Nightly Business Report – March 14, 2019

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

BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR:  Brexit delay.  British
lawmakers hit the pause button on leaving the E.U.  So what`s next?  

2020 vision.  General Electric (NYSE:GE) hits the reset button on 2019 and
says it`s all about next year.  

And navigating financial aid.  Nearly all parents say aid is a determining
factor on where their child goes to college.  But what if the aid is still
not enough?  

Those stories and more tonight on NIGHTLY BUSINESS REPORT for this
Thursday, March the 14th.

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

We begin tonight with the latest developments in the already complicated
Brexit process in the U.K.  The House of Commons today voted overwhelmingly
to ask for a three-month extension to its departure from the European
Union, but there is still much more work to be done before that can happen.  

Willem Marx has more for us tonight from London.

(BEGIN VIDEOTAPE)

WILLEM MARX, NIGHTLY BUSINESS REPORT CORRESPONDENT:  It was the third day
of important votes in the House of Commons as the British government and
parliament work through what has been a month-long political deadlock.  On
Wednesday night, lawmakers hoped to rule out the possibility the U.K. could
leave the European Union without some kind of withdrawal deal and tonight,
as a part of a logical next step to avoid that so-called no-deal, the
government offered parliament an option to try and delay Brexit beyond its
original March 29th deadline.  

A resounding majority of MPs seized that opportunity.  

UNIDENTIFIED MALE:  The ayes to the right, 412, the noes to the left, 202.  
So the ayes have it.  The ayes have it.  Unlock.

MARX:  But before that, MPs also voted against a second referendum and
against an opportunity for the House of Commons itself rather than the
government take control of the Brexit process.  All this now means that in
theory, Prime Minister Theresa May must next week travel to Brussels to
request that her 27 European counterparts give Britain more time.  

But there`s no guarantee those E.U. leaders will grant that extension,
though few of them wanting to see Britain leave without a deal either,
given the damaging economic consequences.  May and her allies are hoping
they can use the threat of a much longer extension to persuade rebellious
members of the conservative party to back her original deal.  If that
happens next week, it could only require a short technical extension, and
the Europeans might be more than happy to oblige.  

May`s third Brexit secretary in as many years, Stephen Barclay, used arcane
parliament language to explain there will be more details by the morning.  
But these are uncharted waters for British leaders and the government.  And
their opponents and critics like Jeremy Corbyn know it.  

JEREMY CORBYN, LABOUR PARTY LEADER:  Mr. Speaker, after the last few days
of government chaos and some defeats, all of us now have the opportunity
and the responsibility to work together to find a solution to the crisis
facing this country, where the government has so dramatically failed to do
so.  

MARX:  The question now is, will parliament find an alternative to May`s
deal that will give the Europeans good reason to extend beyond late June?

For NIGHTLY BUSINESS REPORT, I`m Willem Marx in London.  

(END VIDEOTAPE)

GRIFFETH:  Back here on Wall Street, stocks were flat today as investors
wrestled with news that trade talks between President Trump and his Chinese
counterpart could be pushed back until next month.  Add to that, data
showing that new home sales in January fell by nearly 7 percent.  

And stock gains were capped as a result today.  The Dow rose just 7 points.  
The Nasdaq was down by 12, and the S&P gave back about two.  

But as Bob Pisani tells us now, the market is in a critical time.  

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT:  This is an important
moment for the markets.  We`re finally breaching this 2,800 level in the
S&P 500, and we have a shot at getting at the 2,820 level.  

You might recall, this is the level where five rallies have failed in the
last six months and a break above 2,820 may drag in more investors.  At
least that`s the hope of the bulls.

Despite all the ongoing worries about Boeing (NYSE:BA), the volatility
index, the VIX, often a gauge of fear on Wall Street, has dropped to its
lowest levels of the year.  

Now, one thing might be helping.  Friday is a quadruple witching day.  
That`s the quarterly expiration of the futures and options.  They`re all
expiring at the same time.  

So, why is that important?  There`s been a historically slight upward bias
in this particular week.  The S&P has been up 24 times this week since
1993.  It`s been down just 12 times.  

But what will it take to really push the market higher?  And I think the
key is the global growth story here.  We had solid data this week with the
economic news on durable goods and producer prices and that may help bulls
argue that earnings may not actually turn negative for the first and second
quarters.  That`s been a big worry — meaning no earnings recession in the
cards.  

But to keep the rally going, we really need a lot more meat on the bones
here, after the weak China industrial production numbers we saw overnight.  
We can expect a lot more stimulus out of China, that`s for sure.  But what
traders need is more visibility.  Facts that recently pointed out the
companies with earnings outside the United States predominantly have much
lower earnings expectations now than companies who rely primarily on
earnings inside the United States.  

What does it mean?  Well, it means that China and Europe need to stabilize
to get better visibility on earnings for companies here in the United
States.  Brexit is another mess.  The British pound is nearing a two-year
high but what the street really wants for this whole thing, they want the
deadline to be extended and then they want another referendum that will
result in the U.K. remaining in the E.U.  That`s still a long shot, though.  

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

(END VIDEOTAPE)

GRIFFETH:  And Treasury Secretary Steve Mnuchin today did confirm that the
trade negotiations with China will not be wrapped up by the end of this
month as had been hoped for.  And it turns out that while the protracted
talks continue, our trade deficit with China has ballooned.  Exports to
China fell by 25 percent last year while imports have skyrocketed.  

Jane Wells is at the port of Los Angeles for us tonight.

(BEGIN VIDEOTAPE)

JANE WELLS, NIGHTLY BUSINESS REPORT CORRESPONDENT:  You`re looking at the
largest ship ever to dock at a North American port, capable of holding
19,000 standard containers.  It`s a giant symbol of how out of whack trade
is between the U.S. and China since the tariff war began last year.  

GENE SEROKA, PORT OF LOS ANGELES EXECUTIVE DIRECTOR:  With the more than
1.8 billion square feet of warehousing we have in southern California,
there`s less than 1 percent vacancy rate.  

WELLS:  Where`s why: imports from China surged last year, up $34 billion
from the year before, while exports of U.S. goods plunged $10 billion.  So
much traffic has been coming in from China as companies front-load ahead of
even more potential tariffs.  It`s been great for the ports but it`s gummed
up the works.  

SEROKA:  Truckers are waiting longer, railroads are spending a lot of money
repositioning equipment.  Cargo owners are carrying a lot of costs with the
advance of inventories.  Having all these imports come in and then sit,
we`ve got thousands of containers of brake pads, keyboards just waiting.  

WELLS:  The Institute of International Finance estimates U.S. companies are
losing $40 billion a year because of the tariffs, and the ripple effects
extend far beyond China.  

For example, last month at the World Ag Expo in California, alfalfa farmer
Brooks Behling complained his hay from Utah couldn`t get to Saudi Arabia.  

BROOKS BEHLING, UTAH ALFALFA FARMER:  We had contracts signed in June and
the hay still hasn`t moved.  A lot of it has been paid for but they`re
still sitting in t barns because the ship movement is pretty slow.  

WELLS:  Another reason exports are down is because of China`s new
environmental policies which have slashed Chinese demand for things like
recyclable plastic and paper, which brings us back to this huge ship.  One
reason it`s here is to help clear the port of empty containers, to make
room for the next boatload of goods from China.  

For NIGHTLY BUSINESS REPORT, Jane Wells at the port of Los Angeles.  

(END VIDEOTAPE)

GRIFFETH:  In other news, the number of Americans filing for first-time
unemployment benefits rose to a four-week high last week.  And while claims
remain near all-time lows, some analysts been concerned that a recent rise
could signal a cooling of the labor market.  Last Friday, the Labor
department said the economy created just 20,000 jobs last month.  That was
well below expectations.  

But one area that is hiring is autos.  There are more cars on the road than
ever and drivers are hanging on to them longer than ever.  That means
skilled auto repair technicians are in demand.  By one estimate, some
46,000 will be needed in the next few years.  

Kate Rogers (NYSE:ROG) takes a look from Hackensack, New Jersey.  

(BEGIN VIDEOTAPE)

KATE ROGERS, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Michael Gerhart, Pep
Boys master auto technician has been on the job for decades, constantly
working to stay on top of advances in technology.  

MICHAEL GERHART, PEP BOYS MASTER AUTO TECHNICIAN:  It definitely doesn`t
get boring.  It`s always changing.  As long as you can keep up with the
technology that`s out there, you`re given a chance to use, it can be a very
rewarding career.  

ROGERS:  Finding qualified technicians is a challenge as workers age out of
the industry and the pool of talent shrinks in the face of a tight labor
market.  There`s also a focus on obtaining bachelor`s degrees when those
with trade skills are needed more than ever.  A recent report said a blue
collar worker shortage is expected to continue this year.  

GAD LEVANON, THE CONFERNECE BOARD CHIEF ECONOMIST:  In the U.S. as well as
most other advanced economies, the American Dream is to go to a four-year
college and not have a manual job.  And so, I think this is — for a while
it was not a problem because there was no shortage, but now there is a big
shortage and people with a B.A. are just not interested in those jobs.  

ROGERS:  Icahn Automotive with brands like Pep Boys and AAMCO is leading
the charge to fill the skills gap, partnering with trade schools and
offering apprenticeships.  

BRIAN KANER, ICAHN AUTOMOTIVE GROUP SERVICE PRESIDENT:  As demand has
grown, supply has not kept up.  And a lot of that is driven by a lack of
investment in schools and a de-emphasis on the technical programs really
all the way back to the high school level.  As the employee base ages out
and retires, we`re not filling that gap with the latest technician pools.  

ROGERS:  But executives say this isn`t the blue collar work of days past
and they`re trying to shed that old image.  

KANER:  I think there`s a stigma around this type of work and your dirty
old get your hands greasy job.  Today, shop is really more of a, you know,
a house of technology, where, you know, we really think that, you know,
students today should be thinking about that role as a STEM career.  

ROGERS:  With more drivers on the road and automotive innovations
advancing, filling this gap is imperative.  

For NIGHTLY BUSINESS REPORT, I`m Kate Rogers (NYSE:ROG) in Hackensack, New
Jersey.  

(END VIDEOTAPE)

GRIFFETH:  Time to take a look at some of today`s “Upgrades and
Downgrades”.  

Cowen initiated coverage of Apple (NASDAQ:AAPL) as an outperform.  The
rating was based largely on increasing contributions to earnings from
Apple`s services business.  The price target now $220.  Apple (NASDAQ:AAPL)
closed at $183.73 today.  That was up 1 percent.  

BTIG is upgrading Snap to a buy from neutral.  This is the analyst`s first
buy rating since Snap came public two years ago.  He cited Snapchat`s move
to more premium produced content.  The price target is now $15.  Snap got
12 percent closer to that today, up to $11.28.  

Mizuho was initiating coverage of Microsoft (NASDAQ:MSFT) with a buy
rating.  The firm sees the company`s cloud businesses continuing to drive
strong overall growth.  The price target now $135.  Microsoft (NASDAQ:MSFT)
rose nearly a dime to close at $114.59.  

Now that Boeing`s fleet of MAX jets is grounded, airlines are scrambling to
rebook flyers and keep routes open.  And passengers are reacting and
letting their feelings be known about that jet at the center of the whole
controversy.  

Frank Holland is at New York`s LaGuardia Airport for us tonight.  

(BEGIN VIDEOTAPE)

FRANK HOLLAND, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Boeing`s 737 MAX
jets are now grounded, but passengers like John de Santo are letting their
theories fly about why airlines waited for a presidential order.  

UNIDENTIFIED MALE:  The profit motive is a powerful one.  And I`m quite
sure that they wanted to wait until the last minute until somebody else
made that decision.  When you think about it, you should shut it down
immediately.  

HOLLAND:  As cancellations and disruptions are experienced all around the
country, passengers here at LaGuardia airport in New York City are
expressing a mix of concern, confusion and even confidence.  

UNIDENTIFIED MALE:  I fly every day.  I`m aware of it, but if it`s American
made, I`m going to fly it.  

I`ve flown Ilyushin 16 from the Soviet Union back in the `70s and `80s that
rattled when they flew.  If it`s made by Boeing (NYSE:BA), I`m going to
trust it.  

HOLLAND:  United flight attendant Rachel Kay says passengers have asked a
lot of questions about the 737 MAXes but the tone changed dramatically in
the days after the fatal Ethiopian airlines crash before the jets or
grounded.  

RACHEL KAY, UNITED AIRLINES FLIGHT ATTENDANT:  A while ago when I was
getting them, it was just curiosity.  Like, are we in the news, 737 MAX?  
But now it`s turned to fear, you know, people don`t want to be on one of
those.  If they are on one of those, they want to switch their flights.  

HOLLAND:  United, American and Southwest were the only U.S. carriers flying
the 737 MAXes.  United does not fly the MAX 8, but it does use the slightly
larger MAX 9.  Both United and American say it will impact about 1 percent
of their flights.  Southwest says about 4 percent.  

UNIDENTIFIED MALE:  I think it`s great that all of the MAX 8s are now
grounded.  And hopefully, they`re able to figure out what`s been causing
this so that no more lives are lost.  

KAY:  I really hope they find the black boxes and get to the root of the
problem.  I mean, if they`re going to keep sending the MAXes out, they
should really know what they`re sending out, what they`re getting people
into.  

HOLLAND:  The black boxes from the Ethiopian Airlines flight have been
recovered, but many questions remain.  What caused this deadly crash and
are the 737 MAXes in the U.S. safe to fly again?  

For NIGHTLY BUSINESS REPORT, Frank Holland, in New York City.  

(END VIDEOTAPE)

GRIFFETH:  Coming up, we`ll show you what happened to real estate in one
area when Amazon (NASDAQ:AMZN) came calling.  

(MUSIC)

GRIFFETH:  One week after telling investors that the company would have
negative cash flow this year, General Electric (NYSE:GE) today warned of
lower profits and called 2019 a reset year.  But the numbers may not have
been as bad as Wall Street was fearing.  Shares today rose almost 3
percent.  

Morgan Brennan has more.  

(BEGIN VIDEOTAPE)

MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT:  GE`s vision is
2020.  This year, investors can expect lower profits and weak cash flow as
the company continues to cut costs and debt.  

Cash is a key focus for the company and for investors trying to value stock
in the midst of the turn-around.  GE expects industrial free cash flow to
be down as much as $2 billion in 2019.  But on a call with investors, Culp
(NYSE:CFI) did sound hopeful about the long term.  

LARRY CULP, CHAIRMAN & CEO, GENERAL ELECTRIC:  If we get the returns that
we can and should on restructuring, let alone the underlying operating
improvements that we`re making, we think we get cash flow back to positive
territory.  In `20, we improve upon that in `21 and in longer term are in a
position where this portfolio should yield on a cash flow basis numbers far
in excess of what we did last year.  

BRENNAN:  Power continues to be the biggest pain point, Culp (NYSE:CFI)
telling me we`ll have a greater level of negative cash flow in business
this year.  It was negative $2.7 billion last year.  But that it will be
worse this year and from there, it will get significantly better in 2020.  
And we expect positive free cash flow in 2021.  

GE says health care renewables will face some pressure due to restructuring
and other one-time costs.  And that cash flow for aviation is likely to be
flat, as GE ramps production of its newest jet engine.  

Financial arm GE Capital requires more cash this year and likely next but
could stop losing money by 2021.  To continue paying down debt, the company
plans to gradually sell its stakes in two companies, now home to former GE
units.  Oil field services firm Baker Hughes (NYSE:BHI) and the locomotive
maker Wabtec (NYSE:WAB).  

All of this means GE is forecasting adjusted earnings to decline in 2019.  
But the hard-hit industrial does expect growth to return as soon as next
year.  

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan at the New York Stock
Exchange.

(END VIDEOTAPE)

GRIFFETH:  Oracle (NASDAQ:ORCL) gets help from the cloud.  That`s where we
begin tonight`s “Market Focus”.

After the bell tonight, the enterprise software company`s results topped
expectations, even though overall revenue fell by 1 percent.  Oracle`s
cloud business, which is its largest segment, grew by about 1 percent and
the company increased its dividend by 26 percent to 24 cents a share.  
Shares were volatile in the extended hours tonight after losing a penny
during the regular session to close at $53.05, just shy of an all-time
high.  

Also after the bell, tonight, software maker Adobe reported a 25 percent
rise in quarterly revenue as its earnings did beat Wall Street
expectations.  The quarter was driven by growth in Adobe`s digital media
business.  But the beat might not have been enough, shares initially fell a
closing the regular session up 1 percent to $267.69.  

And shares of Tailored Brands came undone after posting results that fell
short of expectations.  Last night, they reported the parent of Jos. A.
Bank and Men`s Warehouse gave weaker than expected current quarter guidance
saying that same-store sales had dropped during the fourth quarter and that
the trend had continued in the early months of 2019.  And shares lost a
quarter of their value today, closing at $8.75.  

Facebook`s data sharing deals are reportedly the subject of a criminal
investigation now by federal prosecutors.  “The New York Times (NYSE:NYT)”
says a grand jury has subpoenaed records from at least two well-known
makers of smartphones and other devices that reportedly had access to
Facebook (NASDAQ:FB) user data.  

Facebook (NASDAQ:FB) today said it had resolved a widespread outage that
affected its Facebook (NASDAQ:FB), Instagram and WhatsApp platforms.  The
company said it was a technical issue, not an attack.  Facebook (NASDAQ:FB)
lost nearly 2 percent in today`s trade at $170.17.  

When Amazon (NASDAQ:AMZN) announced its plans for a new headquarters in
northern Virginia last November, online searches for homes in that area
spiked by 700 percent, that according to Trulia.  

And as Diana Olick tells us now, those searches are now turning into sales.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT:  This tiny old home in
Arlington, Virginia, is about to go on the market for around $800,000.  

Not surprising to you at all?  

LISA LAYDEN, REAL ESTATE INVESTOR:  No.  

OLICK:  And investor Lisa Layden thinks it`s a steal.  Layton owns four
rental homes in the area and would like to buy more, but competition is
steep, thanks to the Amazon (NASDAQ:AMZN) effect on northern Virginia.  

LAYDEN:  They go quickly, like within three or four days, and they go for
about 5 percent more than they would have six months ago.  

OLICK:  Home sales in Arlington where Amazon (NASDAQ:AMZN) announced its
putting its new headquarters jumped 28 percent annually in December,
according to the Northern Virginia Association of Realtors.  Speculators
were already swarming the market even before the official announcement.  
Sales were up over 7 percent in January but fell almost as much in February
— not for lack of demand, though.

CHRISTINE RICHARDSON, NVAR PRESIDENT:  We`re in a market now where we just
don`t have as many houses to sell as we have buyers that want to buy them.  
And with Amazon (NASDAQ:AMZN) coming, that`s just getting worse.  We`re
just — so many people that wanting to invest and we just don`t have enough
inventory for them.  

OLICK:  Inventory is down more than 20 percent now compared with a year ago
and that is pushing prices in the area higher as well, up over 6 percent
annually.  

Not only are home values going up, but rents are rising as well, and that
has investors even hungrier to get in.  

LAYDEN:  Perhaps I would have sold it in five years.  I think for me, it`s
ten years because of Amazon (NASDAQ:AMZN) and that would be their full
hiring of a ten-year period.  

OLICK:  Because the potential to profit will continue, as long as new
Amazon (NASDAQ:AMZN) employees continue to move in.  

For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Arlington, Virginia.  

(END VIDEOTAPE)

GRIFFETH:  Up next, it`s time for your kid to decide which college to go
to.  But what if you don`t have the money and the financial aid offered is
not enough?

(MUSIC)

GRIFFETH:  Lost in all the clamor this week about the college admission
scandal, many students right now are receiving their college acceptance
letters.  So what happens if you get in but you don`t have the money to go?  

For many families, the financial aid offer from a school does become the
deciding factor.  And if it`s not enough, what can you do?  

Our senior personal finance correspondent Sharon Epperson is here with some
answers tonight.  

Can you actually negotiate for more money?  And what`s the likelihood you
get it?  

SHARON EPPERSON, NIGHTLY BUSINESS REPORT SENIOR PERSONAL FINANCE
CORRESPONDENT:  You can negotiate and you should negotiate.  Princeton
review came out with a study just in the last couple of weeks showing that
99 percent of the parents and the students that they surveyed said that
financial aid would be the deciding factor.  

GRIFFETH:  Right.

EPPERSON:  And so, if you are able to negotiate and have an appeal, then
you need to take that opportunity and you need to find out how best to do
that with the particular school that you`re going to, because in a third of
the cases, you could get some more money.  

GRIFFETH:  Really?  So, how do you do?  What are the steps you should take?  

EPPERSON:  Well, the first thing you need to do is make sure that you know
what the school`s process is.  You don`t want to run up there and try to
get to the financial aid office.  You want to make sure you know what the
appeals process is.  Gather all the evidence you can to support your case,
why the financial aid package really doesn`t meet the mark.  

And then also, emphasize the commitment to the school.  You`re thankful to
get an offer, you`re grateful to be accepted and very seriously considering
going, but you have a case that you need to state.  

GRIFFETH:  And what should you say in that case?  I mean, any dos and
don`ts on what to put in that letter?  

EPPERSON:  One of the most powerful statements that you can make in this is
this does not accurately reflect by financial aid package because, and then
explain what that because is.  Justify that with specific reasons.  

Don`t just ask for a specific number because they want to see a breakdown
of where the shortfall is.  You want to be able to explain that.  You may
actually get more than you anticipated without asking for that specific
number, so don`t try to box them into a corner there.  

And then also make sure that you keep it short, to the point, but you want
to have the evidence that you can to support your claim.  For merit-based
aid, make sure they know of all the awards the student has gotten, perhaps
since that made that application so they can get the merit-based aid as
well.  So, need-based, merit-based, know who to talk to and make sure you
make that appeal.  

GRIFFETH:  Got it.  Paying attention, as you should.

EPPERSON:  All right.  Sounds good.

GRIFFETH:  Sharon Epperson, thank you as always tonight.  

Finally tonight, today is March 14th, otherwise known as Pi Day.  Pi is a
mathematical number that continues on infinitely without repeating.  While,
just in time for today, a new record was set pie calculating the number out
to the 31.4 trillionth digit.  That record was set by a Google
(NASDAQ:GOOG) employee, of course.  

That`s NIGHTLY BUSINESS REPORT for tonight.  Thanks for watching.  I want
to remind you this is the time of year when your public television station
seeks your support and we do thank you for your support.  

Have a great evening, everybody.  We`ll see you tomorrow.

END

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