Transcript: Nightly Business Report – April 23, 2019

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

BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR:  Powering higher.  The S&P  and the Nasdaq close at record highs, thanks to strong earnings from some  very big companies.  

For sale?  If it seems like everyone is making money off of your data,  that`s because they are.  

And record confidence.  Americans are feeling better about their  retirement, but are their financial futures really more secure?

Those stories and more tonight on NIGHTLY BUSINESS REPORT for this Tuesday,  April 23rd.  

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

Well, the stock market has come roaring back.  The S&P and the Nasdaq  closed at all-time highs today, making the rout of late last year a distant  memory.  A number of things are working in the market`s favor right now.   Earnings have been better than expected.  There was also the Fed reversing  course on monetary policy, and the trade talks with China seemed to be  progressing right now.  

So today, new milestones.  The Dow rose 145 points, that`s not a record,  but the Nasdaq added 105 and the S&P was up 25.  Both of those records.
Bob Pisani was in the middle of the action today at the New York Stock  Exchange.  

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Stocks were off to the  races today, picking up steam throughout the session and propelling the S&P  500 and the Nasdaq to new closing highs.  Why did we have a rally?  The S&P  has moved to new highs on the back of four major developments.  

Earnings have been stabilizing, recession fears have been fading.  We`ve  had dampening global growth fears, particularly Europe and China, and the  Federal Reserve keeping interest rate hikes on hold for the foreseeable  future.  For good reasons for the markets, they have had new highs.  
The markets got a boost from a handful of strong earnings beats today,  including Dow components like Verizon (NYSE:VZ), United Technologies  (NYSE:UTX) and Coca Cola.  Not only did they beat, but they beat by  generally wider margins than typically happens.  

And high momentum tech and communication services names powered ahead.   Names like Netflix (NASDAQ:NFLX), and Amazon (NASDAQ:AMZN) and Nvidia, and  Google (NASDAQ:GOOG) parent Alphabet, all up about 2 percent each.  That  helped push the tech-heavy Nasdaq to a new high.  
So what happens next? 

We`ve had mostly banks and industrial stocks reporting.  Banks have been  OK, but not amazing.  Industrials, though, have definitely been reporting  better than expected and the handful of consumer names like Kimberly-Clark  (NYSE:KMB) have been strong, as well.  

So, to keep this momentum going, we need to hear from technology stocks,  energy stocks and especially healthcare stocks.  Healthcare has suddenly  become a bit of a problem child for the markets.  
The market`s being pushed up by a very small group of super performers.   So, the rally needs to broaden out.  There are only 13 new highs on the S&P  500 today.  

So, what else is missing?  How about a little volume and a little  volatility?  Both are still surprisingly low.  The question now becomes,  will new highs draw greater interest from the investing public that we`ve  seen so far.  
For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock Exchange.  

GRIFFETH:  And as Bob just mentioned, earnings were a part of today`s big  rally.  So, we asked Dominic Chu to take a closer look at those Dow  components that reported: United Technologies (NYSE:UTX), Coke, P&G and  Verizon (NYSE:VZ).  

DOMINIC CHU, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Before the big member  stocks of the Dow Jones Industrial Index that reported today all had  generally positive news.  

We`ll start with United Technologies (NYSE:UTX), the aerospace and  technology conglomerate, posted earnings that were ahead of analyst  estimates on better than expected sales and it also raised its full-year  profit forecast.  United Technologies (NYSE:UTX) was helped along by better  demand for aircraft parts and four-year results would be hurt by the  grounding of Boeing (NYSE:BA) 737 MAX model jets around the world.  
Coca-cola, that earnings story was also well-received by investors.  The  soft drink maker also posted an earning on sales.  Coca-Coca was aided by  better sales of bottled water and a slate of new flavors in its existing  flagship brands like orange vanilla-flavored Coke.  

Also, a positive report for Procter and Gamble, as well, has the consumer  products company responsible for everything from Pampers diapers to Tide  laundry detergent, also came in with better than expect profits and sales  and raised its forecast for a metric of sales growth not driven by  acquisition or foreign currency fluctuations.  Procter & Gamble (NYSE:PG)  was able to raise prices to offset input costs.

And we`ll end with Verizon (NYSE:VZ).  After America`s biggest wireless  phone carrier posted better than expected profits, but sales fell just shy  of analyst forecasts.  It reported a loss of both monthly contract phone  subscribes, and Fios TV video customers, but it did add Fios broadband  internet customers.  

Now, tomorrow, big Dow component slated to report include Boeing (NYSE:BA)  and Caterpillar (NYSE:CAT) before the opening bell and Microsoft  (NASDAQ:MSFT) and Visa (NYSE:V) after the closing bell.  

GRIFFETH:  So what`s next for this market now that the S&P and the Nasdaq  are at new highs?  
Joining us tonight, Alicia Levine is chief strategist at BNY Mellon.  
Alicia, good to see you again.  Welcome back.  

ALICIA LEVINE, BNY MELLON CHIEF STRATEGIST:  Hi, Bill.  Thanks for having  me.  

GRIFFETH:  So, the concerns of the global economic slowdown that plagued  the market in the fourth quarter last year, is that a concern now?  

LEVINE:  So, it`s not that it`s not a concern, it`s just that it looks like  we`ve bottomed and it looks like the weakness that we saw in the fourth  quarter and the concerns that we came into the year with actually are  beginning to flatten out.  So, instead of a global, synchronized downturn,  we actually have a global synchronized flattening, and that actually has  been very good for risk assets because it looks like we`re out of the  trough.
And that with China stabilizing —  


LEVINE:  — we`ll start to see green chutes in the emerging markets and as  well in Europe.  

GRIFFETH:  Speaking of China, what would a trade deal mean to this market  right now?  Is it already there and priced in?  

LEVINE:  That`s a really great question because I think for the most part,  the trade deal has been priced in, but the issue is what kind of trade  deal?  I think a trade deal that gets rid of the tariffs would move the  market higher.  Any trade deal that keeps the tariffs in place as an  enforcement mechanism might be seen as a disappointment to investors  because the investors are looking for a trade deal to help goose earnings a  little bit and to move multiples higher.  

GRIFFETH:  One trend that we keep hearing are higher costs, whether it`s  wage inflation or higher raw materials costs.  Is that a concern for you?  

LEVINE:  It`s not a concern yet because many companies have been able to  pass on higher raw material costs to the consumers.  So, we don`t quite see  a trend yet.  I do think margins will be a little bit softer in the first  half, but I expect in the second half that should be getting a little bit  better.
And indeed, if you look at earnings estimates for the full year for 2019,  the bulk of the earnings estimates increases are really coming in the third  and the fourth quarter, and that`s what we`re counting on to drive the year  higher.  

GRIFFETH:  Sectors you like right now.  Are you getting the numbers you`re  after in those groups that you like?  

LEVINE:  So, investors really have to decide when they believe here because  the U.S. market is now trading at the five-year average for the multiple  because we retraced all of that downturn from the fourth quarter.  So, you  have to believe — you have to decide if you believe that we`re in a  cyclical recovery or if this is just a flattening and a downturn.  
If you believe that the economy is getting better here in the U.S., and if  you believe that the global economy is get being better then you have to  turn to financials, industrials, tech and I would point out what you  mentioned earlier that healthcare has really been because of the  because  of the political chatter here in the U.S. 

GRIFFETH:  Right.  

LEVINE:  And it`s always interesting to look at sectors when the multiples  have been compressed and I would certainly look at that here.  

GRIFFETH:  All right.  Very good.  Alicia Levin with BNY Mellon, good to  see you again.  Thanks for joining us.

LEVINE:  Thank you.  

GRIFFETH:  Elsewhere, Iran is now threatening to close the Strait of  Hormuz, the world`s busiest transit lane for oil shipments.  This, of  course, in response to the White House`s announcement yesterday that buyers  of Iranian oil must stop making those purchases or face sanctions.   According to Barclays, about 20 percent of all sea-borne crude passes  through the Strait of Hormuz.  The price of domestic crude continued higher  today, closing above $66 a barrel.  

And as we`ve been reporting, the spring housing market is shaping up to be  a bit unpredictable.  I mean, today, we learned that sales of newly built  homes rose last month one day after we learned that sales of existing homes  fell.  
Diana Olick tries to make sense of it all.  

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT:  The nation`s  homebuilders are putting up fewer homes now than they were a year ago, but  they suddenly seemed to be selling more.  Single family housing starts  dropped 11 percent in March, but sales of new homes gained 3 percent.   The cause of the disparity is likely pretty simple: mortgage rates.  They rose throughout much of the second half of last year, peaking at over 5  percent on the 30-year fixed on November.  That had builders pretty bearish  on the prospects for the spring, likely why we saw fewer homes started.   But rates then began falling this year and really plummeted in March when  spring shoppers were out in force, hence the bump in sales.  
Pulte, one of the nation`s largest builders reported strong earnings in the  first quarter of this year.  Its CEO points squarely to the surprise drop  in rates.  

RYAN MARSHALL, PULTEGROUP CEO:  One quarter into 2019 and roughly 70 basis  points lower over on mortgage rates over the past five months, the  expectations are changing yet again with some calling for a reacceleration  of housing demand.  

OLICK:  Of course, the wild card is still prices.  The median price of a  new home sold in March was down nearly 10 percent compared with a year ago.  

Builders are trying to put up cheaper homes with strip-down amenities, but  given the sky-high costs for land and labor, doing so might help sales, but  could hit builder bottom lines.  

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

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

Qualcomm (NASDAQ:QCOM) was upgraded to overweight from equal weight today  at Morgan Stanley (NYSE:MS).  The analyst cited last week`s legal truce  with Apple (NASDAQ:AAPL) which he says will result in stronger growth and  earnings for the chipmaker.  Price target: $95.  Shares rose 5.5 percent  today to $86.72.  

Kimberly-Clark (NYSE:KMB) was upgraded to outperform from neutral at  Macquarie.  The analyst cited the company`s improving earnings outlook.   Price target now $142.  That stock fell 3.5 percent to $125.62.  
And Hormel was downgraded to underweight from neutral at the J.P. Morgan.   The analyst cited rising hog prices which could be difficult to pass along  to consumers.  The price target: $36.  That stock was down nearly 3 percent  to $39.24.  

Still ahead, feeling more confident about your retirement?  You`re not  alone.

GRIFFETH:  For the first time, a drug distributor is facing criminal  charges related to the opioid crisis.  Rochester Drug Cooperative was  charged today with conspiring to distribute drugs and defrauding the  federal government.  Two former company officials were also charged, but a  settlement with the company has been reached, the government will not  prosecute Rochester as long as it pays a $20 million fine.  Rochester Drug  Cooperative is the nation`s sixth largest drug distributor. 

Elsewhere, two pharmaceutical chains said today that they`re going to raise  the age the customers are allowed to buy tobacco to 21.  Walgreens was the  first to make that announcement.  Its new policy goes into effect starting  September 1st and late in the day, Rite-aid announced the same policy it  would take effect within 90 days.  All of this follows a crackdown by the  FDA to stop retailers from selling cigarettes and other tobacco products to  young people.  

Last week, Senate Majority Leader Mitch McConnell said he would propose  raising the federal age limit on tobacco sales to 21.  

Well, it`s something we do almost every day, we shop, and that simple act  of shopping produces a legion of data and that data is then often made  anonymous and aggregated before getting sold to hedge funds, and those  hedge funds then spend billions of dollars a year on the data that can help  them get an edge on their trading.  

Leslie Picker explains this complicated and not very transparent web of  transactions and who is profiting off your data and how.  

LESLIE PICKER, NIGHTLY BUSINESS REPORT CORRESPONDENT:  You`re on your way  to purchase something, say, it`s a new pair of pants.  You parked your car  at the store, satellites from the commercial space industry see you pull  up.  They sell data about that parking lot and thousands of others to a  firm called Orbital Insight.  Orbital Insight analyzes this picture to see  where and when people are shopping.  They say consumer traffic can give  them an early of same-store sales and revenue ahead of earnings.  
But it doesn`t end there.  There are at least 100 apps including weather  and traffic apps that are selling geo location data.  A firm called Thasos  buys info about foot traffic and spits out insight like about how many  customers visited a store in any given day and sell that to investors.  
When you purchase those pants, companies are tracking that, too.  Yodlee  provides consumer apps to some of the nation`s largest banks and gets  access to their customer`s credit card transaction history which it then  sells to investors, atomized, of course.  

Your e-mailed receipt for those pants is also valuable.  That data is  pulled through services like Rakuten Intelligence`s  This  software rids your inbox of junk, but in doing so, the software gets a look  and can gather information about purchasing habits to sell to hedge funds. says their technology can automatically recognize commercial e- mails and doesn`t look at/or share personal ones.  
And if you post about your new pants on social media, you better believe a  whole host of firms are scraping through Instagram, Facebook (NASDAQ:FB)  and Twitter to gather sentiment data about the top retail brands.  

GRIFFETH:  By the way, Leslie tells us there are currently more than 400  firms collecting these data sets and selling them to hedge funds.  
Twitter says its campaign to clean up its platform is working and that`s  where we begin tonight`s “Market Focus”, with the social media company  saying this morning they had better-than-expected results as it saw an 11  percent rise in what they called monetizable daily active users.  Those are  users most likely to see advertisements.  Twitter also said the strong  quarter was a byproduct of weeding out fake and abusive accounts as well as  better targeting ads.  Shares jumped 15.5 percent today to $39.77.  

Elsewhere, Philip Morris reported better than expect said earnings thanks  to strong demand for its smoke-free products.  But the tobacco company  reported a decline in revenue and lowered its earnings guidance for the  full year.  The stock today was up a fraction to $84.91.  
Lockheed Martin`s better than expected earnings for the quarter were helped  by strong demand for its missiles and fighter jets, and so, the defense  contractor raised its annual profit forecast.  The stock was up just over  5.5 percent today to $33.10.  

And Harley Davidson reported higher first-quarter earnings, but the  motorcycle company did continue to face declining sales.  Harley said that  European Union tariffs were partially to blame for that.  Shares were down  2 percent to $38.92.  

Americans are more optimistic now about their retirement.  A new survey by  the Employee Benefits Research Institute says that this percentage of  workers and retirees who think that they have enough saved has reached the  highest level since before the financial crisis, but are they right?  
Our senior personal finance correspondent Sharon Epperson is here with  highlights from that report.  
So how confident are people right now?  

SHARON EPPERSON, NIGHTLY BUSINESS REPORT SENIOR PERSONAL FINANCE  CORRESPONDENT:  Well, you can wish and you can dream, right?  So, many  workers are having that dream.  They`re very confident or at least they`re  somewhat confident about their ability to retire comfortably and 67 percent  of workers now say that they have — they do believe now that they`ll be  able to retire comfortably in retirement.  The key, though, is that the  economy has done well, their financial situation has improved and that may  have colored their confidence and perhaps their overly confident.  

In fact, 82 percent of retirees say they`re somewhat confident or very  confident and they`ll be able to continue to live comfortably during these  golden years.  

GRIFFETH:  On the other side, though, how far behind are some Americans in  saving for retirement?  

EPPERSON:  They definitely have some catching up to do.  There are a number  of people that haven`t done the calculations yet on how many — how much  it`s going to cost them to retire and what they`re going to need live  comfortably all those years.  Forty-two percent, that`s only the numbers  that have done that type of calculation and only 29 percent, that`s less  than one in three people have actually calculated how much money they`re  going to need for probably their biggest expense and that is healthcare  expenses.  

GRIFFETH:  And what about the people already in retirement?  They`re  confident that they`ll be able to continue in retirement, right? 

EPPERSON:  That 82 percent is pretty astounding, but a lot of it has to do  with that big number for retirement savings that they`ll be needing for  their health care expenses.  Fidelity has estimated that they`re gong to  need $285,000 if you`re a 65-year-old couple retiring today and eight out  of ten workers according to the study said they actually believe that  they`re confident they`re going to be able to cover those medical expenses  in retirement.  They reality of whether or not they`re able to do that,  that based on how much retirement savings they actually have, that`s a good  question mark.  

GRIFFETH:  And then there`s another factor in all of this, and we want you  to stay right there, Sharon, because we want to pick up on a study  yesterday, and that is that this new report that shows that Social Security  and Medicare may run out of money in the not-too-distant future.  So, how  can Americans plan for a potential security shortfall?
Joining us right now, Liz Miller who`s with Summit Place Financial  Advisers.  
Liz, thanks for joining us tonight.


GRIFFETH:  So, Medicare, the report says would be out of money by 2026, not  too far down the road, and Social Security by 2035.  How realistic should  people be to plan for those incomes as they get ready for retirement?  

MILLER:  Well, I think they need to make very specific plans for taking  care of themselves.  When we talk to those in their 50s and, to me, that`s  the real market that`s affected by this, they`re looking out potentially 15  years plus before they retire and that`s coming right against the Social  Security estimates.  

So we have a lot of clients in that age frame asking us what do we do, what  does it look like if there is no additional income?  Savers that are  younger than that, most of them aren`t thinking Social Security.  So I`m  not as worried about that population particularly really even for the 30- year-old to say our savings and they totally believe it`s all on  themselves.
But our clients that are in the 50s, we`re starting to look at, let`s see  what you have and what does it look like without that extra income?  

GRIFFETH:  What about healthcare?  I mean, that is a huge concern for a lot  of people as they get closer to retirement age, right?  

MILLER:  It is.  And those numbers are scary coming up very quickly.  I  think there is part of the population who is sort of ignoring it, sure that  something will change.  Somehow this will get fixed and as we know that can  be very dangerous.  
Fidelity estimates, of course, are pretty high, but we like to put into  perspective the estimates are for a couple and really almost two-thirds of  those estimated expenses are for what is now Medicare premiums and  prescription kind of expenses.


MILLER:  So, one of the things I liked to talk to couples about is what are  you spending now for health care insurance and what are you doing?  Because  what they worry about is thinking that that big nut is a completely  unplanned catastrophe and that`s not what experience shows us.  

GRIFFETH:  And you`ve done a lot of work on how much people are going to  have to pay and get ready to pay when they get to retirement on health  care?

EPPERSON:  Well, when they get ready for retirement on health care, they`re  going to have to pay a substantial amount.  The other thing they have to  remember is when they think they`re going retire at 65 which many workers  say they`re going to do, many more are retiring at 62 or before they think  they`re going to because of the health care emergency, because of  disability, because of job loss.  
What happens then because you can`t get Medicare until you`re 65?  So, how  are you going to pay for those healthcare expenses earlier on?  That`s  something else that a lot of people need to think about now.  

GRIFFETH: I don`t want to be complacent about this, but I can remember when  I was in my 30s and the warnings were that I shouldn`t wait for Social  Security to be there when I`m getting ready to retire and here I am getting  ready to retire at some point, and it`s still solvent right now.  

MILLER:  Right.  Right.  

GRIFFETH : So, are we whistling past the graveyard here?  

MILLER:  Well, demographics have a lot to do with Social Security, and  somehow that`s kind of the rut we`re in at the moment because the  millennials were sort of delayed in starting their careers and if there  were enough younger people working putting into Social Security, it helps  the rest of us get through.  


MILLER:  So it`s the ultimate of a good pyramid scheme.  

GRIFFETH:  All right.  Liz Miller with Summit Place Financial Advisers,  thank you.  
Sharon, as always, thank you for being with us tonight as well.  
Coming up, the transformation of American malls.  

GRIFFETH:  The FAA and the Department of Transportation have now given a  drone start up clearance for deliveries.  This is the first time the drone  company has received the same government approval as an airline.  
The startup is called Wing.  It`s the division of Google`s parent company  Alphabet, and Wing says it can now start commercial deliveries from local  business to homes.
Well, it`s no secret that the way we shop is changing and so malls across  the country have to evolve to keep up with the new demands and to keep  shoppers spending.  
Courtney Reagan takes a look for us tonight.  

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT:  The American mall,  it may not be the gathering place of the `80s and `90s, but extinction  headlines take it too far.  

GREG MALONEY, J.L.L. AMERICA`S RETAIL CEO:  They`re not dying.  They`re  just changing.  

REAGAN:  It`s true that more than a quarter of the nation`s malls have  closed.  Coresight counts 19,500 store closure announcements in the U.S.  since 2017.  Some for bankruptcies due partially for heavy debt burdens,  but also lower sales and margins as more shopping moves online.  
Anchor locations are the biggest traffic drivers, making them the most  important and most expensive to replace.  But Green Street Advisers  estimates malls will be more than 93 percent occupied this year, that`s  above the historical average.  Last year, tenant sales were the best in six  years.  

Mall operators are getting creative, filling empty real estate with  experiences.  Things you can`t buy on Amazon (NASDAQ:AMZN).  

MALONEY:  Things like axe throwing, things where people can go and  participate in some sort of experience.  These used to be in remote  locations and now they`re coming to your shopping center.  

REAGAN:  There`s an escape room where a new bankrupt Limited and Limited  Two Store used to be in New Jersey`s Woodbridge Mall.  
This lifetime fitness in Minnesota is where JCPenney used to be, it even  has a water park.  

The American Dream Mall in New Jersey has changed hands three times in the  16 years since it was first conceived.  Now run by the family that owns  Minneapolis` Mall of America.  It`s almost ready to open.  
With an indoor snow park, a Dreamworks branded indoor water park, aquarium,  Cirque Du Soleil venue, hockey rink and vice media food hall, with over  half of the tenants entertainment or food, it will hardly feel like a mall  at all.  

BYRON CARLOCK, JR., PWC U.S. REAL ESTATE LEADER:  We are a consuming  public.  We like to shop.  We like to have experiences.  I don`t believe  retail as a category is headed toward Armageddon.  I think it`s headed  toward repositioning.  

REAGAN:  Brookfield, the country`s biggest mall owner now has Peloton  stores, Tesla showrooms and supermarket.  

SANDEEP MATHRANI, BROOKFIELD RETAIL CEO:  Today, the best shopping curated  about 30, 35 percent apparel, 20 percent home furnishings, 20 percent  entertainment, 15 percent to 18 percent food, 10 percent electronic and  digitally native companies which are sort of the biggest flow of tenants  into our shopping centers.  

REAGAN:  Simon Property Group (NYSE:SPG) owns some of the strongest malls  in the countries.  In recent years, its tenant composition has changed,  with fewer clothing stores and the addition of 15 brands that started  online like Warby Parker, Caspar and UNTUCKit.  
For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan.  

GRIFFETH:  Finally tonight, today marks the anniversary of one of the  biggest product flops ever.   New Coke, remember that?  It was launched on this day in 1985 and the  backlash was swift.  Consumers were upset about the iconic soda`s shift in  flavor.  New Coke didn`t exactly disappear immediately, but it was joined  only two months later by Coca-Cola (NYSE:KO) Classic and in 2002, it was  taken off the market for good.  
You might say it was a corporate decision that left a bad taste in some  people`s mouths.  Sorry.  

One final look at the day on the street.  The Dow was up 145 points.  The  Nasdaq and the S&P with their gains today all-time highs.  
That is NIGHTLY BUSINESS REPORT for tonight.  I`m Bill Griffeth.  Thanks  for watching.  Have a great evening.  See you tomorrow.

Nightly Business Report transcripts and video are available on-line post  broadcast at The program is transcribed by ASC Services II  Media, LLC. Updates may be posted at a later date. The views of our guests  and commentators are their own and do not necessarily represent the views  of Nightly Business Report, or CNBC, Inc. Information presented on Nightly  Business Report is not and should not be considered as investment advice.  (c) 2019 CNBC, Inc.

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