Transcript: Nightly Business Report – November 26, 2018

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

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Bounce back. Stocks rise to
start the week, but there are a few key things that will drive the market
through the rest of the year end.

BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: The road ahead. General
Motors (NYSE:GM) is closing plants and laying off thousands in cities where
the automaker has deep roots as it looks to a very different future.

HERERA: Every dollar counts. There`s a new front in the battle among the
retailers and at the center of it all is your smartphone.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Monday,
November 26th.

GRIFFETH: And we do bid you a good evening, everybody, and welcome.

Not bad for a Monday. Stocks rose sharply at the opening bell and never
looked back. Tech led the way, so did retailers in what is arguably one of
the most important days of the year for that sector. It was all a very
much needed pause from the recent turbulence that has caused the major
indexes to move in an out of the correction territory recently.

Today, the Dow advanced 354 points to 24,640, snapping it`s like latest
four-day losing streak. The Nasdaq was up 142. The S&P added 40 points
today.

Why the rebound and why today? Bob Pisani has some answers for us tonight.

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: The market put in a
rally and for several good reasons. The S&P with more than 10 percent off
its recent highs, but the damage was more in many sectors, like oil
services, semiconductors, banks and retailers.

The bottom line, a lot of sectors are discounting, a lot of bad news. And
since no one is expecting an imminent recession, it`s not unreasonable to
see some kind of balance. Beyond that, though, traders are pinning their
hopes for a continued rally on two potentially market moving events.

First, Fed Chair Jay Powell is speaking at the New York Economic Club on
Wednesday afternoon. Many are hopeful that with the recent decline in the
markets in oil, as well as turmoil surrounding China tariffs and slower
global growth issues, they`re hoping that Powell may sound a little less
aggressive and a little more dovish about the prospects for rate hikes in
2019.

Now, that may be a lot of wishful thinking, frankly. The Fed chairman is
not going to front run the FOMC meeting in early December by suddenly
changing his position. That he may touch on a slower global economy and a
slower housing market, maybe, but the message is unlikely to signal a
possible cooling in the Fed`s desire to continue to lift rates.

Finally, there`s meeting between President Trump and Chinese President Xi
Jinping in Buenos Aires later this week. Traders are hopeful that just an
announcement of a cease fire, just a vague statement that no new
incremental tariffs will be implemented in the first part of 2016 while
they continue to negotiate, that that may be enough to lift the markets
further.

Here`s the bottom line: given how oversold the markets are, the barrier to
a modest rally this week is not very high.

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

(END VIDEOTAPE)

GRIFFETH: But traders may not be so hopeful after a late report today from
“The Wall Street Journal” that President Trump still expects to move ahead
with an increase on tariffs on Chinese goods. That increase is set to go
into effect in January.

The president also spoke about the possibility of tariffs on Apple
(NASDAQ:AAPL) products and that sent that stock lower in initial hours of
trading tonight.

HERERA: Trade is just one of the things that could drive the market
between now and year`s end. That`s according to our next guest.

Joining us is Lamar Villere, portfolio manager at Villere and Company.

Lamar, welcome back. Good to see you again.

LAMAR VILLERE, PORTFOLIO MANAGER, VILLERE & CO.: Thank you. Good to be
back.

HERERA: We`ve mentioned a little bit about trade, especially with the
president`s comments late this afternoon. You`re also watching central
bank activity as we go into the end of the year. Why?

VILLERE: I think that`s going to be something on the top of investors`
minds, is what`s going to happen at the central bank. I think the
consensus is that the rates are going to move upward. We tend to agree
with that. But any — you know, as Bob mentioned earlier, any change to
that could really move the market.

GRIFFETH: And what about trade? Bob also mentioned that, you know, the
president is saying that he`s still thinking he`s going to impose these 25
percent tariffs on those Chinese goods come January 1st. If that doesn`t
happen, Bob says Wall Street will view that as a victory. Will you see
rallies then? Is that what was going to happen here, do you think?

VILLERE: Yes, if there`s temperance in the posture toward the trade war, I
think you would see a nice move upward. You know, unfortunately, we sort
of expected that before the midterms. We didn`t see it. So, it seems as
though Trump now may be pushing it out to a presidential election issue.
So, he maybe has a little more time.

HERERA: You also are noting consumer data. What type of data and why do
you think that`s going to be important?

VILLERE: Sure. You guys referenced earlier some of the data we saw, and,
you know, 20 percent increases and Black Friday sales as well as people
thinking you`re going to see as much or even more increases here on Cyber
Monday.

Unfortunately, you know, what we like to look at is company earnings, there
aren`t any earnings. Earning season is pretty much over. So, the only
thing we can look at is some of these metrics as they come out that give us
an idea of how the consumer is doing.

So far, what we`ve seen has been positive and I think that`s a big part of
the why you saw the big move up today.

HERERA: So, Fed rate increase, that`s already in the market. Tariffs,
that`s already in the market. What could happen that the market`s not
anticipating right now that you`re thinking about?

VILLERE: You know, continued strength in the consumer. I think the other
— you know, the nice thing is almost counterintuitively, the expectation
is that interest rates are going to go up. That`s bad. The expectation is
that the trade war is going to continue and even exacerbate. That`s bad.

So, if the expectation is for something bad, anything in the opposite
direction will be viewed as a positive. So I think right now, investors
are pretty spooked or pretty resigned I guess to bad news. And that`s what
we like to see because that gives you more opportunity to be surprisingly –
– move in the upside.

HERERA: Lamar, thank you. Lamar Villere with Villere and Company.

VILLERE: Thank you.

GRIFFETH: Big changes are coming to General Motors (NYSE:GM). The
automaker today said it plans to cut about 15,000 jobs in North America as
it shutters a handful of factories and discontinues a number of its models.
Wall Street clearly likes what it heard, though. The stock was up as much
as 7.5 percent today. It closed up 4.5 percent.

Phil LeBeau reports now on the idea behind the strategy, and why G.M. is
ending production in cities it has called home for decades.

(BEGIN VIDEOTAPE)

PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT: It`s the news they`ve
been fearing for months in Lordstown, Ohio, the local GM plant will
effectively shut down early next year.

UNIDENTIFIED MALE: I felt like somebody kicked me in the stomach. I`ve
been working here for a long time.

LEBEAU: It`s equally painful at GM`s Oshawa plant just outside Toronto.

UNIDENTIFIED MALE: Nobody told us anything. That`s why we`re even —
we`re just — there`s people in there balling their eyes out. I`ve never
seen anything like it and we can`t get any answers. So, we`ve stopped the
line and we`re leaving.

UNIDENTIFIED FEMALE: Heart is pumping out of my chest right now, but I`ve
been here 13 years. So, you got to take a stand at some point. So, that`s
what we`re doing.

LEBEAU: The three GM plants in Lordstown, Ohio, Detroit, Michigan, and
Oshawa, Ontario, each employed between 1,300 and 2,200 people. Those
workers have been building models like the Chevy Cruise and Impala, as well
as the Buick Lacrosse, sedans that have seen sales slide as Americans buy
more crossovers and pickup trucks, a trend that troubles the mayor of
Lordstown.

ARNO HILL, LORDSTOWN, OHIO MAYOR: There just isn`t a market for it. If
you look across the board at Ford, Chrysler, General Motors (NYSE:GM),
people just aren`t buying the cars.

LEBEAU: GM CEO Mary Barra says the cuts will keep her company lean and
agile. It will also help the company`s bottom line.

But it doesn`t sit well with President Trump who has repeatedly promised to
protect and add manufacturing jobs in states like Ohio.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I was very tough. I spoke
with her when I heard they were closing, and I said, you know, this
country`s done a lot for General Motors (NYSE:GM). You better get back in
there soon. That`s Ohio — and you better get back in there soon.

LEBEAU: For now, GM says it still no plans to add new models to the plants
it is shuttering, leaving northeast Ohio and southeast Michigan wondering
how they will replace thousands of high-paying manufacturing jobs.

This is the largest restructuring at General Motors (NYSE:GM) since it went
bankrupt almost a decade ago in the midst of a major recession. This time
around, the cuts come as the company is near record profits and the economy
is running strong.

Phil LeBeau, NIGHTLY BUSINESS REPORT, Chicago.

(END VIDEOTAPE)

HERERA: It`s being reported the GM CEO Mary Barra had a meeting at the
White House this afternoon with the president`s national economic council
director, Larry Kudlow, to discuss the company`s announcement.

GRIFFETH: Well, GM`s announcement highlights a dramatic transformation
under way in the automotive industry.

So, what does the automaker of the future look like?

Joining us tonight Karl Brauer. He`s executive publisher and analyst at
Kelley Blue Book.

Good to see you again. Welcome back.

KARL BRAUER, KELLEY BLUE BOOK EXECUTIVE PUBLISHER: Hey. Great to be on
with you.

GRIFFETH: This isn`t as much a downsizing as it is a shift in strategy.
Mary Barra was quick to point out they aren`t just laying people off. They
are still hiring, but they`re looking for people with different skills.
They`re looking for a very different kind of automaker in the future,
aren`t they?

BRAUER: They really are. And I think if you wanted to describe this shift
as one of a move more toward a silicon valley type of mind-set and business
model, I think that`s an accurate way to perceive it and I think they`re
going to be looking for a lot of those similar skill sets that you see with
a high value in silicon valley.

HERERA: In other words, centered around technology because the cars today
are more sophisticated than even before. In my case, they`re more
sophisticated than I am. So, they`re looking at a big technological shift.

BRAUER: Yes, that`s exactly right. They`re looking to, you know, make the
company, you know, future-proofed and prepare for these massive changes
that we see coming. There`s just no getting away from the shift that`s
going to happen in the auto industry over the next five to ten years, more
change than we`ve seen in the past 100. And I think Mary Barra has got a
great handle on that and is trying to prepare the company for it.

GRIFFETH: So, it`s more electronic cars, it`s more hybrids, it`s
autonomous cars that they`re all working on. Does it mean a smaller
company? I mean, politicians are going to be very unhappy to hear they`re
going to have to make do with fewer workers. Is that what we`re looking at
here as well?

BRAUER: It might end up being a total smaller workforce. It might be.
But I don`t think it`s substantially different. I don`t think the size is
the shift as much as what you already talked about. It`s the nature of the
business and the nature of the human resources that drive that business. I
think that`s a much bigger shift.

The size may or may not shift, but probably shouldn`t be ultimately that
much smaller.

GRIFFETH: Going to be interesting to watch this happen.

Karl Brauer from Kelley Book — again, thanks for joining us tonight.

BRAUER: Thank you.

HERERA: Carlos Ghosn is out at chairman of Mitsubishi. This comes one
week after he was arrested in Tokyo for alleged financial misconduct and
just days after he was stripped of his chairmanship at Nissan. Ghosn has
not been charged with any crime, but is being questioned by Japanese
regularities who say he underreported his income over several years.

GRIFFETH: Investors were also watching the situation at the U.S./Mexico
border where violent clashes took place over the weekend. Today, President
Trump pushed Congress to fund his proposed border wall. In a tweet, he
threatened to close that border permanently. He had previously vowed to
veto any spending bill if it did not include border wall funding.

Lawmakers now return to work this week. They have 11 days to pass spending
bills and avoid a partial government shutdown.

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

Novartis was upgraded to outperform from market perform at Cowen. The
analyst calls the stock his best idea for 2019, citing new drugs in the
company`s management. The price target is $100. The stock was up 1
percent to $89 even.

Fellow drug maker Eli Lilly (NYSE:LLY) was downgraded to neutral from buy
over at Citi. The analyst cites the stock`s valuation after a big run-up
this year. The price target is $115. The shares fell a fraction to
$112.38.

GRIFFETH: Still ahead, breaking records.

(BEGIN VIDEO CLIP)

CONTESSA BREWER, NIGHTLY BUSINESS REPORT CORRESPONDENT: Cyber Monday at an
East Coast fulfillment center for Amazon (NASDAQ:AMZN). And the real
question here, can Amazon (NASDAQ:AMZN) break its own Cyber Monday record?

I`m Contessa Brewer in Robbinsville, New Jersey. That story coming up on
NIGHTLY BUSINESS REPORT.

(END VIDEO CLIP)

GRIFFETH: A case involving Apple (NASDAQ:AAPL) made its way to the Supreme
Court today. At issue is the 30 percent commission that Apple
(NASDAQ:AAPL) takes on its App Store sales. The iPhone users in the class
action suit claim that it is akin to monopolistic price gouging where the
consumers can only buy apps through Apple`s App Store. A ruling is
expected in June.

HERERA: Move (NASDAQ:MOVE) over, Black Friday. Cyber Monday is expected
to be big, so big that online sales today by some estimates are on track to
break records. It`s no secret that Amazon (NASDAQ:AMZN) is a dominant
force in e-commerce, but it`s also facing a lot more competition.

Contessa Brewer is at a fulfillment center in Robbinsville, New Jersey,
today.

(BEGIN VIDEOTAPE)

BREWER: This is one of 110 busy fulfillment centers for Amazon
(NASDAQ:AMZN) across the United States, and one of about 25 robotic centers
globally. The online retail giant is trying to get customers to shop more,
to spend more, and to return more often.

UNIDENTIFED MALE: I`m a big Amazon (NASDAQ:AMZN) shopper.

UNIDENTIFIED MALE: I do most of my shopping on Amazon (NASDAQ:AMZN).

BREWER: Amazon (NASDAQ:AMZN) polling out all the stops trying to break its
own Cyber Monday record. Last year`s was the company`s biggest day ever,
selling about 3.5 million items per hour.

LORI TORGERSON, AMAZON SPOKESPERSON: We expect this year will be even
bigger. We`re offering bigger selection, bigger discounts than ever
before. We`re offering free shipping not just for our prime members.

BREWER: Deloitte forecast is as much as 20 percent in jump overall
ecommerce sales this year. Black Friday, famous for its brick and mortar
deals, broke online shopping records up nearly 24 percent over last year
according to Adobe.

STACEY WIDLITZ, SW RETAIL ADVISORS PRESIDENT: Cyber Monday is becoming so
much more important because online sales are up high 20s. So, that`s where
the growth is. That`s where the business is to be won.

BREWER: Amazon (NASDAQ:AMZN) is fending off competitors like Walmart,
Target (NYSE:TGT) and Best Buy (NYSE:BBY), intent on stealing market share
with more people shopping online. Big retailers are generally offering
free shipping. But most with strings attached.

Amazon`s free for all approach will come with a cost. Last quarter, even
before the holiday shipping deal, Amazon (NASDAQ:AMZN) said it spent $6.6
billion on shipping, nearly double its operating income. But clearly
something about its strategy is working.

UNIDENTIFIED MALE: I`m buying things that I never bought before.

BREWER: Amazon`s on tech toys are among the biggest sellers today. No
surprise, they`re deeply discounted. An Echo Dot costs less than half its
original price. Buyer sticks, tablets on sale, attention getting sales on
toys, too, but not everyone is convinced.

UNIDENTIFIED FEMALE: I like to go into the stores and look and feel and
buy the clothes that way.

BREWER: For the converts, the convenience is the key. And Amazon
(NASDAQ:AMZN) thinks it can offer increasing convenience and grow its
profit margin by owning more of the distribution chain, buying cargo planes
and trucks, hiring its own delivery teams. Today as the orders come flying
in, for robots and humans alike, it`s just another manic Cyber Monday.

In Robbinsville, New Jersey, Contessa Brewer, NIGHTLY BUSINESS REPORT.

(END VIDEOTAPE)

HERERA: And as we reported, it was days ago that Amazon (NASDAQ:AMZN) was
hit with a major data breach which caused customer names and e-mail
addresses to be disclosed on its website. Amazon (NASDAQ:AMZN) says the
issue has been fixed and it informed customers who may have been impacted.

GRIFFETH: Well, not only are sales moving online, they`re moving to your
smartphone as well. Adobe reported this morning that on Black Friday
alone, $2 billion in sales were made on smartphones.

Is this the next front that retailers need to focus on?

Joining us tonight, Connie Guglielmo. She is the editor-in-chief of CNET.

Welcome, Connie.

CONNIE GUGLIELMO, EDITOR-IN-CHIEF, CNET: Hi.

GRIFFETH: I mean, people have been using their smartphones to shop for a
long time. But this is really becoming a big deal now starting this year,
right?

GUGLIELMO: It`s definitely becoming a big deal. A lot more people have
smartphones. I mean, most people in the United States have a phone, have a
smartphone. That doesn`t even include tablets.

There`s a lot of couch surfing that`s going on, and I was watching the
news. It was cold on the East Coast. California was lovely. But I heard
it was pretty cold.

So, I imagine a lot of people wanted to get the best deal they could and if
they could do it from their phone, why not? Why leave the house?

GRIFFETH: It`s also faster in many cases, is it not? Just the search
function and the ability to get those e-mail pushes or text pushes, it
makes it much more compelling than it used to be.

GUGLIELMO: Absolutely. One of the advantages that Amazon (NASDAQ:AMZN)
has had has had for a long time is that one-click shopping, right? You set
up your account, you order what you want and you buy it with a click.

Now that we have mobile payment systems like Apple (NASDAQ:AAPL) Pay and
PayPal, you can do that one click shopping experience at a lot of
retailers. It`s definitely getting easier to find things, as you
mentioned, e-mail alerts send you the deals that you want. You just click
on it and you buy.

And Cyber Monday is becoming a big deal because a lot of us are back to
work and we`re using the Wi-Fi network that`s super fast. So, it`s very
convenient. No waiting.

And, you know, there`s that old line about instant gratification, the
problem is it takes so long. If you`re on a super fast network, things
seem a lot smoother.

GRIFFETH: So, it`s not enough for a retailer now to have a website, you
have to have a mobile app as well, and the technology to handle mobile
technology. Who are the winners in this category right now? Who`s doing
the best job, do you think?

GUGLIELMO: Well, we can look at who is gaining new app downloads, and
there have been a couple reports out in just over the past few days. As
you would expect, places like Amazon (NASDAQ:AMZN), Walmart, Best Buy
(NYSE:BBY), there`s a lot of interest in electronics and toys and games and
those retailers sell those devices and they have very well-known brands.
They have very well-designed apps that make it easy to find their products.
We`re seeing a lot more retailers.

I was really interested to see that goat, which is an online marketplace
for sneakers, is one of the most downloaded apps over this weekend.

So, people are finding the brands that matter to them, the categories of
goods that they care about. And even though we call it holiday shopping, I
would venture to guess a lot of the shopping was personal.

GRIFFETH: Right.

GUGLIELMO: People were just looking for good deals.

GRIFFETH: Deal, self-gifters going on there.

Connie, always good to see you. Connie Guglielmo from CNET joining us
tonight.

GUGLIELMO: My pleasure.

HERERA: Campbell`s Soup reaches a truce with an activist investor, and
that`s where we begin tonight`s “Market Focus”.

After months of public fighting, Dan Loeb`s Third Point will add two
nominees to Campbell`s board. As part of the deal, Campbell will expand is
size of the board and Third Point will have input on Campbell`s CEO search.
Third Point had initially pushed for an outright sale of the company.
Campbell`s Soup shares fell more than 3 percent to $39.02.

Newell Brands named a new chief financial officer as part of a move to help
remake the struggling company. Newell has repeatedly missed sales targets
following its 2016 accusation of Jarden (NYSE:JAH). The company also has
plans to sell eight businesses to help pay down debt. Investors cheered
that move, sending the shares of Newell Brands up 8 percent to $23.52.

GRIFFETH: Casino companies Eldorado resorts and the Stars Group have now
entered into an online betting agreement. The deal allows the Stars Group
to own and operate online games in the 13 states in which Eldorado
currently operates. Shares of Eldorado Resorts popped nearly 10 percent on
that news to $39.38.

And CVS (NYSE:CVS) and Aetna (NYSE:AET) have received the final state
approval that they need to complete their roughly $69 million emerge. New
York`s Department of Financial Services today gave the okay to that
acquisition. The deal could close as soon as this Wednesday. CVS
(NYSE:CVS) shares rose another 3-1/2 percent to $77.84. Aetna (NYSE:AET)
shares climbed 2 percent to $210.10.

HERERA: Coming up, the way we watch sports may be about to change, but
only if the companies can get right.

(MUSIC)

HERERA: AT&T (NYSE:T), Comcast (NASDAQ:CMCSA) (NYSE:CCS), Charter
Communications (NASDAQ:CHTR) and Dish Network are among the cable and
satellite providers giving refunds to those who paid $19.29 to watch
Friday`s golf match between Tiger Woods and Phil Mickelson. The much-hyped
game was marred by glitches during AT&T`s live stream. AT&T (NYSE:T) had
hoped to use the webcast to showcase its reach following the Time Warner
(NYSE:TWX) acquisition.

Julia Boorstin is covering this story from L.A.

So, Julia, what does this mean for AT&T (NYSE:T) ultimately?

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, it`s
certainly not good for AT&T (NYSE:T), Sue, especially because AT&T (NYSE:T)
spent months promoting this and AT&T (NYSE:T) CEO Randall Stephenson said
this would be a key to illustrate the strength of their acquisition of Time
Warner (NYSE:TWX), which is now called Warner Media, and would illustrate
the benefits of having all of these assets under one roof, the likes of
sports content like this highly anticipated match, and also the ability to
go direct to consumer.

So, AT&T (NYSE:T) missed this opportunity to show that value and they could
be up millions of dollars. It`s not only a $9 million purse, but it cost
certainly millions of dollars to produce and distribute this kind of match.

GRIFFETH: OK. You had a glitch this time, but what about the future?
Isn`t this an opportunity for media companies, not just AT&T (NYSE:T), but
others who were participating to use an event like this, a pay-per-view
event to find new revenue stream on various platforms?

BOORSTIN: It`s very important for them to figure out how to successfully
distribute pay-per-view events like this because so many consumers are now
cutting the cord and watching content through streaming services. So, if
you want to be able to make a lot of money off an event like this, to be
able to go direct to consumer will be key, but this is not the first time
there have been failures with events like this, so they really have though
make sure to get this right the next time around.

HERERA: Julia, thank you as always. Julia Boorstin in Los Angeles.

GRIFFETH: Finally tonight, space exploration just took another step
forward. NASA`s Insight spacecraft successfully landed on Mars today after
seven months of traveling. It marks the eighth time that NASA has
successfully landed a robot on the Red Plant. But this is the United
States` first attempt since 2012.

Over the next two years, now, Insight will drill deep into the Mars`
interior to collect data. The mission carries an $800 million price tag.

HERERA: Wow. Favorite story of the day,

GRIFFETH: Yes.

HERERA: That does it for us tonight. I`m Sue Herera. Thanks for joining
us. We want to remind you that this is the time of year your public
television station seeks your support.

GRIFFETH: I`m Bill Griffeth. We do thank you very much for that support.
Have a great evening, everybody. We`ll see you tomorrow.

END

Nightly Business Report transcripts and video are available on-line post
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