Transcript: Nightly Business Report – January 7, 2019

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



rise to start the week and many point to Wall Street`s better mood.  


the latest drug company to make a big bet on oncology, as the science 

evolves and ground-breaking new medicines are discovered.  

GRIFFETH:  Pricing power.  It`s going to cost you more to go to Disneyland, 

but will consumers pay up?  

Those stories and much more tonight on NIGHTLY BUSINESS REPORT.  It is 

Monday, January 7th.  

HERERA:  Good evening, everyone, and welcome.  

The big rally Friday extended into today.  Investors started the week in a 

buying mood, snapping up shares of technology stocks, as U.S. and Chinese 

officials talked trade and the price of oil rose.  The Dow Jones 

Industrials rose 98 points to 23,531.  The Nasdaq added 84, the S&P 500 was 

up 17.  

As usual, there was volatility.  But there was also a sense of relief, 

which stands in contrast to what investors were feeling not too long ago.  

Bob Pisani explains.  



much market sentiment has changed just over the past few days.  Investors 

had had a long list of concerns but they`re finally starting to see some 

progress made on several fronts.  There were worries about the Fed raising 

rates too quickly, trade talks going nowhere, the Chinese economy slowing 

down and a possible recession as soon as this year.  

Now, the Fed chairman has softened his language on interest rates.  Fed 

Chair Jay Powell reassured investors he is listening carefully to the 

market`s concerns and that the Fed remains patient and flexible when it 

comes to rate hikes.  Trade talks, the second issue, are picking up.  High-

level officials from both the U.S. and China are meeting today and tomorrow 

to try to hash out the terms of a deal.  

Third, there`s hope for the Chinese economy.  Yes, it`s slower, but China 

has announced stimulus programs to loosen liquidity and boost its 

infrastructure spending.  Yes, expectations for earnings growth in the 

United States are coming down this year, but it could be a lot worse.  Most 

of them are in the mid-single-digit range.  Gas prices have fallen 20 

percent since October.  That is a huge tax cut for the American consumer.  

All right.  How about this fear of a recession thing?  Stronger job growth 

and comments from the Fed are fending off those concerns at least for now.  

The one wild card is political risk both here in the United States and 

overseas in Europe.  The fate of the U.K. and Brexit, that`s murky.  

And now, here in the U.S., now that former U.S. Defense Secretary Jim 

Mattis and another key moderates are gone, some are worried that maybe it`s 

President Trump and not the Fed who might make some policy mistake.  

Here`s the bottom line.  We are not out of the woods, but the trend is 

definitely improving.  

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


GRIFFETH:  Well, let`s talk more about this possible shift in sentiment in 

the stock market.  

Kristina Hooper is back with us tonight.  She`s chief global market 

strategist at Invesco.  

Kristina, good to see you again.  Welcome back.  


GRIFFETH:  So, of the two primary issues that Bob brought up, the Fed and 

the trade tiff with China, are you feeling better about those as well?  

HOOPER:  I`m not feeling a lot better about either one.  


HOOPER:  While I hold out hope that the U.S. and China resolve the trade 

issue, I`m very realistic that it`s unlikely that we`ll see a resolution 

any time soon.  Bob reported on how China is increasing domestic stimulus.  

To me, that`s a sign that it is hunkering down for what could be a 

protracted fight with the U.S. regarding trade.  

HERERA:  And what about the Fed, Kristina?  I mean, there was some 

confusion early on and then just last week, it seems as though the market 

was kind of soothed by what the Fed chief said.  

HOOPER:  Well, certainly the market was temporarily soothed, but we need to 

see more than just words.  What`s going to be critical is the FOMC meeting, 

the statement coming out of it, to see if the language has become more 

dovish, if there`s more reiteration that the Fed is truly data dependent.  

What could really boost markets is if the Fed came out and said it`s also 

examining balance sheet normalization and considering whether or not to 

actually keep it on auto pilot.  Those are all things that could truly 

soothe markets for more than a day or two.  

GRIFFETH:  So what are you doing about that as far as investing in this 

market?  Do you go defensive?  More to cash?  What are you doing here?  

HOOPER:  Well, we always maintain a very long-term perspective, but for 

those who are thinking about the shorter term, you certainly need to be 

prepared for more volatility.  Now, some view that as a real opportunity.  

They have cash on the sidelines.  That can present attractive purchase 

opportunities for investors.  

But for those who are worried about volatility, that have trouble 

stomaching it, it is important to be very well-diversified.  And that 

includes not just equities and fixed income but having exposure to 

alternative asset classes, things like real estate, gold, tend to move in a 

less correlated way with stocks, for example.  So that makes a lot of sense 

in this kind of environment.  

GRIFFETH:  Diversification is the word, I think.  Yes.

Christina Hooper with Invesco, thanks again for joining us tonight.  

HOOPER:  Thank you.  

HERERA:  More now on those trade talks.  The U.S. delegation arrived in 

China for those discussions aimed at ending the tensions that have imposed 

billions of dollars in tariffs over the past year.  

Ylan Mui reports tonight from Washington.



to-face meeting between the U.S. and China since President Trump and 

President Xi sat down for dinner at the G20.  Trump discussed the prospects 

of a deal during a retreat at Camp David over the weekend and he told 

reporters that he is hopeful.  


President Xi is as good as any relationship that a president here has had 

with a president or leader in China.  And I think good things are going to 


MUI:  As for the Chinese, the finance ministry says it has, quote, good 

faith in these two days of talks, which are really more of a technical 

meeting of senior officials.  Deputy U.S. trade Representative Jeffrey 

Gerrish will be leading the delegation.  There are folks from treasury, 

agriculture, energy and state.  

One good sign, the Chinese Vice Premier Liu He apparently joined the talks 

for at least a little bit.  The expectation is that he could come to 

Washington to meet with Treasury Secretary Stephen Mnuchin and Ambassador 

Robert Lighthizer if all goes well.  

Today, Commerce Secretary Wilbur Ross defended the administration`s hard 

line stance.  He said China has realized how dependent it is on the U.S. 


WILBUR ROSS, COMMERCE SECRETARY:  What will come out of it is a resolution, 

are we going to go the negotiated route or are we going to go in the 

original direction of higher tariffs.  It`s really a binary set of 


MUI:  There was also a report that President Trump could meet with China`s 

vice president at the World Economic Forum in Davos later this month, but 

the White House is not confirming Trump`s schedule of meetings just yet.  

We do know that Trump will be there.  The Chinese will be there.  We`ll see 

if the two sides will sit down and talk.  

For NIGHTLY BUSINESS REPORT, I`m Ylan Mui in Washington.  


GRIFFETH:  Elsewhere, oil prices are creeping back towards $50 a barrel.  

“The Wall Street Journal” reports that Saudi Arabia plans to make shoe cuts 

to its crude exports beyond that`s already planned, in an effort to push 

prices even higher.  Prices have also gotten a lift amid the easing of 

trade and economic concerns.  So, domestic crude settled up today about 1 


HERERA:  Eli Lilly is pushing further into the cancer drug industry.  The 

pharmaceutical company is buying Loxo Oncology for about $8 billion in 

cash, making this the second major health care deal of the New Year.  Both 

focused on cancer.  Lilly`s CEO says that acquisition will help the company 

treat the disease globally.  


DAVID RICKS, ELI LILLY CHAIRMAN & CEO:  We`d like to grow our presence in 

oncology.  We have a good set of medicines there, but we`d like to expand 

that because there`s so much exciting science for patients emerging in 

oncology, so many things to invest in.  Loxo was particularly attractive to 

us because it`s so rational that you can detect the kind of problem that`s 

driving the tumor growth and then block it directly.  


HERERA:  Loxo soared on the news, up 66 percent and Eli Lilly`s shares also 


GRIFFETH:  Our next guest is hoping that this year may be the year that 

world of medicine finally outsmarts cancer.  

Kevin Conroy is the CEO of a company called Exact Sciences.  He joins us 

now from the JPMorgan health care conference going on in San Francisco 

right now to talk about this.  

Kevin, good to see you.  Thanks for joining us tonight.  


GRIFFETH:  I have to say, I mentioned this on Twitter earlier today and a 

viewer tweeted back and said I`ve been hearing for years that medicine is 

hoping that they finally have turned the corner on cancer.  What makes you 

think that this year may be the year that you have outsmarted cancer?  

CONROY:  Well, what we`re seeing is the research that we have done with the 

Mayo Clinic to be able to detect the tiny changes in DNA that cancer sheds 

into the blood, so with a simple blood draw, we`ve shown the ability to 

detect 95 percent of liver cancers from that simple blood draw.  And we are 

expanding this research across 15 cancers with the Mayo Clinic.  We`re 

really excited about the prospects for changing the way cancer is detected 

and, therefore, treated.  

GRIFFETH:  And you basically gave us three things that you hope will be 

achieved this year that will change the dynamics in treating cancer.  They 

are new discoveries through industry investment, and you mentioned the fact 

that companies need to continue investing, cracking the cancer code through 

the liquid biopsy which is company is doing, and putting the patient first. 

It`s a very dynamic set.  Putting the patient first is something that I 

noticed because a lot of patients are not compliant with those tests.  

CONROY:  Well, that`s right.  That`s the problem that we wanted to solve 

with our Cologuard test which is a noninvasive way of accurately screening 

for colon cancer right in the privacy of your own home, and using that same 

technology which empowers the patient to take care of their own health.  We 

think that we can really change the dynamic, and a lot of other people are 

working on this too, which gives us great hope.  

We know that cancer is a disease of the DNA.  If you can detect that cancer 

DNA in blood, you can really change the way cancer is treated, because 

early detection really matters.  

GRIFFETH:  You know, it`s not lost on us, Kevin, that two companies have 

already been taken out this year involved in either cancer treatment or 

cancer detection.  Celgene last Thursday, Loxo today.  This is something 

your company is involved in.  You have market capitalization of about $9 

billion and I can already see from the expression on your face you can see 

where I`m going here.  

If somebody called you and said, we are interested in buying your company, 

what would you say to them?  

CONROY:  Well, I can tell you we`ve been working on this for the last ten 

years, and I have never in the last ten years been more excited about the 

future than now.  And so, what I would say is we can`t wait to keep doing 

the work that we`re doing, especially with our partner at the Mayo Clinic.  

I`d much rather do that from a position of being able to make those 

decisions and innovate in a way that can help people.  That is our goal and 

it`s going to continue to be our goal.  

GRIFFETH:  Kevin Conroy, the CEO of Exact Sciences, thanks again for 

joining us tonight.  Appreciate it.  

CONROY:  Thank you.  

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

downgrades.  Google`s parent, Alphabet, was upgraded from buy to hold at 

Pivotal Research.  The analyst cites Google`s dominant digital ad business 

and says the company is better managed that Facebook.  The price target is 

$1,240.  The stock fell a fraction to $1,075.92.

General Motors was upgraded to outperform to market perform at BMO Capital.  

The analyst expects improved profitability and higher free cash flow.  The 

price target is $41.  The stock gained 3 percent to $34.36.  

GRIFFETH:  Micron Technology was upgraded to outperform from market 

perform, also at BMO Capital.  The stock there says the stock has likely 

bottomed after a 35 percent decline over the past six months.  Price target 

now is $50.  Shares rose about 4 percent today to $34 even.  

Altria was downgraded to market perform from outperform at Cowen.  The 

analyst sees tumultuous times in tobacco and is forecasting further 

declines in an already deteriorating U.S. cigarette market.  Price target 

has been lower to $53.  That stock fell 3 percent today to $48.78.  

HERERA:  Still ahead, why an ugly stock market could be bad news for the 

finances of the nation`s largest economy, California.


GRIFFETH:  The economic tensions between the U.S. and China have not 

exactly stopped Tesla from breaking ground on a new factory in Shanghai.  

The electric car maker is forging ahead with plans to ramp up production in 

that critical Chinese car market.  

Eunice Yoon has more for us tonight from Shanghai  



the new Gigafactory as just another example of Tesla`s commitment to the 

China market.  The Tesla founder was here in Shanghai to attend a ground-

breaking ceremony for their plant which is about a two-hour drive from 

here.  In tweets before the event, musk said the company aimed to finish 

construction this summer and start Model 3 production by the end of the 

year and reach high volume production next year.  

He added that the Shanghai Giga production would focus on the Model 3 and 

the Y, serving the greatest China region.  This factory will produce 

affordable versions of the models, he says, for greater China, while the 

rest and higher cost versions would be produced in the U.S. for the 

worldwide market.  The company plans to eventually produce approximately 

3,000 Model 3 vehicles per week here and ramp up to 500,000 vehicles per 


The announcement comes at an uncertain time in U.S./China relations, when 

trade tensions are high.  But Musk says that the move is going to be good 

for the company because it`s going to help reduce some of the risk, reduce 

some of the expenses associated with transportation costs, as well as 


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


HERERA:  Meantime, Toyota is promising to expand the number of electric 

vehicles it plans to sell.  But is it moving fast enough to keep pace with 

Tesla, which has become the leader in plug-in cars and SUVs?

Phil LeBeau has more on the battle to win over buyers looking to go green.  



Toyota, the third largest automaker, and Tesla, the world`s top builder of 

electric cars.  Last year in the U.S., Tesla easily sold more electric 

vehicles than Toyota, which has just one model that plugs in, the Prius 

Prime.  It`s part of the Prius lineup, hybrid cars that run partially on 


AD NARRATOR:  More powerful, next generation gas/electric Prius, with 

hybrid synergy drive.  

LEBEAU:  Prius` popularity exploded ten years ago, making Toyota the leader 

in eco-friendly models.  

BOB CARTER, TOYOTA NORTH AMERICA:  So our strategy is to continue to 

utilize and enhance our hybrids, our plug-in hybrids, and then eventually 

bring in battery electric vehicles as the market grows.  

LEBEAU:  But gas/electric hybrid sales are slowing down because of cheaper 

gas limits how much money hybrid save compared to conventional models. 

Meanwhile, demand for electric cars is growing, especially in China, where 

Elon Musk has broken ground on a new plant to build Teslas for Chinese 


KARL BRAUER, KELLEY BLUE BOOK:  I don`t think there`s any question Tesla is 

seen as the real leader in pure E.V. vehicles now.  Whether it`s just sales 

numbers, whether it`s image and awareness and appeal, I think Tesla owns 

that now.  It`s going to be hard to wrestle that free from them.  

LEBEAU:  Toyota is undaunted.  It`s developing pure electric cars while 

planning to expand sales of hybrids.  

CARTER:  We believe right now that the hybrid technology in the short term 

for `19 and `20 is the best application for consumers today.  

LEBEAU:  It is still early in the race to get more car buyers to plug in.  

While Tesla clearly has the lead, Toyota believes it will eventually have 

the models needed to charge up electric car sales.  



GRIFFETH:  An activist investor wants Dollar Tree to raise its prices.  

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

Starboard Value is pushing them to start selling some items that cost more 

than $1 in order to raise revenues.  Dollar Tree has famously kept prices 

at $1 since it was founded 30 years ago.  Starboard also wants the company 

to consider selling family dollar.  That`s the struggling chain of stores 

that Dollar Tree purchased back in 2015.  Dollar Tree rose more than 5 

percent to $97.96.  

Sage Therapeutics oral treatment for postpartum depression has successfully 

met the main goal of a late-stage study.  The company said that patients in 

that trial showed a rapid and sustained reduction in depressive symptoms.  

And shares surged 42 percent on that news today to $139.13.  

HERERA:  Roku recorded a big increase in user growth, surpassing 27 million 

active accounts in the fourth quarter.  Roku says that users streamed more 

than 7 billion hours in the quarter, a 68 percent gain year over year.  

That growth sent shares up 25 percent to $42.18.  

The New York Stock Exchange and the Nasdaq could see new competition.  

Morgan Stanley, Fidelity and Citadel are among the companies planning a new 

exchange, which they say will provide a low cost alternative to the major 

exchanges.  That sent shares of Intercontinental Exchange which owns the 

NYSE down 3 percent and the Nasdaq fell more than 2.5 percent.  

California`s largest utility is reportedly considering bankruptcy 

protection.  PG&E faces what could be crippling liability damages from a 

number of wildfires.  The cause of the fire has not been determined, but an 

electrical outage occurred around the time and place of California`s camp 

fire and where it started.  Shares of PG&E dropped 22 percent to $18.95.  

GRIFFETH:  Well, with the new Congress being sworn in, there are new ideas 

floating around Washington these days, especially when it comes to taxes.  

During an interview with Anderson Cooper on “60 Minutes” over the weekend, 

freshman New York Congresswoman Alexandria Ocasio-Cortez talked about the 

super rich paying their fair share, invoking an idea from the 1960s.  


REP. ALEXANDRIA OCASIO-CORTEZ (D), NEW YORK:  Once you get to like the 

tippy tops, on your 10 millionth dollar, sometimes you see tax rates as 

high as 60 percent or 70 percent.  That doesn`t mean all $10 million are 

taxed at an extremely high rate, but it means that as you climb up this 

ladder, you should be contributing more.  


HERERA:  The super rich in California have an outsized impact on that 

state`s budget.  And when the stock market is volatile, so is the revenue 

into one of the world`s biggest economies.  

Aditi Roy is in San Francisco.



residents, which include Mark Zuckerberg, Larry Ellison, Larry Page and 

Sergey Bryn, pay the most in personal taxes.  That`s because of the state`s 

progressive tax system in which the top 1 percent of taxpayers generate 

nearly half of California`s personal income tax revenue.  

That also means big drops in the stock market can create volatility in the 

state`s revenues, especially since California`s wealthiest residents make a 

big chunk of their money from capital gains and tech company stock options.  

GOV. GAVIN NEWSOM (D), CALIFORNIA:  Today our economy is larger than all 

but four nations in the world.  We created — we`ve created nearly 3 

million jobs and put away billions of dollars for a rainy day.  

ROY:  It`s a challenge Governor Gavin Newsom who took office today will 

inherit.  While the state currently has a budget surplus, experts say a 

turn in the markets could result in swings in the state`s budget.  

Former Governor Jerry Brown spoke about that volatility during a budget 

address last year.  

FORMER GOVERNOR JERRY BROWN (D), CALIFORNIA:  The difficulty comes when you 

have property tax that`s very stable, the property tax has only gone down 

once since the great recession, whereas income tax has gone down many, many 

times.  And that volatility is what we`re trying to fix.  

ROY:  One way the state is facing that volatility is a $13 billion rainy 

day fund.  But one tax expert tells us if the legislature approves big, new 

spending programs and if there`s a market downturn, that fund would quickly 

dry up.  

In a paper released last year, California`s legislative analyst office they 

say in California, revenues fluctuate in the economy and the stock market 

more than most other states.  The office estimates that the dotcom bust of 

the early 2000s led to $80 billion in losses and a mild recession or even 

deep bear market could result in a $20 billion budget problem.  

While Gavin Newsom has indicated he would like to overhaul the tax system, 

there are a few particulars about how he plans to do it.  Some however 

worry that any changes would roll the tax burden onto lower income 


For NIGHTLY BUSINESS REPORT, I`m Aditi Roy, San Francisco.  


HERERA:  The White House today said that the IRS will pay tax refunds 

during the partial government shutdown.  That has traditionally not been 

the case.  

The IRS has not yet announced a start date to the filing season.  

GRIFFETH:  Coming up, price hike.  The happiest place on earth just got a 

lot more expensive.  


HERERA:  Here`s a look at what to watch for tomorrow.  President Trump will 

address the nation on immigration and the southern border.  CES, the 

world`s biggest annual tech show, gets under way as that industry searches 

for the next big thing.  

And the former chairman of Nissan, Carlos Ghosn, goes to court in Japan 

where he`s accused of underreporting his income.  He`s expected to make his 

first public comments.  That`s what to watch for on Tuesday.  

GRIFFETH:  Finally for tonight, if you`re planning a trip to Disneyland, 

you may experience a bit of sticker shock.  The theme park giant is hiking 

prices once again at its parks.  

Julia Boorstin is in Los Angeles with a look at what`s behind that 




Star Wars Land opening at Disneyland this summer, the theme park is raising 

prices.  Effective Sunday, Disney`s least expensive daily ticket has jumped 

above $100 for the first time, now $104.  

Meanwhile, tickets for regular demand and peak demand days have increased 

in price by 10 percent.  With the price of Annual passes has increased by 8 

percent.  Parking prices are 25 percent higher.  

TIM NOLLEN, MACQUARIE SENIOR ANALYST:  It`s not surprising.  It sounds to 

me like something that any successful company with a quality product like 

Disney would be doing in a strong economy.  There`s clearly been 

overwhelming demand for the parks in general.  Very heavy attendance, 

including at peak hours.  So, part of the plan here I think is to try to 

spread the attendance a bit, but also remember, it`s a very strong consumer 


BOORSTIN:  This price hike comes just a year after Disneyland and 

California Adventure increased prices by as much as 18 percent.  But that 

didn`t hurt the parks, with both visitor volume and spending increasing.  

Now, these price hikes are part of Disney`s preparation for a surge of 

visitors for Star Wars Galaxy`s Edge.  The 14 acre-$1 billion expansion of 

the theme park which will include two rides.  

CEO Bob Iger spoke about expectations for this new Star Wars land in 

Disney`s earnings call in November.  

BOB IGER, DISNEY CEO:  Clearly, it`s the biggest thing we`ve done since it 

opened in 1955 and we think it will drive a huge increase in demand.  I 

think we`ll have some interesting challenges on our hands to manage that 

demand but that`s a good problem to have.  

BOORSTIN:  And Macquarie`s Nollen is confident consumers will be willing to 

pay more.  

NOLLEN:  I will anticipate a lot of people showing up to this new 

attraction at Star Wars Land and I expect people will accept the price 

increase because they want to see that product.  And the Star Wars Land is 

just another way of propagating the usual Disney virtual circle of popular 

content through various different channels.  

BOORSTIN:  The risk is if consumer spending slows, if the economy struggles 

or if Star Wars Land fails to live up to expectations.  We`ll see how much 

ride on Hans Solo`s Millennium Falcon is worth to fans.  

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


HERERA:  Here`s a final look at the numbers on Wall Street today.  The Dow 

rose 98 points, the Nasdaq added 84, the S&P 500 was up 17.  

And that is NIGHTLY BUSINESS REPORT for tonight.  I`m Sue Herera, thanks 

for joining us.  

GRIFFETH:  I`m Bill Griffeth.  Have a great evening.  We`ll see you 



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