ANNOUNCER: This is NIGHTLY BUSINESS REPORT
with Bill Griffeth and Sue
SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Policy pivot. This time it
happened in Europe, and that got investors here nervous, pushing stocks
lower for the fourth straight session.
BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Fraud crackdown. The
Justice Department charges hundreds of individuals for victimizing millions
of older Americans in the largest elder fraud bust ever.
HERERA: Tax law typo. It`s an expensive mistake for some small business
owners who are now paying the price.
Those stories and more tonight on NIGHTLY BUSINESS REPORT for Thursday,
GRIFFETH: And we do bid you a good evening, everybody, and welcome.
A storm cloud hung over Wall Street today. Stocks fell on more evidence
that economies around the globe are slowing down. Today, it was Europe
that was at the center of that storm after the European Central Bank cut
its outlook for the year and announced a new round of stimulus.
And while Europe may seem far away, when it comes to economic and profit
growth, it`s not. As we have seen repeatedly, a hiccup overseas can affect
our economy as well, whether it`s through trade and tariff issues or
through U.S.-based corporations that do business overseas. At the close,
the Dow Industrial Average was down 200 points today to 25,473, the Nasdaq
fell by 84, the S&P slipped by 22.
Bob Pisani has more on today`s market decline.
BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: Stocks drifted lower
throughout the day with global growth fears once again the top of mind for
investors. Don`t underestimate the power of central banks. We had a
policy pivot from the Federal Reserve in December. It got more dovish.
Now, we have the European Central Bank pivot. They`re getting more dovish.
ECB chief Mario Draghi leaving rates unchanged, slashing growth, prospects
for Europe, and launching another lending program to offer cheap money to
banks over in Europe.
MARIO DRAGHI, ECB PRESIDENT: The persistence of uncertainties related to
geopolitical factors, the threat of protectionism and vulnerabilities in
emerging markets appears to be leaving marks on economic sentiment.
And lately, the markets appear to be stalling out. So, there`s the usual
handwringing over the fact that after a 17 percent rally from the December
low, sector leaders are meeting a certain amount of resistance in the last
few weeks. And it`s true, leadership groups like the semiconductor stocks,
small cap companies, the banks and the industrials, they have all been weak
lately because the markets are not really cheap anymore and they were the
market leaders. They`re the ones that moved up the most.
The key now is to stop the decline in earnings estimates. And there are
signs that that is starting to happen. So the first quarter earnings
growth estimates, they have stabilized around down 1 percent. Still
negative, but if this keeps up, earnings could be positive for the first
quarter because they`re usually revised upward.
That`s the key thing. That will push this number into positive territory,
and that means likely we`ll see no earnings recession, at least not
starting in the first quarter. Investors have gotten used to the idea of
an endless up spiral, but maybe it`s time to temper that up indication.
For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock Exchange.
HERERA: A Federal Reserve governor said both global and domestic economic
growth is softening. Lael Brainard added the weakening should mean the
central bank should slow its pace of interest rate increases, adding to the
chorus of Fed officials who are now rethinking monetary policy.
(BEGIN VIDEO CLIP)
LAEL BRAINARD, FEDERAL RESERVE BOARD OF GOVERNORS: While our economy
continues to add jobs at a solid pace, demand appears to have softened
against a backdrop of downside risks. Prudence cancels a policy of
watchful waiting, especially with no signs that inflation is picking up.
(END VIDEO CLIP)
HERERA: Brainard cited trade and Brexit for her outlook. She has a
permanent vote on the Fed`s rate-setting arm.
GRIFFETH: Well, a new report out today showed that worker productivity
grew at a nearly 2 percent annual rate in the fourth quarter. That
registered its strongest growth rate over a nine-month period since 2010.
Worker productivity gains in theory create a backdrop for rising wages,
corporate profits or both.
Separately, another report shows that household net worth saw its biggest
decline since the financial crisis. According to the Federal Reserve, our
total net worth dropped by $3.7 trillion to about $104 trillion at the end
of the fourth quarter. Much of that is being attributed to that steep
stock market decline we saw at the ending of last year.
HERERA: And it is that household wealth that scammers are after. The
Justice Department today announced the largest ever nationwide crackdown on
elder fraud schemes, schemes so aggressive that even a former CIA director
Andrea Day has the details.
TONI BACON, DOJ COORDINATOR FOR ELDER JUSTICE: The sweep this year
involves charges against more than 260 defendants who allegedly defrauded
more than 2 million Americans of more than three-quarters of a billion
ANDREA DAY, NIGHTLY BUSINESS REPORT CORRESPONDENT: The numbers are
staggering, with more seniors being targeted now than ever before,
criminals in some cases duping the elderly out of their life savings.
Attorney General William Barr calling the fraud massive and despicable.
WILLIAM BARR, ATTORNEY GENERAL: We have to prosecute an all-out attack on
this kind of crime.
DAY: But investigators say con men picked the wrong guy when they targeted
95-year-old Bill Webster, a former CIA and FBI director, telling him he
just won millions of dollars in a lottery. The catch: he`d have to send in
50 grand to cover the taxes.
WILLIAM WEBSTER, FORMER DIRECTOR OF CIA, FBI: I feel so sorry for older
people who get this good news of the money they have won and they are going
to be terribly disappointed.
DAY: He said the caller was relentless, threatening to kill his wife, even
after learning who bill was. The couple played along with the scheme and
the man behind it was ultimately taken down.
LYNDA WEBSTER, TARGETED BY LOTTERY SCAM: Our message and the reason we`re
here today was that anyone, absolutely anybody can be targeted by the
scammers, many of whom seem legitimate, friendly, like your next-door
neighbor. Our message is don`t be fooled.
DAY: Investigators say the callers are very creative and always looking
for new ways to dupe the elderly. The most common is a tech support fraud
based in India. That`s where callers will say your computer has been
hacked and they`ll fix it free of charge if given access to your computer.
I`m Andrea Day, for NIGHTLY BUSINESS REPORT.
GRIFFETH: So why has elder financial abuse become so widespread and what
can you do to protect yourself?
Joining us tonight is Jean Setzfand, senior vice president of financial
security at AARP.
Jean, thanks for joining us tonight.
JEAN SETZFAND, AARP VICE PRESIDENT OF FINANCIAL SECURITY: Thanks for
GRIFFETH: Boy, this is widespread. I mean, how do — I have to think that
scammers wouldn`t do this if it didn`t work. Why does it work so
SETZFAND: Well, there`s a portion of the older American generation that
are very trusting, quite frankly, and they feel bad for not picking up
their phones. Once you have somebody on the phone, you`re more likely than
not to actually listen to them and fall prey to what they`re selling you.
HERERA: I assume you`re encouraged by today`s action, but it seems from
everything we`re hearing it`s really only the tip of the iceberg. Can you
put it in perspective for us?
SETZFAND: Absolutely. So, we are very encouraged by the fact that some
scammers have been — and fraudsters have been caught. You hear too much
about frauds and never sort of hear the good news of the bad actors being
caught. So, there is an ongoing trend around the tech support scam
definitely tracked by the FTC. We have a fraud help line and that tracks
very similarly. We`re getting a lot more calls about this issue.
So, broadly speaking, this is really a devastating fraud that`s really
hurting a lot of people, especially older Americans.
GRIFFETH: And it would seem that education could get rid of this, or at
least help to keep people from answering the phone and going along with
some of these scams. Now, you mentioned the hotline. What else can be
done do you think to educate these elders about what the possibilities are
for these scams?
SETZFAND: Absolutely. Well, first of all, a Microsoft (NASDAQ:MSFT) or an
Apple (NASDAQ:AAPL), all the reputable technology firms would never call
you out of the blue. So, if you actually get a call from them and they`re
saying that they`re Microsoft (NASDAQ:MSFT) here to help you because they
have detected a virus on your computer, hang the phone up. It`s 100
percent a scam.
GRIFFETH: Same with the IRS too, right?
SETZFAND: Same with the IRS. There`s a lot of imposters trying to pretend
to be somebody they`re not. So, none of these organizations either
governmental or large companies ever call you out of the blue for no good
HERERA: You know, it points out, does it not, the technology and the
advancement of technology and how it`s integrated into our lives in so many
different ways. Some people are not as comfortable with technology as
others are. So, when something pops up on their phone or their computer,
they`re not as well-equipped to maybe realize that that`s a scam.
SETZFAND: Absolutely. Whether you`re tech savvy or not, the fraudsters
are really good. I myself got an e-mail the other day that actually talked
about downloads that my kids were doing. I thought they actually did it,
but in fact it was not real.
So be very careful if you get any e-mails with links, never open them,
especially from people you don`t know. So the best thing to do, quite
frankly, is don`t answer the phone from anybody that you don`t know. Don`t
respond to an e-mail with anybody that you don`t know. If there`s a pop-up
on your screen that actually has you call a number, none of the programs
actually work that way.
Do not call that number.
GRIFFETH: Jean Setzfand with AARP, words of wisdom there. Thank you for
joining us again tonight. Appreciate it.
SETZFAND: Thanks for having me.
GRIFFETH: You bet.
HERERA: Equifax (NYSE:EFX) and Marriott were victims of two major data
breaches and today executives from those companies appeared in front of
lawmakers who are working to address the problem with new regulations.
Kayla Tausche is in Washington tonight.
KAYLA TAUSCHE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Executives from
Marriott and Equifax (NYSE:EFX) took their apology tour to Capitol Hill,
after suffering two of the biggest customer data breaches in U.S. history.
ARNE SORENSON, MARRIOTT CEO: We deeply regret this incident and are
committed to determining how it occurred, supporting our affected guests
and enhancing security measures to protect against future attacks.
TAUSCHE: Marriott`s CEO, Arne Sorenson, said the company inherited the
security issues when the company bought Starwood Hotels. Over four years,
hackers took information from 383 million Starwood customers and 5 million
passports. U.S. officials have said China conducted the hack.
SORENSON: We have shared everything we have with the FBI, including the
addresses used and the malware tools used in the system so that they can do
that kind of investigation. We`ve simply been focused on making sure the
door is closed.
TAUSCHE: At credit reporting company Equifax (NYSE:EFX), a 2017 breach
subjected 143 million customers to potential bank and identity fraud.
Senator Tom Carper, the top Democrat on the committee that hosted the
executives, blamed the company.
SEN. TOM CARPER (D), DELAWARE: Information obtained by this subcommittee
and included in a bipartisan report released last night illustrates a
years-long neglect of basic cybersecurity practices.
TAUSCHE: With cyber attacks becoming a regular occurrence, lawmakers are
shifting from trying to stop them for setting expectations for how to deal
with them, like when customers should be notified and whether companies
should be able to make money off their vulnerability.
Equifax`s CEO Mark Begor touted the company`s free products for victims.
MARK BEGOR, EQUIFAX CEO: When the breach happened, we offered a free
credit monitoring product to any American.
TAUSCHE: As lawmakers eye new federal regulations, Ted Rossman of
creditcards.com says consumers can take their own measures.
TED ROSSMAN, CREDITCARDS.COM: We can`t protect ourselves against
everything, but by freezing our credit and by checking in on our finances
regularly, even if we can`t totally prevent it all, we`re going to know
early enough that it`s going to make it easier to unwind.
TAUSCHE: While fewer people are falling victim to identical fraud than in
years past, the cost for those who do is going up. According to Javelin
Research, that out of pocket cost hit $1.7 billion last year.
For NIGHTLY BUSINESS REPORT, I`m Kayla Tausche in Washington.
GRIFFETH: Time to take a look at some of today`s “Upgrades and
We begin with shares of Toll Brothers (NYSE:TOL), which were downgraded to
underweight from neutral at JPMorgan (NYSE:JPM). The analyst calls Toll`s
fundamental outlook below average. The price target now $32. But despite
that downgrade, the stock rose nearly 2 percent today at $35.51.
AB InBev was downgraded from sector perform from a top pick at RBC Capital.
The analyst said the company has little prospect for margin growth right
now. The firm also cited the stock`s valuation and that stock did fall 2
percent today to $80.36.
HERERA: Pepsi was initiated with an underperform rating at Credit Suisse.
The analyst there cites an increase in competition and its struggling
beverage business. The price target is $100. The stock fell a fraction to
Estee Lauder was upgraded to overweight from neutral at JPMorgan
(NYSE:JPM). The analyst cites confidence that its earnings goals are
achievable. The price target is $175. The stock rose about 1 percent to
GRIFFETH: Still ahead, the impact of steel and aluminum tariffs one year
HERERA: It has been a rough ride for the transportation sector. The Dow
Transportation Index has fallen for ten straight sessions, making this its
longest losing streak since early 2009. And while airline stocks only make
up a part of that index, they have also hit some turbulence recently.
Phil LeBeau spoke to a number of airline CEOs today in Washington.
PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT: Despite airline stocks
flying considerably lower over the last week as investors worry about the
possibility of a recession hurting business, the CEOs of several major
airlines say they still see strong demand, especially here in the United
OSCAR MUNOZ, UNITED AIRLINES CEO: Pretty much for the half a year we`re
feeling pretty strong we`re not seeing any significant slowdown at this
DOUG PARKER, AMERICAN AIRLINES CEO: Strong globally, domestically.
Everything we`ve seen visibility is not the greatest, people book 30 days
in advance, but continues to be very strong.
BRAD TILDEN, ALASKA AIRLINES CEO: A lot of our business originates on the
West Coast of the United States. The markets that we`re operating in,
we`re seeing quite solid demand.
LEBEAU: The next big test for airline stocks, what happens in the spring
and summer travel seasons, two of the busiest times of the year for the
airlines. Those results will be critical to seeing if these stocks can
perhaps build a base and start to move higher over the next several months.
Phil LeBeau, NIGHTLY BUSINESS REPORT, Washington, D.C.
GRIFFETH: A food fight at Kroger (NYSE:KR). And that`s where we begin
tonight`s “Market Focus”.
The supermarket chain reported a drop in profit and says it expects
earnings for the whole year to come in below expectations. The y has spent
billions of dollars to overhaul its stores and improve online sales in
order to better compete with Walmart and Amazon (NASDAQ:AMZN). And its CFO
says its investments will pay off.
(BEGIN VIDEO CLIP)
MICHAEL SCHLOTMAN, KROGER CEO: With our launch of Kroger (NYSE:KR) Ship
that we made some investments in in the fourth quarter, which was part of
the margin erosion we saw in the fourth quarter, we would expect to serve
100 percent of the United States by this time next year.
(END VIDEO CLIP)
GRIFFETH: Nonetheless, Kroger (NYSE:KR) shares fell 10 percent today to
Elsewhere, General Electric (NYSE:GE) gave investors an update today on its
insurance business. The company said that current reserves for its long-
term care policies are sufficient and that it`s looking to increase
premiums. GE also said that it`s on course to raise about $9 billion by
2024 to cover the cost of those long-term care policies that were written
about a decade ago. The stock rose more than 3.5 percent today to $9.45.
Online marketplace Etsy gave investors a five-year growth target that was
in line with Wall Street expectations. Etsy also said that it sees global
merchandise sales growing at a compound rate of 16 percent to 20 percent
annually with revenue growth slightly faster. But investors were expecting
more and shares fell 4 percent today to $67.24.
And H&R Block`s quarterly revenue topped expectations as its do-it-yourself
tax returns offset a drop in assisted returns. The income tax filing
company`s full-year outlook was in line with Wall Street estimates. And
shares rose more than 2.5 percent to $24.16.
HERERA: International Game Technology (NYSE:IGT) missed on earnings but
revenue was in line with forecasts. The company`s 2018 results were also
in line with the outlook that it provided back in October. The gaming
company which makes slot machine has seen shares nosedive more than 45
percent over the past year. Today, they fell 16 percent to $14.35.
Barnes & Noble (NYSE:NE) (NYSE:BKS) beat on earnings but posted flat sales
for the holiday season. The bookseller a investors its full-year earnings
will be weaker than previously estimated. Shares fell 13 percent to $5.11.
Costco (NASDAQ:COST) reported better-than-expected quarterly profit thanks
to an increase in online sales. The warehouse club operator improved its
website, which helped attract more shoppers, as did same-day delivery for
groceries. The total revenue was just shy of estimates. Didn`t bother
investors, though, they sent the stock up in initial after-hours trading.
Shares finished the regular session down 1 percent to $216.79.
Online ticketing company Eventbrite reported a wider-than-expected loss and
issued weak first quarter guidance. Paid ticket sales grew as did net
revenue but that wasn`t enough to offset the lousy outlook and that sent
the stock sharply lower in initial after-hours trading. It rose 3 percent
to $32.42 in the regular session.
GRIFFETH: It has now been one year since President Trump enacted those
tariffs on imported steel and aluminum. And the results have been mixed.
I meanwhile some domestic producers do credit the levies with reviving a
struggling industry, others say the tariffs have had a negative impact,
resulting in higher prices on some everyday items.
Frank Holland takes stock of this part of the trade war one year later.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We`re urging all companies
to buy American.
FRANK HOLLAND, NIGHTLY BUSINESS REPORT CORRESPONDENT: That was president
Trump`s goal when he imposed steel and aluminum tariffs last march, and it
seems to be working. Aluminum production in the U.S. is expected to
increase by 60 percent this year, compared to 2017 before the tariffs.
And there`s more room for growth. Domestic supply is only meeting about 20
percent of U.S. demand. Michael Bless, CEO of Century Aluminum
(NASDAQ:CENX) said the 10 percent tariff on aluminum makes U.S. companies
more competitive against foreign producers that sell at lower prices
because they get government subsidies.
MIKE BLESS, CENTURY ALUMINUM PRESIDENT & CEO: The U.S. should be able to
produce some, a vast minority in aluminum but some of its primary aluminum,
1.2 million out of 5.7 million tons here. The tariffs were the only way to
right the playing field right now.
HOLLAND: Bless says as the tariffs took effect, Century Aluminum
(NASDAQ:CENX) has increased production by 250 percent and increased workers
by 25 percent. The last quarter, the company reported a loss. The result
of a sharp rise in raw material costs.
BLESS: The price of aluminum doubles and our profits crater. So, it`s a
HOLLAND: Last year, Commerce Secretary Wilbur Ross famously dismissed any
price increases as minimal.
WILBUR ROSS, COMMERCE SECRETARY: Here`s a can of Coca-Cola (NYSE:KO).
Coca-Cola (NYSE:KO) has 3 cents worth of aluminum in it. So if that goes
up 10 percent, that`s 0.3 of a cent. I just paid $1.49 for this can of
Coke. It doesn`t mean anything. So, all this hysteria is a lot to do
HOLLAND: But Coke ended up passing those higher costs on to consumers.
JAMES QUINCEY, COCA-COLA PRESIDENT & CEO: We have to take with our
bottling partners an increase on our beverage industry in the middle of the
year, which is relatively uncommon. That`s the freight, that`s the metals,
the steel, the aluminum going up, the labor going up.
HOLLAND: As trade talks between the U.S. and China continue, steel and
aluminum producers are watching the debate over tariffs that debate over
tariffs that are growing their business.
For NIGHTLY BUSINESS REPORT, I`m Frank Holland.
HERERA: Coming up, a small typo in the tax law and a big headache for one
HERERA: Huawei is suing the U.S. The Chinese telecom company contends
that Congress violated the Constitution when it banned government agencies
from purchasing Huawei equipment. The U.S. government has alleged that
Huawei is closely aligned with the Chinese government and that its
equipment could be used as a spying tool. Huawei has denied those
GRIFFETH: We have certainly been telling you about some tax filing
surprises under the new tax law this year. And here`s another one. The
legislation was supposed to allow businesses to write off construction
costs in the very first year. But one industry accidentally got left out.
Ylan Mui explains.
YLAN MUI, NIGHTLY BUSINESS REPORT CORRESPONDENT: Matt Herridge was going
to get a big break under the new tax law. He owns this Burger King
franchise in West Virginia and planned to expand with two new locations.
Now, that`s on hold because of a typo in the tax code.
MATT HERRIDGE, BURGER KING FRANCHISE OWNER: This is an error. That`s the
frustrating part about this.
MUI: Under the new law, restaurants don`t qualify for the immediate write-
off that other businesses get for construction. Instead, they have to
write it off over 39 years. That`s even longer than the 15-year schedule
they had before the new law. In other words, he is worse off than he was
HERRIDGE: We do not have any certainty that we will get to depreciate at
that 15-year rate or at that bonus rate, and so we really can`t count on
that. So, we are slowing down our rate of remodel and new builds.
MUI: That`s the exact opposite of what Congress intended.
MARK PRATER, PRICEWATERHOUSECOOPER`S MANAGING DIRECTOR: It`s just a
legislative language mistake that needs to be corrected.
MUI: That correction is in the works here in Washington, but it needs
support from Republicans and Democrats.
REP. JACKIE WALORSKI (R-IN), WAYS AND MEANS COMMITTEE MEMBER: This is a
15-minute fix. Let`s do it. Let`s get on and let`s not play partisan
games with something that affects jobs in every single member`s district.
MUI: There is hope that a fix could pass later on this year as part of a
big government spending package, but nothing is guaranteed here on Capitol
Hill. So, for now, business owners like Matt Herridge remain in limbo.
For NIGHTLY BUSINESS REPORT, I`m Ylan Mui in Washington.
HERERA: And that is NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera.
Thanks for watching. We`d like to remind you that this is the time of year
your public television station seeks your support.
GRIFFETH: And I`m Bill Griffeth. Thank you very much for that support.
Have a great evening. 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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