it has to get
up to the 60s and 70s again and it has.

And so, we`re taking advantage of that and let`s be honest U.S. fracking
isn`t going away. It`s going to continue to just continue to grow in this
environment. They make a lot of money on it.

So, this is a smaller again tactical play. This is not a long-term hold.
This one is one of those you`re in for a little while and you got to get
out because they could be out of business in five or ten years as the
environment changes. No doubt.

GRIFFETH: All right. What about Cenovus Energy (NYSE:CVE)?

DUDASH: Cenovus, yes, they are just like Amazon (NASDAQ:AMZN). When
you`re talking about Amazon (NASDAQ:AMZN), people thought it was super
pricey when we were saying to buy into it, but they had cornered the market
in something. They can out-compete their peers.

Cenovus is the same story. They`ve they can pull Canadian oil sands out
cheaper than everybody else they get it out in the $30, $35 a barrel range
again. Prices are going to be in 60s and 70s for some time.

They can make more money. They got rid of Conoco or they divested from
each other. So before they had to hit $50-something barrel, now they`re
$30-something a barrel. They`re going to profit more than their peers.
They can do something cheaper. They can do something more efficient than
their competitors.

HERERA: And let`s finish with Solaris Oilfield Infrastructure.

DUDASH: OK. Back to the fracking play and they happen to be the ones who
provide the way of getting the oil out of the ground and the infrastructure
that`s involved in it, the technology that`s involved in it. They`re the
backbone for that whole industry. That`s probably the safest of the bunch.
That`s the one that`s going to be around for a long time, continuing to do,
until fracking doesn`t exist in the U.S. anymore which, you know, it`s
going to be quite some time.

So if you`re looking for the safest of the three, that`s the one you could
put money in and ride out for some time.

GRIFFETH: Always good to see you, Steve. Thanks.

Steven Dudash with IHT Wealth Management.

DUDASH: I appreciate it, Bill.

GRIFFETH: And for more on his picks, you can head to our Website at
NBR.com.

HERERA: Anthony Bourdain was a chef, an author, a travel host and quite a
storyteller, who today was found dead of an apparent suicide.

Robert Frank takes a look at the man who has turned his name into a
powerful personal brand.

(BEGIN VIDEOTAPE)

ROBERT FRANK, NIGHTLY BUSINESS REPORT CORRESPONDENT: He was called a
celebrity chef, but like everything else in his life, Anthony Bourdain
defied convention in his brand and his business. Bourdain came to success
later in life at the age of 44.

After a troubled youth with drug addiction and financial troubles, Bourdain
worked in various New York kitchens and eventually rose to become executive
chef at Brasserie LaSalle in 1998.

But his big break was the book “Kitchen Confidential” which started as an
article in the “New Yorker” and became a best-seller in 2000, selling over
a million copies. He leveraged that success into a dozen more books and
cookbooks, appearances on “Top Chef”, and three of his own TV shows. His
most recent show, “Anthony Bourdain: Parts Unknown” on CNN was in
production for its 11th season when he died. The show won five Emmy
Awards.

Now unlike many food celebs, Bourdain did not launch a chain of restaurants
or food products. He didn`t even have a restaurant. He did have plans for
what he called Bourdain Market, a giant food hall in Lower Manhattan, but
the project fell through last year. He also invested in food and travel
site Roads and Kingdoms.

Now, Bourdain said he preferred to be called a storyteller, taking viewers
to his favorite secret hideaways in remote corners of the world and asking
what he said were two fundamental questions, what makes you happy and what
do you eat? Bourdain is survived by his 11-year-old daughter and ex-wife
Ottavia Busia.

For NIGHTLY BUSINESS REPORT, I`m Robert Frank.

(END VIDEOTAPE)

GRIFFETH: And NBR will be right back.

(MUSIC)

HERERA: Facebook (NASDAQ:FB) reportedly gave companies access to user
records well after the company said it had shut off access for other
developers. According to “The Wall Street Journal”, the company struck
data sharing deals with a small number of firms. Those deals included
information about a user`s Facebook (NASDAQ:FB) friends, including phone
numbers. The report comes as lawmakers try to hold Facebook (NASDAQ:FB)
accountable for the way that it manages its user information.

GRIFFETH: Kia is recalling about a half a million vehicles because of
potentially faulty airbags. The automaker says an electronic glitch may
prevent the air bags from deploying in the event of a crash. The recall
follows a federal investigation into four deaths and six injuries. Kia has
now recalled more than one million vehicles in the U.S. to address this
issue.

HERERA: Well, it is off to the races this weekend. The 3-year-old colt
Justify will be competing for horse racing history at the Belmont Stakes
tomorrow, hoping to become only the second horse since 1978 to capture the
Triple Crown.

Eric Chemi is in Elmont, New York, tonight.

(BEGIN VIDEOTAPE)

ERIC CHEMI, NIGHTLY BUSINESS REPORT CORRESPONDENT: The Belmont Stakes is
not just about the excitement. It`s also big business with millions more
dollars at play, because of the Triple Crown. Betting on the race could
reach a hundred million dollars, double a typical year. The Belmont
racetrack is sold out of its 90,000 seats, and TV viewership is expected to
skyrocket to an Olympic-sized 20 million people watching, rather than a
typical 6 million.

TEO AL KHING, JUSTIFY CO-OWNER: As far as the members or the China Horse
Club is concerned, the Triple Crown is a new concept for everybody. So
when we explain to them it`s like a Chinese Yao Ming winning the NBA.

CHEMI: The horse`s owners could cash in even more. Windstar Farms is the
primary owner of Justify and it`s sold sponsorship rights to a private jet
company Wheels Up for a record amount in the seven figures.

BEN STURNER, LEVERAGE AGENCY CEO: This is the largest deal in the history
of horse-racing full horse. We did the deal for American Pharoah, and we
did the deal for California Chrome. We did it with Skechers with Chrome,
and it was a big deal. We did Monster, the big deal with American Pharoah.

And Wheels Up, this is a bigger deal, but they get much more. They get
much more. They get the pants, they get the hat, they get the blanket on
the horse.

CHEMI: The race winner only gets $900,000, but the big money is in the
breeding rights long after the Belmont. It`s expected that Justify`s
breeding rights could be sold for a record $60 million.

ELLIOTT WALDEN, JUSTIFY MAJORITY OWNER: The way you look at buying horses
and owning horses is it`s really about the big horse. All the horses in a
group don`t make darn profit, but if you can have that one, you can have
that special horse that can get you a grade one win.

Our goal is to have one out of each crop. If you get two or three, that`s
a bonus. But if you get one, you can pay for the whole crop that you`ve
bought that year.

CHEMI: For everyone involved in Saturday`s big race, the Triple Crown
means a lot more money.

For NIGHTLY BUSINESS REPORT, I`m Eric Chemi in Elmont, New York.

(END VIDEOTAPE)

GRIFFETH: And before we go, here`s another look of the day on Wall Street.
The Dow gained 75 points to close out a pretty strong week. The Nasdaq
added 10, and the S&P 500 was up eight. And for the week, the major
averages were all solidly higher, first time in a while.

HERERA: I know.

All right. Watch the Belmont.

GRIFFETH: We`ll be on it.

HERERA: That`s NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera.
Thanks for joining us.

And we want to remind you, this is the time of year your public television
station seeks your support.

GRIFFETH: I`m Bill Griffeth and we do thank you very much for that
support. Have a great weekend, everybody. See you again Monday.

END

Nightly Business Report transcripts and video are available on-line post
broadcast at http://nbr.com. The program is transcribed by ASC Services II
Media, LLC. Updates may be posted at a later date. The views of our guests
and commentators are their own and do not necessarily represent the views
of Nightly Business Report, or CNBC, Inc. Information presented on Nightly
Business Report is not and should not be considered as investment advice.
(c) 2018 CNBC, Inc.

 

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