Nightly Business Report – March 28, 2019

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

BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR:  Walking away.  The chief executive of Wells Fargo (NYSE:WFC) is stepping down immediately from the scandal-plagued bank, and his most vocal critic cheers.  

Next target.  Should profits be taxed more than earned income?  That`s what Democrats are asking as they eye higher rates on long-term capital gains.  

New playbook.  How one investor is taking a page from venture capitalists to identify and invest in the next generation of baseball stars.  

Those stories and much more tonight on NIGHTLY BUSINESS REPORT for Thursday, March 28th.

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

Stocks rose today as trade talks between the U.S. and China resumed.  We`ll 

have more on that in a moment.  

We begin with late-breaking news tonight — a surprising resignation at 

Wells Fargo (NYSE:WFC).  CEO Tim Sloan is stepping down effective 

immediately.  His departure was announced after the close tonight.  He is 

being replaced on an interim basis by the bank`s general counsel.  

Wells Fargo (NYSE:WFC), of course, has been under intense scrutiny because 

of the fake account scandal of a few years ago which has resulted in more 

than $2 billion in fines.  Sloan was promoted to CEO and charged with 

cleaning up the mess, but he is now the second CEO to step down because of 


Senator Elizabeth Warren had been a very vocal critic of Sloan`s.  She 

recently called on the Federal Reserve to maintain its growth cap on the 

bank until Sloan was replaced.  

After the news, she tweeted this out tonight.  About damn time, she wrote.  

Tim Sloan should have been fired a long time ago.  He enabled Wells Fargo`s 

massive fake account scam, got rich off of it and then helped cover it up.  

Now, let`s make sure all the people hurt by Wells Fargo (NYSE:WFC) scams 

get the relief they are owed.  

The stock initially moved higher in after-hours trading tonight following 

that announcement.  

To Wall Street now, and the stock market where trade was once again in 

focus, U.S. officials are in Beijing to resume talks between the world`s 

two largest economies, and investors cheered with hope today.  The Dow 

Industrial Average rose to 91 points to close at 25,717, the Nasdaq added 

25, the S&P was up 10.  

Eunice Yoon has more for us tonight from Beijing.  



Robert Lighthizer and Treasury Secretary Steven Mnuchin are in Beijing for 

their talks with China`s Vice Premier Liu He.  The Commerce Ministry 

confirmed that the two sides are going to hold discussions all day on 

Friday and said that a lot more needs to be done.  

“The Wall Street Journal” is reporting that the Chinese side is offering to 

make concessions to give access to the country`s cloud computing industry.  

Under the proposal, foreign tech firms would be allowed to own data centers 

as part of a pilot in a free trade zone.  This is the second report 

indicating that China is making offers in its technology sector.  

Trump administration officials told “Reuters” that the Chinese have put 

forth proposals on forced tech transfers that have gone further in the past 

in their size and scope.  The “Reuters” report said U.S. officials want to 

keep at least some of the tariffs as leverage over the Chinese, but whether 

the Chinese will want to do that seems unlikely.  

Sources familiar with the talks have told me that the two sides still need 

to clarify how and when tariffs will be imposed, nail down undefined 

language and find a way to make the deal enforceable.  Separately, China`s 

premier put a timetable on a new foreign investment law that`s meant to end 

forced tech transfers.  He said it would go into effect next January and 

added we will heed the input from various parties, especially foreign 


To drive home the message that Beijing is addressing the complaints of its 

trading partners, including the United States, the Chinese vice premier 

heads to Washington next week to continue the negotiations.  

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


GRIFFETH:  Well, with just one day left in the first quarter, investors 

must be feeling pretty good, because it wasn`t just one part of the market 

that saw gains, but pretty much all of it.  

Bob Pisani is at the New York Stock Exchange.



the first quarter and overall investors should be very pleased with their 

investment portfolios.  Even with all this hand wringing about lower bond 

yields, it`s not just the S&P 500 which, by the way, is having the best 

quarter since 2009, everything is up.  And I mean everything.  The stock 

market, the bond market, Russell 2000, the small cap index is up 12 


But bonds are doing great.  High-yield bond ETFs are up 6 percent.  

Corporate bond ETFs are up 5 percent.  Even treasuries are up more than 2 

percent and that doesn`t include the dividend.  

So, what does it all mean?  It means if you have a portfolio with a 60/40 

stock/bond split, you have about 9 percent this quarter.  That`s very 

impressive gains for a balanced portfolio.  And you`ve been a winner even 

if you invest by sector.  

All 11 sectors are up on the quarter.  Technology stocks are the big 

gainers but energy stocks are also strong as oil rallied.  Industrial 

stocks, which were dramatically oversold at the end of the fourth quarter 

thanks to these global growth and trade concerns, they snap back.  They`re 

up 15 percent.  

It`s not bad for three months` work.  

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


GRIFFETH:  We learned today that economic growth in the U.S. slowed in the 

final three months of 2018.  Gross domestic product for the fourth quarter 

showed a gain of just 2.2 percent.  That was in line with expectations but 

down from a previous estimate from the government.  And that put full year 

growth for all of last year at 2.9 percent.  That actually was the best 

year for the economy since 2015.  

But Warren Buffett is noticing a slowdown in economic activity.  During a 

wide-ranging interview today, the chairman of Berkshire Hathaway 

(NYSE:BRK.A) pointed to BNSF Railway.  That is the freight rail company 

owned by Berkshire that he says is signaling weaker growth.  


WARREN BUFFETT, BERKSHIRE HATHAWAY CEO:  It looks like it`s slowing down.  

I don`t mean that it`s reversing course or anything, but it does seem from 

all of the businesses, but especially including railroad statistics, 

because they come so fast and they cover such a broad spectrum, and it gets 

distorted by whether people are hurrying up the Pacific Trade because 

they`re worried about tariffs and all of that sort of thing.  But I would 

say that it does look like the pace of increase in the economy has slowed 



GRIFFETH:  Well, if the U.S. economy is slowing down, it may be in part 

because economies overseas are hitting the brakes.  And today, the vice 

chair of the Federal Reserve said the central bank must pay closer 

attention to global growth risks because countries are linked more than 

ever because of trade and financial transactions.  During his speech today, 

Richard Clarida explained how the U.S. economy could be shocked by a global 




U.S. through direct trade links, lowering the demand for U.S. exports and, 

thus, lowering GDP.  Second, the foreign recession would lead to lower 

interest rates abroad, and other things equal would tend to raise the value 

of the dollar, which in turn could have an impact on exports and trade.  


GRIFFETH:  And he emphasized that policy makers cannot ignore those kinds 

of risks.  

To the housing market now.  And today, we learned that home buyers signed 

fewer contracts to buy existing homes in February when compared to January.  

But mortgage rates have continued going lower since then, and those lower 

rates have many feeling enthusiastic about the spring selling market.  

Diana Olick has more.  



in Bethesda, Maryland — 


OLICK:  — home buyers were taking advantage of warmer weather and lower 

mortgage rates.  

DANA RICE, COMPASS REALTOR:  Everything is falling into place.  Interest 

rates are going down, the weather is nice, we have some houses to look at 

and people are excited.  

OLICK:  Things were busy at this five bedroom colonial listed for $1.25 

million.  But while the supply of homes for sale is a little higher than 

last spring, the market is still very competitive.  

TANIA PETERS, PROSPECTIVE BUYER:  It seems like there are fewer houses on 

the market that are more affordable, and it also seems that they go very 

quickly.  So, within the first couple weeks of showing.  

OLICK:  Tonya and her husband, Matthew, want more space for their young 


MATTHEW PETERS, PERSPECTIVE BUYER:  If we look towards the upper end of our 

price range, it seems like there`s more options.  

OLICK:  Price is still clearly an issue, while the price gains in most 

markets are shrinking, the run-up over the last few years was dramatic.  

And even falling mortgage rates are not making up for it.  Pending home 

sales in February, which measures signed contracts during the month, fell 

from January and were down sizably from a year ago.  

The average rate on the 30-year fixed saw a recent peak just over 5 percent 

last November but then began falling slowly.  Rates were around 4.5 percent 

in February.  In the past week, the rate took the steepest dive in a 

decade, falling to right around 4 percent.  

The hope in the housing market is that this latest drop will really juice 

spring sales, but demand has been strong for a long time.  It will really 

come down to what today`s buyers can afford.  

GLENN KELMAN, REDFIN CEO:  People have been on a knife`s edge about whether 

they can afford a house and lower mortgage rates mean more buyers.  It has 

had an unusual effect.  There`s almost no slack in the system, because 

wages haven`t kept up with home prices, people are having to borrow the 

money.  When it gets easier to do that, we see more buyers.  

OLICK:  And that Bethesda home that went on last weekend went under 

contract by Tuesday.  

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


GRIFFETH:  And in Washington, a proposal is being floated that has grabbed 

Wall Street`s attention.  

John Harwood reports the Democrats are looking at raising the tax rate on 

long-term capital gains.  John joins us from D.C. tonight.  

I mean, it`s no surprise the Democrats want to raise taxes on the 

wealthiest of Americans.  So why go after capital gains?  


Alexandria Ocasio Cortez, the fiery freshman House member from New York, 

drew a lot of attention with her 70 percent rate.  That`s a high rate.  It 

sounds high to a lot of people.  

Democrats want to draw a contrast with Republicans on work versus wealth, 

and so they`re focusing in on capital gains rates, which are lower.  

They`re talking about raising them to not as high as 70 percent in any 

event, and they think that that is a way to frame in the 2020 campaign a 

better argument that will appeal to a wider array of voters.  

GRIFFETH:  So what proposals are we seeing so far on that?  

HARWOOD:  Well, you`ve got Bernie Sanders who wants to equalize the 

ordinary income and capital gains rates, raise them both to 54 percent.  

That`s not likely to fly.  John Delaney, former private equity executive 

who`s a long shot Democratic candidate says, we`ll just make the capital 

gains rate the same as the personal rate now, that`s 37 percent.  

Elizabeth Warren has got a wealth tax, which is different, but the 

interesting thing about her wealth tax is what she would do is tax on a 

mark to market basis the value of assets as they appreciate, not just when 

they`re sold, which is what happens under existing law.  

GRIFFETH:  Quickly, any pushback within the party on any of this?  

HARWOOD:  Yes.  Larry Summers, the former treasury secretary, told me if 

you raise the capital gains rate over 30 percent, you will actually cost 

the government money rather than gain it because selling capital gains is 

voluntary — realizing capital gains is voluntary, depending on sales.  If 

you discourage sales, you`ll get less revenue and so, Larry Summers said 

what`s the point of going that high.  

GRIFFETH:  John Harwood in Washington — thanks, John.  

HARWOOD:  You bet.  

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


FedEx (NYSE:FDX) was downgraded today to neutral from positive at 

Susquehanna.  The analyst said the stock is going to remain under pressure 

in the near term without a new source of cash flow.  So, the price target 

is now $192.  That stock rose 1 percent to $177.90.  

SeaWorld was upgraded to buy from neutral at B. Riley FBR.  The analyst 

calls that theme park operator a leader in its industry and can benefit 

from improving economies of scale.  Price target now is $34.  That stock 

was up a fraction to $24.68.  

Monster Beverage was named a top pick at Credit Suisse today.  The analyst 

cited the company`s growth potential and pointed to slowing momentum at new 

competitor Bang.  The price target, $75.  Shares dipped to $54.46.  

Still ahead, startups promise to disrupt the financial services industry, 

but that`s not exactly how it`s been 


GRIFFETH:  As you may know, Lyft makes its debut on Wall Street tomorrow, 

and tonight it priced its IPO at $72 a share.  That was at the high ending 

of the expected range.  That values the company as more than $20 billion.  

Lyft is one of the mostly highly anticipated IPOs of the year.  

Meanwhile, the government is suing Facebook (NASDAQ:FB).  The Department of 

Housing and Urban Development alleges that the company engaged in housing 

discrimination.  The lawsuit claims that Facebook (NASDAQ:FB) allowed 

advertisers to restrict who was able to see ads on the platform based on 

race and national origin.  The department says that violating the violating 

the Federal Fair Housing Act.  Facebook (NASDAQ:FB) says it is surprised by 

this decision.  

Amazon (NASDAQ:AMZN) said today it is adding 800 jobs to its tech hub in 

Austin, Texas.  Those positions will focus on engineering and cloud 

computing.  The expansion follows Apple`s announcement last year that it 

will invest $1 billion into a new campus in that city.  Whole Foods, which 

is owned by Amazon (NASDAQ:AMZN), is headquartered in Austin, Texas.  

The Federal Trade Commission has shut down four operations that it said 

were responsible for billions of robocalls.  According to the FTC, the 

groups pitched a wide array of services from debt relief to home security 

to fake charities.  The agency has been calling on phone companies and 

wireless carriers to help combat the scammers.  

And according to “The Wall Street Journal” robocallers so far have been 

fined more than $200 million since 2015.  But at this point, the government 

has only collected $6,700 of that amount.  

It`s no secret that technology is causing rapid changes in many industries.  

Tech startups are looking to reinvent just about everything these days, 

including the way we bank.  But that industry`s evolution is not exactly 

going as some had planned.  

Deirdre Bosa is in San Francisco for us tonight.  



bill using your phone or opened a savings account online, then you`re part 

of the fast-growing fin tech industry which stands for financial 


Fin tech startups were widely expected to challenge the traditional banking 

industry by making it easier and faster to save, borrow and manage your 

money without ever even having to walk into a local branch, but that total 

disruption never happened.  And as it turned out, startups and established 

banks instead are working together.  

There`s Chase` acquisition of payment startup We Pay.  Citi`s partnership 

with robo adviser Betterment.  And this week, Apple (NASDAQ:AAPL) announced 

a credit card with Goldman processed by MasterCard (NYSE:MA).  

At the fin tech ideas festival organized by the Banks Policy Institute here 

in San Francisco, large banks and startups are on stage together talking 

about more collaboration.  

AJAY BANGA, MASTERCARD CEO:  I think sometime back when you go back to the 

launch of Apple (NASDAQ:AAPL) Pay and the like, that itself was an 

indicator that I think most companies understand.  In today`s world to 

succeed, rather than try and control everything yourself, the best way to 

work is through partnerships.  

DAN SCHULMAN, PAYPAL CEO:  We think of ourselves today as a platform, not a 

product company.  And that`s a large part of our growth is based on that 

definition and that extension.  

BOSA:  Experts also say the future of banking involves Blockchain, the 

technology behind cryptocurrencies like bitcoin, but how and when 

Blockchain transforms the industry is still unclear, even for those banks 

that have made big investments in the technology.  


to buy, I am bearish.  I think that and I hope that it works.  I want it to 

make us better, but I have not yet seen a use case that tells me I`m be 

dependent on it in ten years.  

BOSA:  Even the CEO of startup Ripple which wants to transform the way 

financial institutions move money around the world acknowledge that 

progress has stalled but says that Blockchain will play a central role in 

banking in the digital future, it will just take time.  

BRAD GARLINGHOUSE, RIPPLE CEO:  Bitcoin, I think, actually, in many ways 

it`s been great for the industry, because someone who not that long ago 

saying Bitcoin is a fraud is now leaning in and macro good thing in the 

industry and bringing credibility.  

BOSA:  As for what`s next, participants here expect more changes to the 

normally staid financial services factor and that any transformation will 

be driven by both the newcomers and old-timers alike.  

NIGHTLY BUSINESS REPORT, Deirdre Bosa, San Francisco.


GRIFFETH:  Movado shares are ticking higher and that`s where we begin 

tonight`s “Market Focus”.  

The luxury watch maker reported better-than-expected earnings thanks to a 

35 percent increase in sales over the holiday quarter.  The CEO said today 

its lineup of newly acquired brands are helping to boost its online sales.  

And shares soared by 22 percent today to $40.06.  

Accenture reported stronger than expected quarterly results and it 

increased its full year guidance.  The global consultancy firm cited its 

push into digital and its investments in cloud services.  Accenture says it 

plans to spend up to $1.5 billion on deals during the current fiscal year.  

The stock gained 5 percent today to $175.12.  

Meanwhile, Blackstone is reportedly dropping out of an auction for Nielsen 

and reports say that Apollo global management is also losing interest in 

that television ratings company.  The auction was expected to be completed 

this month.  But the latest development pressured the stock.  It fell 11 

percent today to $23.66.  

And a lawsuit against Boeing (NYSE:BA) has now been filed over the crash of 

the Ethiopian Airlines jet.  The suit was filed by the family of one of the 

passengers on that flight.  It alleges that Boeing (NYSE:BA) had 

defectively designed the automatic flight control system of its 737 MAX 

jets.  Investors, though, shrugged the news off.  The stock gained a 

fraction to $374.44.  

Coming up, the big money in March Madness.



basketball`s sweet 16 kicks off tonight, and gaming companies and casinos 

are hoping for some sweet returns.  

I`m Contessa Brewer.  Coming up on NIGHTLY BUSINESS REPORT, how these 

companies are hoping for a piece of the March Madness action.



GRIFFETH:  Last night, a jury awarded a California man $80 million in 

damages after he claimed that the weed killer Roundup caused his cancer.  

The man had used that product on his 56-acre property for two decades.  

Bayer now owns Monsanto (NYSE:MON), the maker of Roundup.  It insists that 

the weed killer is safe and said that it will appeal this verdict.  In the 

meantime, though, Bayer and Monsanto (NYSE:MON) still face hundreds other 

lawsuits tied to Roundup.  

Well, the sweet 16 portion of the NCAA men`s basketball tournament gets 

under way today, and so far march madness has been big money for bookies 

and in sports books.  

With sports betting now legal in many states outside Nevada, Contessa 

Brewer has a look at all of the ways that Americans can get a piece of the 

action now.  She reports tonight from East Rutherford, New Jersey.  


BREWER:  For the first time in history, the sports book here at the 

meadowlands is accepting bets on March Madness, and a slew of other sports.  

UNIDENTIFIED MALE:  We`re all excited about this.  

BREWER:  The American Gaming Association predicts one in five adults will 

wager a total of $8.5 billion.  Much of that on those college basketball 

brackets.  But legal sports books are also getting a piece of the action.  

Big business surpassing even the super bowl.  In Nevada, traditionally 

march madness brings in 65 percent of the sports betting action for the 

year.  Now a total of eight states have legalized sports betting and 30 

others are moving forward.  

Analysts predict New Jersey alone could draw 25 percent of Nevada`s handle.  

Casinos and online platforms are rushing to cash in.  FanDuel now grabs 50 

percent of the market share in New Jersey.  CEO Matt King is hoping for 

widespread regulation.  

MATT KING, CEO, FANDUEL:  Nobody should ever kid themselves that the need 

for good, stable, friendly regulation because if you don`t have that, then 

you can`t compete against the illegal guys.  

BREWER:  And it`s these little devices, mobile gambling, that will drive 

the profits of this industry.  How important is it?  In February, Super 

Bowl, FanDuel brought in a million and a half dollars through this sports 

book, but it brought in $6.5 million through online and mobile bets.  Just 

this week, Rhode Island passed a measure into law to allow sports gambling, 

and these companies are counting on more states to follow suit.  

KING:  If you really want to bring the illegal market into the regulated 

market, then it`s very important that they have access to mobile sports 

betting.  That`s what we have today.  

BREWER:  For investors, looking for some direct exposure to the U.S. 

market, it`s not quite as easy as making a bet on your phone.  David Katz, 

gaming analyst at Jefferies, suggests looking to the technology or platform 

providers or overseas.  

DAVID KATZ, JEFFERIES GAMING ANALYST:  The bricks and mortar casino 

companies don`t look to make the most money from sports betting in the U.S.  

It`s the technology and platform providers, IGT and scientific games, that 

are best positioned.  And even the U.K. companies, William Hill, Paddy 

Power and GVC that are covered by our U.K. colleagues, are best positioned 

for the U.S. sports betting business.  

BREWER:  For now, gaming companies are intent on growing market share and 

lobbying more states to legalize sports wagers.  FanDuel is betting March 

Madness could wind up making this its best month ever.  It`s expecting 

sweet returns for the sweet 16.  

For NIGHTLY BUSINESS REPORT, Contessa Brewer, East Rutherford, New Jersey.  


GRIFFETH:  And on this opening day for Major League Baseball, we have this 

story of a former pitcher who is investing in minor league players and 

stealing a page from venture capital playbooks.  

Eric Chemi has the story in New York tonight.  



may be facing volatile times, there`s a creative way to get uncorrelated 

returns, investing in baseball players.  A company called Big League 

Advance has raised more than $150 million to buy equity stakes in Minor 

League Baseball players.  

The idea is simple.  The players get an up front payment, but it`s not a 

loan.  They can keep the money forever.  In returning, Big League Advance 

gets a percentage of any eventual Major League Baseballers.  

The company has invested in over 130 players so far, including Fernando 

Tatis Jr. and Jose Asuda, two highly regarded up and coming prospects.  

Michael Schwimer, a former Major League pitcher himself, founded the 



choose the equity they like to give up in return for the money that they 

receive.  Our kind of company motto is Big League Advance, buy players for 

players.  We might have a scale of a million dollars for 10 percent, but 

$100,000 every one.  The player can say, OK, I`ll do $300,000 for 3 

percent.  So our average deal is in the $300,000 to $500,000 range.  

CHEMI:  A typical Minor League Player might make less than $10,000 a year 

so getting an upfront payment of 300 grand could be life-changing money.  

Several superstar players, including Bryce Harper and Manny Machado 

recently each signed contracts worth over $300 million.  Earning a small 

percentage of a contract like that would be a big win for Schwimer 


The company`s motto is just like venture capital, losing a small amount of 

money on most investments with hopes that a few superstars make up for all 

the rest.  

SCHWIMER:  If you invest in 10 tech startups and one or two become Facebook 

(NASDAQ:FB) and Google (NASDAQ:GOOG), you`re going to do pretty well, even 

though they`re eight or nine missed, and that`s how we do it, just for 

baseball players instead of tech stocks.  

CHEMI:  One benefit of this type of investing is that baseball salaries are 

not correlated to the whims of the stock market.  The catch, though, is it 

requires investors to be patient.  

SCHWIMER:  It`s a very long-term investment.  You`re not free agent until 

six years with a Major League team.  You`re seeing that with Bryce Harper 

now and Manny Machado and others.  And so the tale is very long.  So, on an 

individual player investment, we`re not expecting a return for at least six 

or seven years.  

CHEMI:  For NIGHTLY BUSINESS REPORT, I`m Eric Chemi in New York City.  


GRIFFETH:  And before we go, one final look at the day on Wall Street.  As 

we get ready for the ending of the first quarter, the Dow today rose 91 

points, NBC added 25, the S&P was up 10 as traders watch for developments 

out of Beijing on those trade negotiations in China.  

And tomorrow we`ll see how the Lyft IPO does on Wall Street as well.  

That`s NIGHTLY BUSINESS REPORT for tonight.  I`m Bill Griffeth.  Thanks for 

watching, everybody.  We`ll see you tomorrow.


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