ANNOUNCER: This is NIGHTLY BUSINESS REPORT
with Sue Herera and Bill
BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Amazon (NASDAQ:AMZN)
doesn`t love New York. The company cancels plans to build its second
headquarters in the Big Apple (NASDAQ:AAPL) after mounting opposition.
SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Retail surprise. Sales
declined in December at their fastest pace in a decade during the most
critical month for that industry.
GRIFFETH: Coke goes flat. The soda maker expects sales growth to slow
this year and shares saw their biggest drop since 2008.
Those stories and more tonight on NIGHTLY BUSINESS REPORT for this
Thursday, February 14th.
HERERA: Good evening, everyone, and welcome.
One of the nation`s biggest companies is saying good-bye to the country`s
biggest city. Amazon (NASDAQ:AMZN) has confirmed that it will not build
its second headquarters in New York. As we reported last week, the company
was concerned about mounting opposition from some lawmakers and advocacy
In a statement, Amazon (NASDAQ:AMZN) said, quote, while polls show that 70
percent of New Yorkers support our plans and investment, a number of state
and local politicians have made it clear that they oppose our presence and
will not work with us to build the type of relationships that are required
to go forward with the project we and many others envisioned in Long Island
City, end quote.
Critics of the decision did not like the tax breaks that Amazon
(NASDAQ:AMZN) was given to build the project that it estimates would have
brought 25,000 jobs and billions of dollars in tax revenue to the city.
We have two reports tonight. Diana Olick on what that decision would mean
on property values in the area but, first, Contessa Brewer with reaction
from Long Island City.
CONTESSA BREWER, NIGHTLY BUSINESS REPORT CORRESPONDENT: On this holiday
devoted to love, no love lost in New York City as neighbors and local
politicians duked it out and Amazon (NASDAQ:AMZN) announces it`s pulling
out from its New York City deal. This was supposed to be the largest
economic development deal in New York state`s history, a deal that would
bring 25,000 to 40,000 jobs, jobs that would average $150,000 a year.
New York Governor Andrew Cuomo is pointing the finger at local leaders for
ending this deal. A small group of politicians put their own narrow
political interests above their community. One of those outspoken
opponents was local New York City Councilman Jimmy Van Bramer and he did a
victory lap news conference.
JIMMY VAN BRAMER, NEW YORK CITY COUNCIL: We are proud that we fought for
our values, proud that we fought for our values. Our values in New York
City are to defend working men and women.
BREWER: But the constituents who live here, neighbors and local
businessmen, are furious.
PROTESTER: Job killer, everybody!
BREWER: They feel like they have lost out on the opportunities, and they
pushed back loudly during that news conference.
CHRIS BYRNE, NEW YORK RESIDENT: I think it`s a sad day for the community,
I really do. There were a lot of jobs coming our way. There was a lot of
energy in the community. And it`s just unfortunate. You know, there were
a couple of politicians who made a lot of noise and they did not speak for
the residents in this community.
BREWER: Amazon (NASDAQ:AMZN) praised both New York`s governor and the
mayor, Bill de Blasio, for being good partners, but today in his statement,
Bill de Blasio somewhat changed his tune.
He said: We gave Amazon (NASDAQ:AMZN) the opportunity to be a good neighbor
and do business in the greatest city in the world. Instead of working with
the community, Amazon (NASDAQ:AMZN) threw away that opportunity.
Amazon (NASDAQ:AMZN) said it had 70 percent support among New Yorkers, but
those 30 percent who opposed were loud in their opposition. They wanted to
know what the impact would be on transit, on schools, on real estate, and
they felt like Amazon (NASDAQ:AMZN) wasn`t being a good community partner
in sitting down and talking with them.
And so on this Valentine`s Day, New York City got dumped.
Contessa Brewer, NIGHTLY BUSINESS REPORT.
GRIFFETH: Now, when Amazon (NASDAQ:AMZN) did first announce its choice of
Long Island City for its second headquarters, we reported that buyers were
flocking to buy up real estate in that area.
Diana Olick takes a look.
DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: In the 14 weeks
following Amazon`s announcement to put HQ2 in Long Island City —
UNIDENTIFIED FEMALE: Yes. So, this entire cube is sold out.
OLICK: Open houses like this one were jam-packed. Some hoping to live
there. Others, investors hoping to buy, flip and profit from what would
surely be a jump in home prices.
Signed contracts to buy properties, mostly condos, jumped 181 percent
compared to the same period the previous year, according to Stribling and
Associates, 135 sales compared to just 48 the year before.
When the news hit today, shares of residential REITs like Equity
Residential (NYSE:EQR) and Avalon Bay took a hit. Avalon has a large
building in Long Island City and Equity Residential (NYSE:EQR) has a big
presence right across the river in Manhattan.
Long Island City`s rental market was considered overbuilt before Amazon
(NASDAQ:AMZN) with several new towers on the water. In a statement, the
president of New York`s Real Estate Board, John Banks, said: It`s
unfortunate that we`ve lost out on an opportunity to create tens of
thousands of jobs for city residents and generate billions of dollars in
tax revenue. Nevertheless, New York City is still open for business and
will retain its status as a world class center for tech and innovation.
Office REITs were split today with SL Green getting hurt initially as it
has a large presence in Manhattan, but JBG Smith, the biggest office name
in Northern Virginia, the other Amazon (NASDAQ:AMZN) choice for HQ2, got a
bounce. Some may be thinking that Amazon (NASDAQ:AMZN) will now go even
bigger in northern Virginia.
For Long Island City, it`s not as if it will suddenly become a wasteland.
Agents there say all the attention over the last few months was very
positive and will likely outlast the Amazon (NASDAQ:AMZN) effect.
For NIGHTLY BUSINESS REPORT, I`m Diana Olick.
HERERA: Today, investors got another surprise. Retail sales for the
holiday season were a lot weaker than expected, posting their worst monthly
plunge since 2009. And that caused the stocks to jolt lower at the open
and after a volatile day, the Dow Jones Industrial Average fell 103 points
to 25,439, the Nasdaq was up 6 and the S&P 500 was down 7.
And that sharp drop in retail sales is raising questions about the economy.
Steve Liesman has more.
STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: The largest monthly
decline in retail sales in nine years reported today by the government
raised new questions about the outlook for the economy this year, with
specific concern about whether the American consumer is weaker than
In data that was delayed by the shutdown, the government reported that
retail sales for December plunged 1.2 percent. Wall Street expected a 0.1
percent gain. The report which covers the critical Christmas selling
season showed sales declined in most major categories, including department
stores and gasoline stations. The numbers for internet retailers were even
Fed Governor Lael Brainard in an exclusive CNBC interview said the data
added to a growing of concerns she has about the economy.
LAEL BRAINARD, FEDERAL RESERVE BOARD OF GOVENORS: It certainly caught my
eye. It`s a miss. It`s one month of data so don`t want to take too much
signal from it, but certainly adds to a story where we want to take onboard
that there`s some downside risks. At the same time, we`re still getting
pretty good numbers, more recent numbers on payrolls.
LIESMAN: The big retail miss prompted economists to slash their outlook
for fourth quarter growth by 0.7 of a percentage point to 2.4 percent.
That would make it the weakest quarter since the first quarter of 2018.
But there were questions about whether too much was being made of the one
retail number because of some unique events.
LINDSEY PIEGZA, STIFEL CHIEF ECONOMIST: The consumer was losing momentum
going into this final number for 2018, but it also reflects the government
shutdown, or at least the initial days of the government shutdown. So, the
question is, does this weakness reflect a bigger issue in terms of the
consumer pulling back, or is this temporary weakness and we should expect a
rebound as we wait for those January and/or February figures.
LIESMAN: Brainard said the retail number reinforced her support for the
Fed`s current policy stance, which is to be on hold. She said, quote, I`m
comfortable waiting and learning.
For NIGHTLY BUSINESS REPORT, I`m Steve Liesman in Washington.
GRIFFETH: Well, let`s turn to Andrew Hollenhorst for his analysis of this
data. He is the chief U.S. economist at Citi.
Andrew, thanks for joining us tonight.
ANDREW HOLLENHORST, CITI CHIEF U.S. ECONOMIST: Thanks very much, Bill.
GRIFFETH: Everybody has got their opinion about what this number meant.
It`s only one month but it was a huge miss. What do you make of it?
HOLLENHORST: It`s an ugly surprise for Valentine`s Day, unfortunately.
This number was a lot weaker than we were expecting but I think you have to
be careful here. As an economist you`re always trying to separate what is
an aberration from the trending and what is telling you something about
maybe a new trend we`re moving to.
And the trend has been very strong. Strong job growth, strong income
growth has been driving strong consumption growth. We saw that in
November. You had this weakening in December in this one report.
And so, I would agree with Governor Brainard that you have to take it
seriously. But in terms of is it telling us something really different
about the strength of the consumer? I don`t think we can conclude that, at
least not yet. Everything else we`re seeing is still sending a message of
There are some special factors here, the shutdown which happened in equity
markets. So we`re keeping a fairly optimistic view on growth. Again, it`s
been a strong economy. Very, very aberrant reading in this one report, but
it doesn`t change our view.
HERERA: OK. So, it doesn`t change your base case scenario. Does it
change what you think the Fed will or will not do in the future based on
this data point?
HOLLENHORST: So I think the good place that the Fed is in right now is
they have already clearly signaled that they`re on pause probably at least
for the first half of this year. Certainly after this data report, you
want to wait. You want to wait for some of this delayed data to come back
in and see where the consumer is, where the economy is.
Can the Fed get back to hikes? I think they still can. I think that can
happen towards the end of the year. You`re going to have to see stronger
GRIFFETH: So you`re not changing your outlook for the econ but a couple of
reports I saw, one from a Federal Reserve bank, a local one, and another
from a brokerage house both reduced their expectations for GDP in this
current quarter. One I saw go from 2.7 percent all the way to 1.8 percent.
What do you make of those?
HOLLENHORST: So I think 2.7 to 1.8 is a little aggressive, but this is
talking about the Q4 data, what happened in December. Yes, we revised down
our growth expectation also from the higher 2 percent to now the mid-2
percent. So, those Q4 growth estimates are going to come down.
But, remember, we`re talking about a 2 percent plus economy here. We think
this can reaccelerate as you get into the second quarter especially. The
first quarter will be dragged by some of these effects. So, I think there
is an outlook for strong growth and this is backward-looking Q4 and likely
to get some rebound in coming quarters.
GRIFFETH: We will see. Andrew Hollenhorst of Citi, thanks again for
joining us tonight.
HOLLENHORST: Thanks so much.
HERERA: And now Michael Farr joins us to talk about the stock market`s
reaction to the data. He is president of Farr, Miller and Washington.
Welcome back, Michael. Nice to see you.
MICHAEL FARR, PRESIDENT, FARR, MILLER AND WASHINGTON: Thank you, Sue.
HERERA: What did you make of the market`s reaction to the data? A lot of
people thought it could have been much worse.
FARR: I thought it could have been much worse, Sue. In fact I thought
that the markets behaved kind of responsibly today, almost like adults,
which we didn`t see a lot in 2018 with all of the volatility that we did
You know, I think Steve in his interview with Governor Brainard earlier
today brought up some really important points, but one of the things that
was, I think, clear was that the consumer data, the retail data was weak,
but I don`t think necessarily the consumer is weak. Unemployment is still
remarkably low. We`re seeing wage gains.
There`s a lot of other important data that says that the consumer could
continue to spend. But the consumer was facing a Washington crisis
shutdown with 600,000, 800,000 people out of jobs. And then we saw that
drop in the stock market, Sue.
When you see your portfolio statement go down 20 percent, just saying, you
know, maybe I`m not going to spend a lot now. It doesn`t mean that you
can`t, it means that you won`t. It`s different with people being out of
GRIFFETH: But we have come back quite a bit in January, throughout most of
2019. I mean, we did have the worst stock market decline for a December
since the 1930s, but we have come back. Now what do you think happens now
that we`re getting these signs that maybe there is a little weakness going
FARR: Yes. You know, I think you have to pay attention to the weakness.
We take a look at of course interest rates and we`ve got an interest rate
on the 10-year at 2.65 percent, still very low interest rates. As we look
to next year and the following year, maybe 2.3, 2.4 percent GDP growth in
2019 is what the fed is sort of looking for. And then still 2 percent in
So, it`s not awful. Nothing is really awful. But I think caution after
you`ve seen a market that`s gone up 17 percent.
HERERA: Michael Farr with Farr, Miller and Washington, thank you, Michael.
FARR: Thank you.
GRIFFETH: To earnings now, Coke was a big loser on Wall Street today. In
fact, it suffered its biggest decline since 2008 after the company said it
expects sales to slow this year. And that overshadowed a slightly
stronger-than-expected revenue number in its latest quarterly revenue
report. The stock fell sharply, down more than 8 percent today.
Sara Eisen spoke to Coke`s CEO and filed this report.
SARA EISEN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Coca-Cola (NYSE:KO) saw
another strong quarter of growth but didn`t painting the rosiest picture of
The CEO, James Quincy, said it`s the economy that has been so cautious.
JAMES QUINCY, COCA-COLA CEO: As we look into 2019, clearly, we see
softness in some of the countries that stumbled a little towards the end of
2018. Argentina went down strongly at the back ending of last year.
Turkey is now adjusting to some of their macro economic troubles, some of
the other countries in the Middle East, and, of course, Europe has softened
a little bit coming into 2019.
So I think it`s not one country in particular, there`s, I think, a few
parts of the world that are softening that clearly are represented in the
IMF economic outlooks. But again, the good years and the bad years will
come. What we`re focused on is really executing against that plan. We`ve
got good brands, good marketing, good innovation and our system is
EISEN: Coca-Cola`s underlying business is strong fueled by double-digit
growth in Coke`s zero sugar. A return to growth for Diet Coke after years
of underperformance. Alternative sparkling waters like Topo Chico and
experimentation with new flavors, like Blueberry, Asahi Diet Coke and a
brand new version of Coca-Cola (NYSE:KO), orange vanilla.
QUINCY: I think around the world, you`re seeing consumers more interested
in personalization, more interested in trying new flavors of brands they
love, and so you see that in the U.S. with new flavors on Coke, new flavors
on Diet Coke. Clearly, it`s been part of helping stabilize the Diet Coke
business, along with packaging and some great marketing. So, I think
you`ll see more from us in terms of innovation not just around new brands
and new products but also new flavors.
EISEN: But ultimately, Coke`s fortune is tied to that of the global
economy. It operates in more than 200 countries around the world.
Therefore, the strength of the U.S. dollar does weigh on those profits when
brought back home. And if the economy turns in places like emerging
markets, Coca-Cola (NYSE:KO) feels it on the spending side.
For NIGHTLY BUSINESS REPORT, I`m Sara Eisen.
HERERA: It is time to take a look at some of today`s “Upgrades and
ExxonMobil (NYSE:XOM) was upgraded to outperform from underperform at
Macquarie. The analyst says that Exxon is well-positioned for the future
and cites its liquefied natural gas developments and its Permian basin
operations, among other things. The price target is $83. The stock rose 2
cents to $76.27.
D.R. Horton (NYSE:DHI) was downgraded to market perform from strong buy at
Raymond James. The analyst cites the macro housing environment for the
year. The firm also noted the stock`s valuation. The shares fell about 1
percent to $39.80.
Dunkin Brands was downgraded from hold to buy at Argus. The analyst cites
that outlook for some store sales growth. The firm also notes management`s
plan to add fewer stores. Shares rose about 1 percent to $69.87.
GRIFFETH: Still ahead, why trade talks with China are entering a crucial
GRIFFETH: In Washington, the Senate today passed legislation that would
avert another partial government shutdown. The House is expected to vote
on that bill tonight, then it goes to the president.
(BEGIN VIDEO CLIP)
SEN. MITCH MCCONNELL (R-KY), SENATE MAJORITY LEADER: I`ve just had an
opportunity to speak with President Trump, and he — I would say to all my
colleagues, has indicated he`s prepared to sign the bill. He will also be
issuing a national emergency declaration at the same time. I`ve indicated
to him that I`m going to prepare — I`m going to support the national
(END VIDEO CLIP)
GRIFFETH: House Speaker Pelosi said that she may mount a legal challenge
if a national emergency is in fact declared. Senate Minority Leader Chuck
Schumer called such a move a lawless act.
HERERA: And when it comes to trade, the focus is on Beijing where
officials from the U.S. and China are trying to hammer out their
differences to avoid an escalation of the tensions between the world`s two
Eunice Yoon has been covering the story for us all along and she`s back
tonight with more.
EUNICE YOON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Today was a key day
for the trade talks. All the major players, Treasury Secretary Steven
Mnuchin, Trade Representative Robert Lighthizer and China`s Vice Premier
Liu He were meeting for their first day of two-day discussions. The two
sides are trying to hammer out the framework of an agreement that would act
as a basis for a potential summit between president Trump and President Xi
later, possibly as early as next month.
There`s a feeling that the final decisions would be made by the two leaders
if they do meet. From what we know, a lot is on the table, but the
negotiators are still far apart on how to address stickier structural
issues and enforce a deal once it`s worked out. But the two sides might
get some more time. Bloomberg is citing sources saying that President
Trump is considering a 60-day extension to the March 1st deadline.
Separately, we got trade data out of China that gives us a good look into
the impact of the tariffs on the trade relationship between the U.S. and
China. It`s not necessarily what you might think. Chinese exports to the
U.S. in January were down, but up overall by more than 9 percent. Greater
shipments to Japan, Europe as well as Southeast Asia.
But what was even more interesting is how sharply imports to the U.S. fell,
by 41.2 percent. That raises questions as to who is and who is not being
affected by the tariffs. It`s only one month data but the data shows that
American exporters are getting hurt more severely than Chinese ones.
It also lends to the argument that you often hear in China within the
business community here that even though the U.S. is an important market
for China, it has limited influence because China can just export to the
rest of the world.
For NIGHTLY BUSINESS REPORT, I`m Eunice Yoon in Beijing.
GRIFFETH: Elsewhere coming off a dramatic year, CBS (NYSE:CBS) reported
fourth quarter results that missed Wall Street earnings and revenue
estimates, largely due to its entertainment unit and tough comparisons to
last year, which was very strong. That sent the stock initially lower in
But as Julia Boorstin reports, one part of the business is strong.
JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: The key takeaway
from CBS (NYSE:CBS) earnings, while revenue and earnings grew slower than
expected, the company`s direct-to-consumer streaming business is growing
Acting CEO Joe Ianniello saying the company`s streaming app, CBS (NYSE:CBS)
All Access and Showtime, have significant momentum, saying they provide a
great return on investment and represent one of the company`s most powerful
long-term growth drivers. Ianniello announcing they had 8 million direct-
to-consumer subscribers between CBS (NYSE:CBS) All Access and Showtime,
nearly two years ahead of original projections.
As a result, Ianniello says they`re increasing their target to 25 million
domestic subscribers for these services by 2022. That`s up from
projections made in August of 16 million subscribers by then. Ianniello
saying they`re steering their strategic focus towards scaling direct to
For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Los Angeles.
HERERA: Nvidia beats earnings estimates and that`s where we begin
tonight`s “Market Focus”.
The chip maker closed out a turbulent year with better-than-expected profit
and revenue that was in line. But the company is forecasting first quarter
revenue below estimates as it faces slowing sales to data centers and weak
demand for its gaming chips. Shares initially popped in the after-hours
trade following a 1 percent gain during the regular session where they
closed at $154.53.
Six Flags investors took on a ride today, quite a ride, as the earnings
beat estimates by a wide margin, but revenue came up short. The theme park
operator was hurt by challenging economic conditions in China, which pushed
back some park opening dates there. Shares plummeted almost 13 percent
today to $54.87.
GRIFFETH: Restaurant chain operator Bloomin Brands topped earnings and
revenue expectations and provided upbeat full-year outlook as well. The
solid results were held by Outback Steakhouse which posted gains in same-
store sales and customer traffic. Shares jumped 9 percent for the company
to $21.06 today.
Yeti also beat on quarterly earnings and revenue and gave positive guidance
for 2019. That company which makes coolers and mugs said that the growth
was driven by expanded drink ware products. Yeti came public just last
October and shares were surging 17.5 percent today to $21.90.
And eBay (NASDAQ:EBAY) is reportedly planning to layoff workers as it
restructures its regional operations. The online marketplace has faced
strong competition from the likes of Amazon (NASDAQ:AMZN) and other online
retailers. EBay currently employs more than 14,000 people. The stock was
up just a fraction today at $36.32.
HERERA: Coming up, why the world`s largest passenger jet is being
HERERA: Southwest received approval from the FAA for test flights to
Hawaii. The airline still needs full FAA authorization before it can
announce when it will start passenger flights. This is considered a key
step in the approval process for a new route. As we reported, that process
was delayed earlier this year because of the partial government shutdown.
GRIFFETH: Well, the world`s largest commercial airplane is flying into the
sunset. Airbus has decided it`s going to stop building that massive A-380
due to a lack of orders.
Phil LeBeau has more on the big plane that failed to meet big expectations.
PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT: The death of the
Airbus A-380 is not a surprise. Aside from Emirates, which is based in
Dubai, demand for the massive jumbo jet never really took off.
With orders dwindling, Airbus has decided to stop building the plane.
TOM ENDERS, AIRBUS CEO: The decision we had to take on the 380 is a
painful decision, but this will not impact Airbus` competitiveness in the
LEBEAU: This is not what Airbus envisioned when it delivered the first A-
380 in 2007, a double-decker plane carrying 400 to 600 passengers on long
international flights, was supposed to be the perfect plane for a global
surge in air travel. We`ve seen that surge with more than 4 billion people
taking off every year.
But instead of ordering more A-380s, airlines have opted for smaller, more
fuel efficient planes, like Boeing`s 787 Dreamliner, which has the size and
range to connect a wider variety of cities around the world. Not
surprisingly, 787 orders and deliveries have steadily climbed higher, while
the A-380 has struggled, a disappointing return on Airbus` $25 billion
investment in the plane.
ENDERS: We`ve poured a lot of resource into the 380 over many, many years.
And the decision today means the end of production but not the end of a
program. By the way, we will continue supporting the 380 for many, many
years to come.
LEBEAU: In fact, Airbus expects the A-380 to be in service well past 2030,
connecting mega hubs like London, New York and Mumbai. But for many other
cities around the world, the A-380 will never be the right fit.
Phil LeBeau, NIGHTLY BUSINESS REPORT, Chicago.
HERERA: And finally tonight, “Fortune” is out with its list of best
companies to work for, evaluating everything from perks to opportunities
Climbing to number one spot is Hilton, up from number 33 last year. Hilton
is the first hospitality company to achieve a number one ranking.
Salesforce, number two, down one notch from the top spot last year.
And rounding out the top three is family owned grocery chain Wegmans, which
has been on that list for 22 years. Wow.
HERERA: That will do it for us tonight. I`m Sue Herera. Thanks for
GRIFFETH: I`m Bill Griffeth. Thank you for joining us and have a happy
Valentine`s Day as well.
HERERA: Yes, indeed.
GRIFFETH: We`ll see you tomorrow.
About NBR“Nightly Business Report produced by CNBC” (NBR) is an award-winning and highly-respected nightly business news program that airs on public television. Television’s longest-running evening business news broadcast, “NBR” features in-depth coverage and analysis of the biggest financial news stories of the day and access to some of the world’s top business leaders and policy makers.
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