Transcript: Nightly Business Report – June 18, 2018

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

Dow closes lower as trade tensions linger and the risk to the economy rise.

You think you`re being tracked? Well, the answer may be yes, even if you
turn off your locator on your smartphone.

Paying with plastic. As interest rates go up, there are ways to lower high
credit card fees.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for this Monday,
June the 18th.

And we do bid you good evening, everybody. Sue is off tonight.

You`re going to hear the word “trade” a lot because the standoff between
the world`s two largest economies continues to weigh on stocks, especially
some large cap names with global exposure that make up the Dow Jones
Industrial Average. Market uncertainty has been rising, of course, over
the past few months because of the trade friction between the U.S. and
China. And today, investors were once again cautious, unwilling to take on
much risk.

The Dow was down more than 200 points for a time today. When all was said
and done, it fell 103, fell back below 25,000, the Nasdaq eked out a
fractional gain and the S&P down five points.

Bob Pisani has more on what is pressuring stocks.


but closed around session highs. With the Nasdaq small caps both eking out
small gains. Tech and FANG stocks looked to be flipping the market early
on, but banks failed to rally although they moved up towards the close.
Investors are worried about the growing threat of an all-out trade war
between the U.S. and China and they sift through the list of U.S. products
China has rolled out in retaliation — chip makers, automakers, soybean
farmers, they`re among the victims of this latest trade skirmish.

Semiconductor names like Intel (NASDAQ:INTC), Broadcom (NASDAQ:BRCM) and
Lam Research (NASDAQ:LRCX) all came under pressure on those concerns.
Intel (NASDAQ:INTC) also got downgraded by one Wall Street a firm. And if
you still think trade uncertainty is no big deal, small caps tell a
different story. The small cap Russell 2000 index is up about 11 percent.
More than twice what the S&P 500 is up this quarter. Small caps have less
exposure to international trade war than big caps.

Finally, one other factor contributing to the weakness could be
seasonality. According to the Stock Traders` Almanac, the Dow has been
down roughly 1 percent in the week following June option expirations day
which was on Friday. Remember, that`s typically one of the big volume days
of the year.

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


GRIFFETH: Now, the Commerce Department today announced an investigation
into the dumping of steel propane cylinders from China, Taiwan and
Thailand. Just the latest salvo in escalating trade tensions that has many
wondering what comes next when it comes to the White House`s trade

Kayla Tausche is in Washington for us tonight.


Mike Pompeo said the Trump administration`s foreign policy including its
tough stance on trade is in the U.S.`s interest.

MIKE POMPEO, SECRETARY OF STATE: We do our best to call out unfair
economic behavior as well, and break down barriers to market entry so that
our companies have fair reciprocal opportunities to sell and to market all
around the world.

TAUSCHE: And he minced no words calling out China for producing excess
steel and aluminum and sending it to the U.S. at prices so low it puts U.S.
companies out of business.

POMPEO: This is predatory economics 101.

TAUSCHE: It`s not just China in the White House`s crosshairs. Imports
from G-7 allies Germany, France, the U.K., Italy, Japan and Canada have all
been targeted with tariffs on steel and aluminum. And it`s not just metal,
the U.S. is investigating auto imports and has lashed out at Canada for
unfair dairy subsidies.

Business leaders are increasingly concerned President Trump`s brinksmanship
could backfire.

SERGIO ERMOTTI, UBS CEO: I`m really been worried that once — these things
are going to get out of control once, you know, somebody`s going to
announce something that, you know, then trigger a more serious issue.

TAUSCHE: Pompeo still expects allies to stick by the U.S. once the hard
conversations are over.

POMPEO: Our relationship is not solely defined by trade, and so, I am —
I`m very confident that when these negotiations are completed, that the
historical relationships between the United States and Canada and the
United States and our European partners will continue the way they have for
70 odd years.

TAUSCHE: A series of deadlines approaching will bring trade back to the
forefront, beginning with a June 30 deadline for the Treasury Department to
slap new investment restrictions on China, potentially increasing tensions
even further.

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


GRIFFETH: In fact, a Federal Reserve official said today that business
optimism is fading as the trade tensions rise. Atlanta Fed President
Raphael Bostic expressed concern that trade barriers will disrupt growth
and increased risk to the economic outlook. Others are also starting to
wonder about the unforeseen consequences of heightened trade tensions.

Steve Liesman picks up that part of the story from here.


the trade war could escalate and become meaningful in terms of world and
global trade, but for right now, the biggest concern is the effect on
sentiment and investment, especially that the tariffs could undo the
positive effects of the corporate tax cut. Moody`s (NYSE:MCO) Investors
Services writes in a recent report, quote, the second order impacted tariff
increases would be to dampen currently robust global growth momentum, end

Fed officials including Chairman Jerome Powell say their contacts in
industry are telling them it`s causing some to question capital investment

JEROME POWELL, FED CHAIRMAN: I wouldn`t comment on any particular specific
trade actions. I will say that we, of course, have — we have broad
contacts in — among business leaders around the country and they say that
concerns about changes in trade policy are rising. I think it`s fair to

And also that you`re beginning to hear reports of companies holding off on
making investments and hiring people.

LIESMAN: In an interview on CNBC, President Trump`s top economic adviser
Kevin Hassett agreed that tariffs could undermine confidence.

KEVIN HASSETT, CEA CHAIRMAN: We are in a period of uncertainty and that
period of uncertainty is visible in some places. You can see it in lumber
prices and steel prices and so on. But again, the president`s long-run
objective is one that I think all economists would share, which is to get –
– like think about all the barriers in China. Think about the fact that
China is stealing more than $100 billion a year worth of our intellectual

LIESMAN: Hassett said strong growth puts the U.S. in a good position
though to weather that uncertainty.

But Daniel Ikenson from the Cato (NYSE:CATO) Institute in the back of the
envelope calculation said if the president follows through on recent
threats and imposes additional tariffs on autos and auto parts, the extra
profits from the corporate tax cuts, quote, could be entirely wiped out for
the manufacturing sector.



GRIFFETH: And in addition to the trade tensions, there is another hot
button issue in Washington. That would be immigration. So with markets
stumbling here, is Wall Street starting to become more weary of government

Joining us tonight to talk about, Ed Mills is managing director and
Washington policy analyst at Raymond James.

Ed, good to see you again. Welcome back.

Thank you.

GRIFFETH: Let`s face it — all Wall Street cares about is growing the
economy and making money. And I guess the fear is that an issue like
immigration could distract Washington from the trade issues as they become
more and more contentious here. What do you think?

MILLS: Yes. Or immigration can force Trump to get even more bombastic on
trade. I think one of the things that you see here in D.C. is that
whenever Trump has a series of bad headline days on any given topic, he
does a great job of changing the subject.

And so, what I think investors are looking at saying, if it gets a little
bit too hot on immigration, what subject does he change that to, and the
subject he keeps going back to time and time again right now is trade. And
so, does he try to really up the pressure on China, Canada, Mexico, other
members of the G-7 in order to kind of back step from some of the trade
headlines that we have and some of the immigration headlines that we have
right now?

GRIFFETH: And let me add another uncertainty, all of this. We had a
report out today that showed that Russia cut in half the amount of treasury
securities that it owns between April and May, went from $96 billion down
to $48 billion. That could be a big headache for a lot as we continue to
try and add to our growing deficit here.

MILLS: Yes. I think we are always looking to see who is the incremental
buyer of treasuries. One of the things that could be a potential benefit
here, though, is that when I talked to investors, probably one of their
biggest concerns is kind of the yield curve, the long end of the curve,
kind of what`s happening at the 10-year and beyond with the Fed raising
interest rates.

They are concerned that we get an inverted yield curve, which would signal
a potential recession, which has been historically bad for stocks. If you
don`t have other central banks buying or other large countries buying, and
possibly selling some of those treasuries, you won`t have the yield curve
inversion that many investors fear.

So, I`d put that maybe in the “it might be OK” camp.

GRIFFETH: On the other hand, and I`ll play devil`s advocate here. It
could be argued if you`re going to start a trade war, now is the time to do
it when the economy is as strong as it is. The time not to do that is when
we are struggling economically.

MILLS: I think you`re using Trump`s talking point right there, because I
think what you see with Trump is that he feels that the United States has
always been counted on as being the most rational actor in any
negotiations. And many countries and other counterparties have used that
against the United States. And that he believes he has to kind of, A, go
with an America first strategy and then disrupt the status quo, try to
threaten the worst case scenario and try to get the other side to finally
negotiate with the United States where they`ve been able to kind of slow
walk the United States in the past.

And so, with the stock market at all time highs and with unemployment low
and, you know, kind of, generally good sentiment with the economy and with
a tax cut right in our rear-view mirror, that he thinks this is the time to
fight and the fact that the market hasn`t really connected, this gives
Trump the kind of enthusiasm or kind of extra emphasis on trying to hit ck
and hit back harder now, seeing if he can get a deal and ultimately, try to
break down some trade barriers that he views as threat to the long-term
economic growth in the United States.

GRIFFETH: Ed Mills with Raymond James, always good to see. Thanks for
joining us here tonight.

MILLS: My pleasure. Thank you.

GRIFFETH: You bet.

Elsewhere, a new report out today said sentiment in the home building
sector dropped this month due in large part to higher costs. Lumber prices
are at a record and have added nearly $9,000 to the price of a new single
family home in the past year. Part of that is a result of the tariffs on
Canadian lumber that went into effect in 2017. Now, despite rising cost,
homebuilders are happy with the rising demand for housing right now.

Now, while there`s a lot for investors to keep track of at home, there are
big issues in Europe as well, and one of them is Germany. European stocks
fell today in part because of the uncertain future of Chancellor Angela
Merkel as the leader of Europe`s biggest economy.

Annette Weisbach is in Berlin for us tonight.


chancellor of Germany, is facing probably a worst political crisis in her
very long career. At the core of the problem is the question which
refugees should be allowed into Germany and which refugees should be
directly rejected at the border?

The sister party of Angela Merkel`s party which comes from the south of
Germany is very adamant about the fact that those people who have
registered elsewhere in the European Union should directly be rejected.
Angela Merkel is famous for her open door policy, at same time says we need
to have a European solution. For now, it looks that compromise is very
hard to reach because both parties have been vocal about their positions.

But one thing is clear. Everybody in Berlin knows that this crisis could
topple the government.

This is Annette Weisbach, for NIGHTLY BUSINESS REPORT, in Berlin, Germany.


GRIFFETH: Time to take a look now at some of today`s upgrades and

Certainly, a lot of talk today about that downgrade of Disney (NYSE:DIS) to
sell from hold at Pivotal Research. The analyst is concern that had the
battle for Fox`s assets has placed Disney (NYSE:DIS) in an unwinnable
situation. You either take on too much debt to win the deal or you lose
some valuable assets if there is no deal. The price target, now $93. The
Dow component fell 1.5 percent to $107.06.

And earlier in the program, Bob mentioned the Intel (NASDAQ:INTC)
downgrade. Here are more details on that. The Dow component`s rating with
was cut to underperform from market perform at North Land Capital. The
analyst now expect Intel`s sales to grow to slow starting in the third
quarter. So, the price target is now $45 and the stock fell more than 3
percent on the news today to $53.22.

Yet another Dow component this time, Chevron (NYSE:CVX), was upgraded to
outperform from market perform at Raymond James. The analyst there says
the company is better positioned than its peers to benefit from higher oil
prices. Price target now $140 and Chevron (NYSE:CVX) rose 1-1/2 percent to

Meanwhile, Blackrock was upgraded to buy from neutral at Citi. The analyst
says that Blackrock is well-positioned in a changing industry and far ahead
of its key peers in technology. Price target, $610. That stock rose a
fraction to $527.54.

Still ahead, is your smart phone tracking your every move even when the
tracker is turned off?


GRIFFETH: Google (NASDAQ:GOOG) is investing $550 million in Chinese online
shopping site This move ramps up its rivalry with Amazon
(NASDAQ:AMZN) while at the same time giving it a bigger foothold in China.
And the deal could also help Google (NASDAQ:GOOG) increase its advertising
revenue. For, the agreement allows it to start selling products on
Google (NASDAQ:GOOG) shopping.

Speaking of which, the investment from Google (NASDAQ:GOOG) comes on what
turn out to be an historic story day for The company saw record
sales during its mid-year shopping festival.

Eunice Yoon has more tonight from Beijing.


is placing a $550 million bet on and the reason is what`s going on
behind me. I`m at a JD facility here in Beijing that`s using automation
and high technology to sort 600,000 packages a day. Now, this is an
especially busy time because it`s a busy shopping holiday in China, 6/18.

This year, the company broke last year`s record, clocking a 40 percent
increase in sales to $24.7 billion, mainly due to strong demand for fresh
food and smart electronics. The Google (NASDAQ:GOOG) investment is
potentially an interesting partnership for both companies. Google
(NASDAQ:GOOG) has been largely shut out of this market so the investment in
JD is an important effort to get better access to China, just as Google
(NASDAQ:GOOG) tried to expand its own shopping platform back home to
compete with Amazon (NASDAQ:AMZN).

For JD, which is primarily focused on China, this is a step to become more
global, at a time when trade tensions between the U.S. and China are high.

Founder Richard Liu told me in an exclusive interview, the tensions have
given him reason to hold off on bigger investments in the U.S.

RICHARD LIU, JD.COM FOUNDER & CEO: I think at least it will impact our
confidence because in the past, we want to invest a lot and we want to
invest a lot of projects and companies in the U.S. But today, we want to
wait for while. Last year, we planned to go to the U.S. market from this
year but now we have to wait.

YOON: As part of this deal, JD will be able to sell products to Americans
through Google (NASDAQ:GOOG) shopping. As for the U.S. tariffs, Liu said
he thought that they would be bad for American brands in China, but not
necessarily for him, but the partnership does show that whatever the
political tensions, the business community wants cooperation into the
future in U.S. China ties.

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


GRIFFETH: Rent-a-Center is being bought and that`s where we begin
tonight`s “Market Focus”.

The furniture and electronics rental company has agreed to be taken private
by shareholder and equity firm Vintage Capital for about $1 billion. Rent-
a-Center had been dealing with pressures from other activist investors to
sell itself. Shares popped by 22 percent on the news to $14.68.

Elsewhere, PTC Therapeutics said that its experimental treatment for spinal
muscular atrophy improved the motor skills of a majority of babies who
participated in that study. That trial is still ongoing. Shares of the
biotech, though, soared more than 27 percent on the news to $47.88.

Meanwhile, rival Biogen, which has similar drugs in the pipeline saw its
shares fall by 5 percent to $289.12.

And videogame retailer GameStop is reportedly in talks with private equity
firms about a potential sale. Reuters says the company has received
takeover interest and has hired a financial adviser to assist with deal
talks. Shares jumped about 9 percent to $15.20.

And Apple (NASDAQ:AAPL) said this morning its newest operating system will
automatically share a user`s location with emergency services when they
call 911. The new feature on the upcoming iOS 12 system for iPhones and
for iPads will help first responders locate a person more quickly. The
update uses a technology developed by a company called Rapid SOS. And if
Rapid SOS sounds familiar, that`s because we profiled that company about a
year ago as part of our “Bright Ideas” series.

Speaking of which, we all assume that turning off the GPS locater on our
electronic device prevents someone from being able to track us, right?
Well, not according to researchers at northeastern university who say they
were able to track users as they drove through different cities around the
world with the locater off.

Andrea Day reports.




DAY: It`s someone driving through Boston that Sashank Narain and a team at
Northeastern University tracked down. It was just a test.

Narain is a recent doctoral graduate.

NARAIN: Secretly, I am finding the location.

DAY: But get this. He says they were able to find almost every twist and
turn even though the driver had his phone location turned off.

Would the user have any idea?

NARAIN: No idea at all.

DAY: It`s called a side channel attack because a target centers in your
device that weren`t designed to provide location, like the accelerometer,
it measures how fast the phone is moving. The gyroscope, that tracks
rotation, and the magnetometer, which works like a digital compass.

Guevara Noubir is a professor at Northwestern.

GUEVARA NOUBIR, PROFESSOR: People don`t really realize that their mobile
phone, with access to all these sensors, is in some sense potentially the
best spying device you can imagine.

DAY: And he says combining readings from the sensors could arm bad guys
with secret info.

NARAIN: As they become more and more accurate, this may become primary
means of invading user`s privacy.

DAY: They tested it out in cities from New York to London and say it works
best in places like Boston where streets aren`t set up like a grid.

NOUBIR: If you were to travel the same path every day, we have extremely
high probability to guess where you live, where you work.

DAY: He says hackers could access your device through an app like this
simple flashlight the researchers created.

NARAIN: You need to have an app installed on the phone. Once that`s done,
all the other processes are automatic.

DAY: And he says some might have complete access to some of the sensors on
your device without asking for permission.

NARAIN: As long as you have your phone switched on and the app is already
installed on your phone, this would record your information.

DAY: The team used android devices for the study, but say it would also
work on the iPhone because permissions for the sensors are similar. Apple
(NASDAQ:AAPL) declined to comment.

Google (NASDAQ:GOOG) tells us its latest operating system, quote, restricts
access to sensors, such as accelerometers and gyroscopes, and smart sensors
do not directly provide user location data and this research highlights
just how difficult it would be to use these sensors for location tracking.

Is there currently a way for users to turn all these sensors off?

NARAIN: Unfortunately, there`s nothing.

DAY: The team is now searching for a solution. Meantime, the best way to
protect yourself is only download apps from Google (NASDAQ:GOOG) and
Apple`s official stores and always keep your operating system up to date.



GRIFFETH: Wonder if that works on my BlackBerry.

Coming , the secret to lower credit card rates and fees.


GRIFFETH: The National Transportation Safety Board is sending a technical
specialist to Los Angeles to examine a fire that broke out in a Tesla Model
S sedan. The vehicle was owned by the husband of actress Mary McCormick
(NYSE:MKC) who posted this video of the fire over the weekend. She said
there was no crash involved and the fire appeared out of the blue.
Regulators say that the specialist is going to try to learn more about
fires in battery powered cars. As for Tesla, it called the incident
extraordinarily unusual.

And with interest rates rising, credit card rates are also moving up, of
course, which would mean more fees for consumers who prefer to pay with
plastic. But you may still be able the lower those rates and fees.

Joining us tonight, Sharon Epperson, on how to lower these fees.

I guess you have to start the negotiating process somewhere, right?

somewhere to figure out what you want to negotiate. Do you want to
negotiate the annual fee or a late fee? Do you want to try to get rid of
the annual fee or do you want to negotiate a higher credit limit?

And what people need to realize that they can do is they can just ask. did a survey and what they found was just amazing. Fifty-
six percent of people who just asked got a lower interest rate. Seventy
percent had an annual fee waived or lowered, 84 percent got a late fee
waived, and 85 percent who asked got a higher credit limit.


EPPERSON: And, of course, we know that`s a great thing to have because
that could potentially raise your credit score if you don`t use it much.

GRIFFETH: OK. But I always need a script. So, when I call, what do I

EPPERSON: Well, first of all, you want to ask for the boss. Ask for a
manager, ask for someone who has the power to make a change for you. Then
make sure that you can state your case. What evidence do you have to show
that you are paying on time, that you are a loyal customer, that you have
great credit history.

Make sure they know these things. And if you think something is going to
happen like you may have a late fee because you have to go for a medical
emergency or you are going through a life change that`s causing this, let
them know ahead of time so that possibly they`ll not make you pay that late
fee because you`ve been such a great customer.

And finally, you have to be prepared to have done your research to know
where you can get a better offer and be prepared to switch — let them know
this, I found a better offer elsewhere and I`m ready to walk, I`m ready to
switch my card if you don`t honor this.

GRIFFETH: They will approve that then.

EPPERSON: Exactly.

GRIFFETH: It sounds straightforward. So, why aren`t more people doing

EPPERSON: A lot of people just don`t know. They don`t know that they can
do it. Millennials, gen-Xers are often the once who say we don`t know.
Baby boomers might say, I kind of like my card, I`m all right. Also, women
are not as likely to get their charges reversed as men. They`re seen as
too pushy.

So, stick to the script. Make sure you have your evidence and make sure
you`ve done your research to know where else you could go.

GRIFFETH: Always good advice and I always write it down.

EPPERSON: Thank you.

GRIFFETH: Thank you, Sharon Epperson, very much for joining us tonight.

Finally tonight, some good news if you`re a flier. Get this, airlines
canceled fewer flights in April and passengers filed fewer complaints.
According to the Transportation Department, the most punctual airlines were
Hawaiian (NASDAQ:HA), Delta and Mesa Airlines. The carriers with the
lowest rates of on-time arrivals were JetBlue, Frontier and Southwest
Airlines (NYSE:LUV).

Before we go, another look at the day on Wall Street, down day once again
amid trade tensions. The Dow opened more than 200 points lower, but closed
down 103 points, but it did fall back below 25,000, the Nasdaq rose a
fraction today and S&P 500 dropped by five points.

That is NIGHTLY BUSINESS REPORT tonight. Thanks for joining us. I`m Bill
Griffeth. Have a lovely evening. We`ll see you again tomorrow.



Nightly Business Report transcripts and video are available on-line post
broadcast at 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
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Business Report is not and should not be considered as investment advice.
(c) 2018 CNBC, Inc.


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