Nightly Business Report – April 4, 2019

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

BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR:  Pushing higher.  The Dow
hits a six-month high.  The S&P 500 posts a six-day win streak, as
investors look for signs of progress in U.S.-China trade relations.  

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR:  Paying you back.  Why there`s
a chance that S&P 500 dividends could set a record this year.  

GRIFFETH:  Tackling personal finance.  A pro football player is changing
the game of money off the field.  

Those stories and much more tonight on NIGHTLY BUSINESS REPORT for
Thursday, April 4th.  

HERERA:  Good evening, everyone, and welcome.  

The Dow closed at its highest point so far this year.  The S&P 500 had its
longest win streak since early 2018.  All of this as President Trump and
the Chinese vice premier met in the Oval Office to discuss some of the key
sticking points on trade between the two — the world`s two largest
economies.  

Now, some of that trade optimism spilled over on to Wall Street.  The Dow
Jones Industrial Average rose 166 points to 26,384.  The Nasdaq fell three.  
The S&P 500 was up about six.  

Eamon Javers is at the White House for us tonight with more on today`s
meeting.  

So, Eamon, what was said and what was the mood?

EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Yes, Sue.  That`s
right.  When I was in the Oval Office with the president and the Chinese
vice premier today for the one portion of their meeting in the Oval, and
the president said that progress is being made.  He likes where things
stand with this trade negotiation, but he also said that it could be four
more weeks before we know whether there is a deal or not to be had here.

And just as interesting as what he said here was what he didn`t say.  The
president did not announce as many expected he might, a date for a summit
with Xi Jinping in which they would finalize this deal.  So, that is still
off in the distance at some point, not clear when exactly that would
happen.  

I asked the president what the sticking points are here on the negotiations
and he mentioned two.  He said tariffs are a sticking point and also the
issue of intellectual property is still a sticking point, as they negotiate
this deal.  And those are two core things that this negotiation is about,
almost in their entirety, that`s the core of this dispute and the president
saying those are still the sticking points.  I think that gives you a sense
of it could be a long four weeks here before it could be resolutions.  

HERERA:  Eamon, thank you so much.  Eamon Javers at the White House for us
in Washington.  

Bill?

GRIFFETH:  Well, trade is not the only thing investors are focused on right
now.  But the job market is critical and today we learned that the number
of Americans filing for unemployment benefits last week hit their lowest
level since 1969.  Yes, 50 years.  Jobless claims dropped by 10,000 to
202,000, further underscoring the robustness of the labor market happens.  

HERERA:  But is sometimes the case, there`s conflicting data.  According to
the report from outplacement firm Challenger, Gray & Christmas, layoffs
surged 35 percent in the first quarter.  Now, that would indicate that t
job market got off to a shaky start in 2019.  The report says companies may
be streamlining his operations and that`s where the job reductions are
coming from.

But tomorrow might clear things up a bit when the government releases its
monthly employment report.  Economists are looking for an increase of 175
non-farm payroll jobs.  The unemployment rate is expected to be steady at
3.8 percent.  

GRIFFETH:  Elsewhere, the CEO of J.P. Morgan chase had a lot to say about
the economy in his annual letter to shareholders.  Jamie Dimon addressed a
broad range of topics, including income inequality.  And in his letter, he
wrote 40 percent of American workers earned less than $15 an hour and about
5 percent of full-time American workers earned the minimum wage or less,
which is certainly not a living wage.  

To address the problem, Mr. Dimon suggested that lawmakers and business
leaders set aside partisan politics and put the needs of society ahead of
personal, parochial and partisan interests.  

HERERA:  In recent years, there`s been a big push to raise the minimum
wage.  Today, Target (NYSE:TGT) said it plans to increase pay for workers
to $13 an hour from $12 starting in June.  It would be the third hike of
the company in less than two years with the goal of reaching $15 an hour by
the end of 2020.  The CEO says the wage increase and the investment in
employees is the reason why the retailer was able to hire more than 120,000
seasonal workers in a very tight labor market.  

GRIFFETH:  So what kind of an impact does a minimum wage increase on the
economy right now?  

Joining us to talk about it is Ethan Harris (NYSE:HRS).  He`s the head of
global economics research at Bank of America (NYSE:BAC) Merrill Lynch.  

Ethan, welcome back again.  

ETHAN HARRIS, BANK OF AMERICA MERRILL LYNCH:  Thank you.  

GRIFFETH:  You know, it`s really econ 101 when you have a tight labor
markets.  You need to compete for workers, you raise wages.  

At what point do we start to see that creep into inflation numbers, do you
think?  

HARRIS:  I think we`ve got a ways to go.  A lot of what we`re seeing now is
more in the nature of catching up.  Wages have not gone up very fast in
this recovery.  It took a long time to get the job market back to normal.  
Right now, there`s a little catching up going on for Joe six-pack.  

I do think in the next two or maybe three years, we`ll see a more
significant spillover into price inflation, but right now, I think we
should enjoy the improvement.  

HERERA:  Now it also, does it not, allow employers even in a tight labor
market to be more discerning about what type of worker they want if they`re
going to raise pay.  They`re going to have a lot of applicants, but they
can be a little pickier.  

HARRIS:  Yes.  The firm, there is a real benefit here.  Not only do you get
to pick better workers, but you retain them longer and you have much more
of an incentive to invest in them as workers.  So, while wages are going
up, the costs of hiring and firing and the productivity of the worker is
improving.  So, it`s not a one for one cost increase for companies.  
There`s actually a silver lining here.  

GRIFFETH:  But now, we`re talking about the unskilled workers.  For skilled
workers, we still hear from many companies about a shortage of skilled
workers and that`s something that, you know, raising wages isn`t going to
help, is it?  

HARRIS:  No.  I mean, we have a problem as a country is that we haven`t
invested in a lot of the skills that we need today.  So, for example, the
manufacturing sector has a labor shortage in it, even though everyone talks
about us losing a manufacturing job to foreign competitors because we`re
not training workers to do modern manufacturing jobs, that they`re not, you
know, doing screws and putting bolts on.  It`s complicated computer stuff.  

So, yes, there is a significant shortage of skilled workers and companies
are really struggling to fill those jobs.  

GRIFFETH:  And, once again, tomorrow`s jobs report should be very telling.  
Ethan Harris (NYSE:HRS) with Bank of America (NYSE:BAC) Merrill Lynch —
again, thanks for joining us tonight.  

HARRIS:  Thank you.  

HERERA:  In Washington, Democrats have long pushed to raise the minimum
wage, but now, they`re talking about a new idea — a minimum retirement.  

Ylan Mui explains.  

(BEGIN VIDEOTAPE)

YLAN MUI, NIGHTLY BUSINESS REPORT CORRESPONDENT:  There`s growing concern
in Washington that living through your golden years will take a lot of
green.  Yet many workers aren`t saving on their own for retirement, 35
percent don`t even have access to a savings plan through their employer
according to Pew.  

So, Democratic Senators Chris Coons and Amy Klobuchar want to make
companies step up to the plate.  Their new proposals require businesses to
pay at least 50 cents to have the retirement savings for every hour that
you work.  Over a year, that would add up to about $1,000.  

SEN. CHRIS COONS (D), DELAWARE:  This would provide flexibility,
portability and sustainability for a workplace retirement savings account
for tens of millions of Americans as well as an easy to administer vehicle
for emergency savings.  

MUI:  That sounds great for employees, but it could be really expensive for
businesses especially small businesses that would be forced to offer a new
benefit.  So, the program provides a tax credit to offset the cost for up
to 30 workers.  Large corporations that already offer 401(k) plans or
pensions will likely already be in compliance with the new rules.  

JIM KESSLER, THIRD WAY EVP FOR POLICY:  The job should provide a wage and
it should provide healthcare and it should provide vacation time, and it
should provide a retirement.  

MUI:  But this idea comes with a catch.  The cost of those business tax
credits can add up.  The estimated price tag, up to $250 billion to the
federal government over a decade.  

To pay for it, the senators are proposing raising the corporate tax rate
from 21 to 23 percent.  They`re also talking about raising the rate on the
wealthiest households from 37 percent to 39.6 percent.  

COONS:  I think it`s important that we identify some proposed offset for
every new tax credit that`s proposed.  

MUI:  The bill has a backing of centrist and progressive groups, as well as
labor unions and the AARP.  The senator said they wanted to propose an idea
that actually has a chance of becoming reality.  

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

(END VIDEOTAPE)

HERERA:  Also in Washington, President Trump said he`s recommending Herman
Cain for a seat on the Federal Reserve board.  Cain is the former CEO of
Godfather`s Pizza.  He also served on the board of directors for the Kansas
City Fed and was a former GOP presidential candidate.  

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

We begin with Facebook (NASDAQ:FB) which was upgraded today from buy to
neutral at Guggenheim.  The analyst said that consumers are increasingly
unfazed by content and privacy concerns.  The price target now $200 even.  
Facebook (NASDAQ:FB) closed today at $176.02.

And that same analyst at Guggenheim downgraded Roku to neutral from buy.  
The firm cited new risks from the launch of Apple (NASDAQ:AAPL)`s new video
product.  The price target there is $72.  Roku closed at $64.49, and that
was down 6 percent.  

And Micron Technology (NASDAQ:MU) was downgraded from under weight from
equal weight at Morgan Stanley (NYSE:MS).  The analyst said that a rebound
in memory semiconductor prices will not happen any time soon.  So the price
target is $32.  Micron finished the day at $42.89 and it was down 2
percent.  

HERERA:  Still ahead, Tesla`s CEO heads to court as investors try to make
sense of a disappointing report on car deliveries.  

(MUSIC)

HERERA:  The CEO of Boeing (NYSE:BA) apologized for the fatal 737 MAX
crashes and said it was apparent that in both flights, an anti-stall
feature activated in error.  In a statement, Dennis Muilenburg said that it
is Boeing (NYSE:BA)`s responsibility to eliminate that risk.  He says the
company owns it and knows how to fix it.  

GRIFFETH:  One of the big stories was Tesla`s CEO Elon Musk showed up in
court today for a hearing regarding his ongoing battle with the SEC.  The
judge in the hearing gave the two sides to settle their differences.  
Meanwhile, the automaker`s stock was up 8 percent after reporting sharply
lower deliveries for the first quarter.  

Our Phil LeBeau joins us now outside the courthouse there in New York City.  

So, let`s start with what happened outside the courthouse.  What are the
differences that exist between the two sides and what happens if they are
not solved in two weeks?

PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Well, Bill, this went
about as well as can be expected for Elon Musk, short of the judge outright
dismissing the complaint from the SEC and it really comes down to this.  
The SEC believes that Elon Musk violated his agreement in the agreement
that they reached last year where he said and the SEC agreed with him.  All
of his financial communications would be pre-approved by Tesla.  

He sent out a tweet earlier this year.  The SEC said, look, that`s a
materiel matter regarding the production of vehicles and it should be pre-
approved.  Elon Musk and his attorneys said all along, look, it was not
incorrect.  It was not immaterial, I did not mislead people and it was not
in violation of the agreement.  

So what the judge said today, you to, meaning the SEC and Elon Musk
attorney, get together, work this out over the next two weeks, if you can`t
work this out, then I`m going to have to issue a ruling from the bench.  
And she made it really clear.  She`s in no mood to issue a ruling and she
does not believe that contempt of court decision should be thrown around
lightly.  

So she`s hoping that her legal pressure will force the SEC and Elon Musk
attorney to work out maybe a modification of the SEC agreement they already
have.  

HERERA:   Also, Phil, the stock was under pressure today of Tesla because
of disappointing car delivery numbers.  What should an investor make of
that?  

LEBEAU:  Right.  We are in a lumpy period, Sue, in terms of deliveries.  
You`re not going to have a straight linear growth for Tesla when it comes
to deliveries and this quarter, the first quarter numbers, was proof of
that.  And the question for investors is, do you have the stomach for the
roller coaster ride that you get with Tesla likely over the next couple of
years when it comes to these deliveries, because you`re likely going to
have one quarter like the first one where it`s not very good and a couple
of quarters from now it could be fantastic.  

So, it`s going to be a roller coaster for investors.  

GRIFFETH:  Phil LeBeau who is in the middle of the media scrub is live in
New York today.  Thanks, Phil, see you later.  

LEBEAU:  You bet.

HERERA:  We`ve been reporting on a high-stakes hearing taking place in
Massachusetts.  The outcome will determine whether Wynn can keep its gaming
license in that state.  

Today, on the last day of testimony, some senior executives made very
revealing remarks about the company`s effort to conceal potential sexual
misconduct by founder and former CEO Steve Wynn.  

Contessa Brewer has the details.  

(BEGIN VIDEOTAPE)

CONTESSA BREWER, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Wynn Resorts
(NASDAQ:WYNN) is paying more than $2.5 million for encore Boston harbor.  
The casino resort is scheduled to be opened in June, but Massachusetts
regulators are considering whether to yank the gaming license.  

PHIL SATRE, WYNN RESORT`S CHAIRMAN:  We don`t have a business unless we
have a license.  

BREWER:  Board chairman Phil Satre, CEO Matt Maddox and a parade of
directors and executives testified before the Massachusetts Gaming
Commission during three days of hearings into how the company handled
reports of allegations of serious sexual misconduct against founder and CEO
Steve Wynn, charges he denies.  

MATT MADDOX, WYNN RESORTS CEO:  There were a lot of different people that I
think were trying to protect Steve Wynn.  

BREWER:  The investigative report concludes that the company didn`t apply
its own policies to Steve Wynn himself and that executives who knew about
the settlements and allegations didn`t report to the board, and company
failed to protect employees.  Wynn Resorts (NASDAQ:WYNN) does not contest
the conclusions.  

PAT MULROY, WYNN RESORTS DIRECTOR:  I can kick myself from here to China,
that I didn`t — that I didn`t speak up.  

BREWER:  Maddox came under fire for retaining a top executive last year who
some employees mistrusted.  

UNIDENTIFIED FEMALE:  You were making excuses for high-level folks that had
failed to do their job.  

BREWER:  And for approving undercover surveillance of a former employee who
was a named source for “The Wall Street Journal” article detailing a litany
of allegations.  Maddox`s own suitability in connection with the gaming
license is at stake.  

MADDOX:  This company is never going to be about a person again.  

BREWER:  Maddox testified the company turned over a new left after Steve
Wynn`s departure, adding three new women to an overhaul board, instituting
new policies and training, executives blamed for the systemic failures left
Wynn Resorts (NASDAQ:WYNN).  

ELAINE WYNN, BIGGEST WYNN SHAREHOLDER:  I am here by my choice.  

BREWER:  For the first time since the scandal became public, we heard from
Elaine Wynn, the company`s largest individual shareholder and as such,
subject to gaming license qualifications.  She was a board member when was
license was granted in 2013 but never revealed that settlement to
regulators.  

WYNN:  At the moment my shares were free and clear to sell, I would have
had an opportunity to do so and leave this company.  But I chose not to,
and I am here because I am Team (NASDAQ:TISI) Wynn.  

BREWER:  Commissioners will now deliberate whether to let Wynn Resorts
(NASDAQ:WYNN) retain its license.  So, for now, it`s a waiting game — win,
lose or pay a hefty fine.  

For NIGHTLY BUSINESS REPORT, Contessa Brewer, Boston.  

(END VIDEOTAPE)

GRIFFETH:  Constellation gets a boost from beer and that`s where we begin
tonight`s “Market Focus” with the wine and spirits maker reporting stronger
beer sales to help offset weakness in its lower-priced wine business.  In
fact, yesterday, we reported that Constellation reached a deal to sell 30
of those lower priced wine brands to Ernest and Julio Gallo Winery.  
Constellation Brands (NYSE:STZ) closed 6-1/2 percent higher today at
$191.45.  

Office Depot (NYSE:ODP) is warning about a potential revenue shortfall.  
The office supplies chain cited weakness in its compucom division.  The
company says it is taking steps to improve its performance which includes a
streamlining of its operational structure.  Shares fell nearly 24 percent
today to $2.88.

And Ford reported today that overall sales fell in the first quarter
compared to a year ago.  A drop in demand for passenger cars offset
stronger demand for trucks and SUVs.  The company said that the average
vehicle cost was $3,800.  That was an increase of $1,800 from last year,
and the stock rose better than 9 percent to $9.24.  

HERERA:  Tradeweb is making its Wall Street debut.  The platform for bonds
and derivatives twice raised the size of the offering from 20 million
shares to 40 million.  Tradeweb rose 3 percent to $35.81.  

Jeff and MacKenzie Bezos have finalized their divorce.  As part of the
settlement, Jeff Bezos will keep 75 percent of the couple`s Amazon
(NASDAQ:AMZN) shares.  MacKenzie also plans to give Jeff all of her
interests in “The Washington Post (NYSE:WPO)” and Blue Origin.  Amazon
(NASDAQ:AMZN) shares were down a fraction to $1,118.86.  

GRIFFETH:  S&P 500 dividends are expected to set another record this year.  
The 2019 dividend payment growth rate could increase by as much as 8.9
percent, easily outpacing wage growth and inflation.  

We are joined tonight by Howard Silverblatt.  He`s senior index analyst at
S&P, Dow Jones indices and the person behind this data.  

Howard, good to see you again.  Welcome back.  

HOWARD SILVERBLATT, S&P DOW JONES INDICES SR. INDEX ANALYST:  Thank you.  

GRIFFETH:  How much longer does this go on?  Is the eighth record year
we`ve seen now for the dividend increases?  

SILVERBLATT:  It would be the eighth year and that`s a strong increase from
last year.  Nine percent increase is what we were projecting, last year was
9.8.  Bottom line is that investors are getting more money than they ever
got.  Companies are increasing their shareholder return and increasing it,
although buybacks are the favorite here.  

And they`re doing well as far as dividends go.  So if they`re looking for
income, there aren`t a lot of places they can go.  Banks are certainly
matching those numbers.  

HERERA:  Right, and given the data that you put forward.  Dividends account
for a significant chunk of long-term stock.  If that`s the case, why not
just buy dividend-paying stocks and leave the rest behind.  

SILVERBLATT:  Well, if it was 60 years, 70 years ago, we probably would.
Trading has changed, which a little bit shorter, and they were able to buy
stocks, they live off the income and any of the investment program, and
their kids worry about the taxes.  

Today, it`s more about trading and shorter time periods and with the
capital appreciation, and, you know, an increase in stock prices.  So there
are still dividend followers and especially people who need the income, but
the general market looks more towards quicker appreciation of stocks.  

GRIFFETH:  Which sectors do we see the best growth in these days?  I can`t
tell you a number of times when I asked the money manager the utility
stocks and none of them say yes, but yet the utility stocks continue to set
records here.  So, I would think that`s one area.  Where else can you find
good dividend growth here now?  

SILVERBLATT:  Definitely, utilities and financials.  Financials are
controlled.  If you`ll buy the big banks and the New York banks and that`s
controlled by the Fed and that goes annually on that note.

Another place where you get dividend payers, if you just look at the
payers, not the non-payers, that is technology.  They actually paid the
most in dividend of any sector.  The difficulty here is that you don`t
usually buy a technology issue such as Apple (NASDAQ:AAPL) because of the
yield in Apple (NASDAQ:AAPL) has a decent yield.  I mean, it`s very
volatile.  

Again, dividend investors typically look for stability, utilities and
financials give them that.  If you wanted to go for a longer game and more
risk obviously, energy which has them beaten down and oil is back to over
60.  

GRIFFETH:  Indeed.  Howard Silverblatt with S&P Dow Jones Indices — again,
thanks for joining us tonight.  

SILVERBLATT:  Thank you.  

GRIFFETH:  And coming up, a football pro who is also a professor.  His
goal: to make people smarter about their money.  

(MUSIC)

GRIFFETH:  When it comes to making plays, NFL linebacker Brandon Copeland
is no stranger to success on the field, but it`s how he plays it safe with
his money off the field that may surprise you.  

Sharon Epperson has this great story for us tonight.  

(BEGIN VIDEOTAPE)

SHARON EPPERSON, NIGHTLY BUSINESS REPORT CORRESPONDENT:  On the field,
Brandon Copeland plays to win.  

Off the field, he`s changing the game.  

BRANDON COPELAND, NFL PLAYER/PROFESSOR:  The conversation has changed from
what do I have now to how can I use what I have now so that I don`t have to
depend on anyone else to give me a paycheck for the rest of my life.  

EPPERSON:  A Baltimore native, Copeland grew up surrounded by the sport.  
His grandfather, Roy Hilton, spent 11 years in the NFL.  For Copeland,
football came naturally, but it was the skills he developed in the
classroom that really paved the way.  

COPELAND:  My grandfather made it cool for me to be smart, be educated and
pushed to get A`s an B`s.  

EPPERSON:  And it was that ethic that landed him at one of the most
prestigious high schools around.  

COPELAND:  I was fortunate to go to a high school called Gilman in
Baltimore and the head coach of my football team, he ran his own hedge
fund.  But as a young kid I didn`t know what he did.  I had no idea.  I
just knew that he was pretty well off and so one summer I went to work for
him.  

EPPERSON:  A summer that would help shape his future love of finance.  

He quickly learned that making money and understanding how to take it to
make more would be his ticket to financial freedom , an ideology he fine-
tuned when he attended the prestigious Wharton School of Business at the
University of Pennsylvania.  

When you`re with your teammates in high school and college and even now, do
they talk about money and do they understand the importance of
understanding how to manage their own money?  

COPELAND:  The common denominator of most people in this world is we all
talk about money, right?  That`s what we deem as successful and
unsuccessful.  The biggest money lesson I`ve learn side is basically don`t
try to keep up with the joneses.  If it`s not something of value, then
don`t chase it.  

EPPERSON:  And it`s that lesson that Copeland wanted to share with others,
a basic conversation about money that many are not being taught, even at
the highest levels.  So, we reached out to his alma mater.  He`s now known
at UPenn as Professor Cope.  

COPELAND:  The premise of this class is to talk about stuff that you
actually will use in your lifetime, right?  And my goal is that you don`t
come to that decision for the first time and you`re trying to learn on the
fly.  

EPPERSON:  The course focuses on everyday finances like how to budget
yourself based on your salary, the basics really, he co-teaches the class
with Dr. Brian Peterson.

COPELAND:  At certain point in time, I knew that in 45-degree angle, me,
personally, I don`t plan on using it.  If I have to use it, I`ll break out
a TI-84 or Google (NASDAQ:GOOG) the answer, right?  We have the camera.  
So, you just see us make a lot of money and then you see us lose it, but if
you`ve never been taught how to budget, if you`ve never practiced that, and
you hone your skills and gain the reps , but you give a 21-year-old kid $2
million and say good luck.  You know, don`t lose it.  

Now, players are talking about money but not just talking about — I`m
going to buy this or I`m going to get this.  It`s more about, where you
invest it in?

EPPERSON:  So, now, your conversation with teammates aren`t just about what
you`re going to get but how you`re going to get there.

COPELAND:  Exactly.

EPPERSON:  A lesson in life he hopes will help others change their
financial game.  

For NIGHTLY BUSINESS REPORT, I`m Sharon Epperson in Philadelphia.  

(END VIDEOTAPE)

HERERA:  Here`s another look at the final numbers from Wall Street.  The
Dow gained 166 points, the Nasdaq fell three, S&P 500 was up about six.  

GRIFFETH:  And tomorrow`s the big jobs report.  

HERERA:  It sure is.  

So, join us.

GRIFFETH:  Yes.

HERERA:  That does it for us tonight.  I`m Sue Herera.  Thanks for joining
us.  

GRIFFETH:  I`m Bill Griffeth.  Have a great evening.  See you tomorrow.

END

This entry was posted in Transcripts. Bookmark the permalink.

Leave a Reply