ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Sue Herera and Bill Griffeth.
BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Dow 28,000. The three major indexes closed the week at records as a rush of euphoria hits Wall Street.
SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Bold bets. With the market at all-time highs, our market monitor has a list of stocks that he says could climb 30 percent over the next year.
GRIFFETH: New prognosis. The White House wants to force hospitals to reveal the price of care so that people can look for better deals. And the sector rallies.
Those stories and much more tonight on NIGHTLY BUSINESS REPORT for Friday, November 15th.
HERERA: Good evening, everyone, and welcome.
The bulls are out on Wall Street. The major averages all closed at records. The Dow above 28,000, thanks to optimism on a trade deal, a rally in health care stocks and upbeat report on retail sales, which is an indication that the consumer which has been powering the economy is still strong.
Here are the closing numbers: the Dow Jones Industrial Average rose 222 points to 28,004. The Nasdaq was up 61 and the S&P 500 added 23. It was the sixth straight weekly gain for the S&P 500, the longest win streak for that index since 2017.
Bob Pisani takes a look at what to make of all these bullishness.
BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: We had another day of record highs. Now, the S&P has broken out of its trading range into record territory, euphoria has been growing and pretty fast frankly. A number of technicians have been positively giddy recently but not just the chartists feeling good about the trends. Even strategist and everyday retail investors are starting to get really gung-ho on the markets.
Barclays, for example, says that small caps are at a turning point and they`re poised to outperform. Morgan Stanley (NYSE:MS) also thinks a key rotation from growth stocks to value stocks is beginning. Even the average retail investor is getting all bulled up, according to the latest investor sentiment survey. That`s from the American Association of Individual Investors — high levels of bullishness.
So, why is everybody so excited? We could chalk it up to a combination of a neutral and supportive Federal Reserve, better global growth outlook for 2020. But remember, this also seasonal strength and there`s higher hopes for an eventual U.S.-China trade deal that`s also factoring very heavily into the equation.
Everybody seemed to think that FOMO, fear of missing out, is going to cause institutional players to buy in at the end of the year. The only thing that can really throw a wrench in the works is the breakdown in the China negotiations.
Still, some market observers are not impressed. So, Brian Belski at BMO Capital noted that many on Wall Street are habitually late to the party. He said people get bullish after the market rallies. He thinks there is some froth in the market as everyone in Wall Street chases performance going into the end of the year.
And he does have a point. All this euphoria would be great if we were coming off the big selloff. But we`re not. Stocks are at new highs. Breadth is strong. Put it all together, the market looks a little frothy right now.
For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock Exchange.
GRIFFETH: And as Sue mentioned stocks got a late day lift from health care stocks after the Trump administration released a plan that would force hospitals and insurance companies to disclose the price of their care. That sent shares of insurers higher like Anthem, Humana (NYSE:HUM), United Health and Cigna. Hospital operators like Community Health, Tenet and HCA Holdings also rallied.
Bertha Coombs has more details.
BERTHA COOMBS, NIGHTLY BUSINESS REPORT CORRESPONDENT: The Trump administration`s new transparency rules would require hospitals to publish insurance negotiated prices for some 300 procedures starting in 2021. The president arguing the move will give patience more control. And the transparency will help push system prices lower.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: This will allow you to see your out-of-pocket costs and other vital price information before you go in for treatment. So you know what it`s going to be and be able to have lots of choices.
COOMBS: Four major hospital associations vowed to take legal action to stop the new rules, arguing that publishing their negotiated rates with insurers will be too confusing for consumers.
The policy experts say the rules aren`t as onerous as feared.
DR. ZEKE EMANUEL, UNIVERSITY OF PENNSYLVANIA: The penalty for not revealing the information, $300 a day. And in the whole hospital industry, it`s a few hundred million dollars. That`s in an industry that makes $1.3 trillion. You know, ignoring in executive order is not going to be very painful for most hospitals.
COOMBS: In the meantime, insurers argue that publishing their negotiated rates would make it harder to drive a bargain with hospitals to lower costs for consumers.
EMANUEL: The worry here is, hospitals won`t reduce their price. One hospital in the city will look across town and say, oh, he is getting more.
COOMBS: For investors, the news and potential impact of the rules clearly not seen as bad, as some had feared earlier this year. The S&P 500 health care sector hitting a new record high today, with strength both in hospital and insurer stocks.
And health insurers are now up 20 percent over seven straight weeks of gains.
For NIGHTLY BUSINESS REPORT, I`m Bertha Coombs.
HERERA: Retail sales rebounded in October. Sales increased 0.3 percent last month, lifted by car purchases and higher gas prices, reversing September`s decline.
But consumers did pull back on big ticket household items and clothing. Experts say that could temper some excitement for a strong holiday shopping season.
So joining us now to talk more about retail sales and the consumer is Michael Lasser, retail analyst for UBS.
Michael, welcome. Nice to have you here.
MICHAEL LASSER, UBS RETAIL ANALYST: Good evening, Bill and Sue. Thanks for having me.
HERERA: Are you at all worried? I mean, the report was better than a lot of people thought it would be. Are you worried at all about the pullback by consumers on the bigger ticket items and clothing?
LASSER: No, I`m not. I think the consumer is on good footing as we merge into the holiday season. Household balance sheets are in good shape. Wages are rising and unemployment is low. Those are three important foundational elements of what should drive healthy consumer spending over the holiday season.
GRIFFETH: Winners and losers into the holiday season here, and I`m curious your thoughts on the department stores themselves, and which category they fit in right now.
LASSER: Well, you know, what I would tell you is that apparel is a difficult category. We heard when Walmart reported yesterday, they noted that apparel was an area of weakness. That was in part because of the uncooperative weather. It`s been a bit warm up until recently.
LASSER: And as a result people, haven`t been buying apparel. The winners will clearly be those with effective omnichannel offerings. One of the notable points from these retail sales report was that the e-commerce channel does quite well.
So, those that can blend a good in-store experience, along with the robust omnichannel experience are going to be well-positioned for this holiday season.
HERERA: Should consumers expect a lot of discounting or promotional things? I mean, they`re pretty used to that.
LASSER: Absolutely. And, Sue, it`s a good question, because a lot of the retailers have brought in pretty heavy inventory levels ahead of all the tariff uncertainty. So, that coupled with the fact that the holiday always tends to be promotional. You should expect to see heavy discounting throughout the next few weeks.
GRIFFETH: I`m curious about home goods as well. They seem to be doing well and specifically of RH, which used to be called Restoration Hardware, which now has a big fan in Berkshire Hathaway (NYSE:BRK.A). What about that sector? It`s doing well all of a sudden.
LASSER: It`s a good question, Bill. You know, home furnishings is a sector that consumers are interested in because the housing market is very stable. It`s an area that consumers choose to continue to invest in.
It is being impacted by the tariffs. We heard that from some of the players like Wayfair thus far. But nonetheless, we expect that home furnishings will be stable as we move through the holiday season.
HERERA: Michael Lasser from UBS, Michael, thank you.
LASSER: Thank you very much.
GRIFFETH: And in the news tonight, day two of the impeachment hearing on Capitol Hill traders on Wall Street have been watching the testimony of former Ukraine Ambassador Marie Yovanovitch who said she was removed from her post after what she called a concerted campaign against her.
Reaction to her testimony pretty much followed party lines. It ranged from compelling to irrelevant.
HERERA: The Democrats running for the party`s presidential nomination are trying to set themselves apart. We hear a lot about the progressive candidates and their economic platforms, and things like a wealth tax and Medicare-for-All. But what about the moderates? Where do they stand?
We asked Kayla Tausche to take a look.
KAYLA TAUSCHE, NIGHTLY BUSINESS REPORT CORRESPONDENT: While the progressive darlings of Democratic Party have stolen the headlines.
SEN. ELIZABETH WARREN (D-MA), 2020 PRESIDENTIAL CANDIDATE: It`s time for a wealth tax.
SEN. BERNIE SANDERS (I-VT), 2020 PRESIDENTIAL CANDIDATE: A Medicare-for- All.
TAUSCHE: A handful of candidates led by Vice President Joe Biden, South Bend Mayor Pete Buttigieg and Minnesota Senator Amy Klobuchar are not so quietly vying for the party`s moderate vote, with lower price platforms to appeal to the wallets of the middle class, arguing that health care doesn`t need to be run by the government.
JOE BIDEN (D), 2020 PRESIDENTIAL CANDIDATE: We can do that without Medicare-for-All. We can do that by having the public option.
TAUSCHE: Expanding some government programs but leaving private options available too.
PETE BUTTIGIEG (D), 2020 PRESIDENTIAL CANDIDATE: The way I would do it is to make sure that the choice rests with you. We`re not going to kick you off your private plan if you don`t want to be kicked off your private plan, because I trust you to figure out what the right plan is for you.
TAUSCHE: They all think higher education should be free for some and that more student debt should be forgiven than currently but not all of it. And to pay for it, they`d roll back President Trump`s corporate tax cut and raise taxes on certain income brackets and investments.
Klobuchar says progressive candidates are obscuring the impact of that on ordinary people.
SEN. AMY KLOBUCHAR (D-MN), 2020 PRESIDENTIAL CANDIDATE: We have a big problem with our debt, and it may not affect you guys, but it`s going to affect your kids and your grandkids. So, I want to be able to show how I`m paying for things as we move forward.
TAUSCHE: Buttigieg supports taxing unrealized capital gains on the top 1 percent of Americans.
BUTTIGIEG: We certainly need to consider a higher marginal tax rate for top income earners.
TAUSCHE: Biden says closing some loopholes could add up.
BIDEN: Eliminate one tax loophole, call stepped up basis. It only costs $17 billion for the government. Eliminate that, it could put every single solitary person qualified for community college in community college for free.
TAUSCHE: Those messages are resonating with some Democrats in early voting states. Polls this week in New Hampshire and Iowa show Biden and Buttigieg in the lead in those respective states. The leads are narrow with Warren and Sanders not far behind and two months to go before the primaries.
For NIGHTLY BUSINESS REPORT, I`m Kayla Tausche in Washington.
GRIFFETH: Time to look at some of today`s “Upgrades and Downgrades”.
We begin with shares of Grubhub. They were upgraded to overweight from under weight at Barclays. The analyst cited the company`s position as a dominant brand and as potential for growth as a result. Price target, $51. That stock was up 3 percent today to $39.79.
Qualcomm (NASDAQ:QCOM) was upgraded to buy from neutral at Mizuho. The analyst cited the ramp-up of 5G over the next two years in 2020 and 2021. Price target, an even $100. Shares rose a fraction to $90.81.
And Nvidia was upgraded to buy from hold at Craig-Hallum. The analyst cited the company`s strong third quarter results. Price target, $255. The stock fell more than 2.57 percent to $204.19 following those earnings that were reported last night.
HERERA: Still ahead, remember WorldCom`s Bernie Ebbers. Why he is seeking early release from prison.
HERERA: Amazon (NASDAQ:AMZN) plans to protest the Pentagon`s award of a $10 billion cloud computing deal to Microsoft (NASDAQ:MSFT). Last night, the company expressed concern that the decision was based on politics and not a fair contracting process. As we reported last month, Microsoft (NASDAQ:MSFT) beat out Amazon (NASDAQ:AMZN) for the Joint Enterprise Defense Infrastructure cloud project, otherwise known as JEDI.
GRIFFETH: Streaming service Hulu is hiking prices for the second time in less than a year, this time from $44.99 to $54.99 per month. Company says the new price reflects the substantial value of its Hulu + Live TV service. Just last month, AT&T (NYSE:T) raised the price of its TV Now service to $65. Experts say it`s the latest sign that providers are having trouble making money on discounted packages that rival cable.
HERERA: And as cord cutting picks up steam, media companies have a plan to battle back.
Here is Julia Boorstin.
JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Media companies are pulling out all the stops to fight the growing cord-cutting threat. Paid TV subscriber declines accelerated to 1.8 million last quarter. That`s the third consecutive quarter of over 1 million subscribers lost. AT&T (NYSE:T), which owns DirecTV, is suffering the most, losing 1.1 million video subscribers last quarter. That`s nearly three times its year earlier loss.
ALEX KRUGLOV, FORMER HULU HEAD OF CONTENT ACQUISITION: The biggest factor on acceleration the past quarter is a confluence of new options available to consumers, most of them are driven by newly emerged subscription services, most of which are actually effectively free to the consumer. So, as a result when you look at a person`s time, more and more of that time can be spent on a subscription service and on options that are available over the top.
BOORSTIN: But while consumers drop TV bundles, they do need faster broadband or mobile Internet to access streaming services. And that`s where these media giants are focusing. AT&T (NYSE:T) growing its wireless customer base much faster than expected last quarter. While Comcast (NASDAQ:CMCSA) (NYSE:CCS) high-speed internet customers grew at a record pace. Its best third quarter in a decade.
In fact, now, Comcast (NASDAQ:CMCSA) (NYSE:CCS) calls broadband not video the foundation of our customer relationships. In addition to selling the pipes, media companies have three ways to tap into the shift to streaming. First, of course, there are the wave of subscription services such as Disney (NYSE:DIS) Plus and HBO Max. Second, they`re selling content to streamers, as Viacom`s Nickelodeon is to Netflix
(NASDAQ:NFLX). And third, there`s digital advertising on streaming apps.
KRUGLOV: I absolutely believe that the suppliers will continue investing in the free ad supported services simply because the subscription marketplace is quite crowded at this time. But will the consumers actually gravitate to consistent usage of the services? That remains a big question mark.
BOORSTIN: Connected TV ads such as those on Hulu or Roku are expected to grow nearly 40 percent this year to $7 billion and to double in four years according to e-marketer. While Hulu is Disney`s bet on the digital ad market, NBC Universal (NYSE:UVV) will launch its ad-supported play Peacock next year.
For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in San Francisco.
HERERA: Julia mentioned Comcast (NASDAQ:CMCSA) (NYSE:CCS) in her story. And as you know, Comcast (NASDAQ:CMCSA) (NYSE:CCS) is the parent company of CNBC, which produces this program.
GRIFFETH: T-Mobile CEO is reportedly going to stay put. That`s where we begin tonight`s “Market Focus”.
As first reported by CNBC, T-Mobile`s chief executive John Legere is not taking the top job at WeWork as speculated early in the week. T-Mobile is waiting for the acquisition of Sprint to be approved by state attorneys general around the country. T-Mobile shares rose more than 1.5 percent to $78.07.
Strong online sales helped Alibaba`s chief rival in China, JD.com, top Wall Street`s expectations. The Chinese-based Internet company has maintained solid growth in the industry despite the ongoing trade war with the United States. Shares fell a fraction today to $33.55.
And JCPenney reported a smaller than expected loss as it sold more diamond jewelry and denim clothing in the latest quarter. Retailer did miss on revenue estimates. But it raised its financial outlook for the whole fiscal year. Shares gained more than 6 percent today to $1.17.
HERERA: United Airlines is the latest carrier to extend its grounding of the Boeing (NYSE:BA) 737 MAX. United`s schedule returned date is now to pushed to early March, which is the similar time frame to both American and Southwest. United shares fell a fraction to $92.51.
And the world`s largest Starbucks (NASDAQ:SBUX) opens its doors in the Windy City. The Chicago store is five stories high and it covers about 35,000 square feet, edging out its Tokyo location for the top spot. Starbucks (NASDAQ:SBUX) shares were down a fraction to $84.21.
GRIFFETH: Time for our weekly market monitor who has three names he believes will grow as much as 30 percent over the next year. This is his first time on the program. We welcome Dave Harden. He`s the president and chief investment officer at Summit Global Investments.
Dave, thanks for joining us tonight. And welcome.
DAVE HARDEN, SUMMIT GLOBAL INVESTMENTS PRESIDENT & CIO: Thank you, Bill. Glad to be here.
GRIFFETH: A couple of those names are household names. And they`ve done very well this year starting with Microsoft (NASDAQ:MSFT). You`re expecting a 30 percent gain. It`s already up that much this year alone.
What`s going to propel it even higher?
HARDEN: It`s done very well. You know, this is a company that really fits into our baskets really — just our portfolios love this. Love outstanding companies with little to know downside risk, downside surprises. We really like to own outstanding companies with the least surprises.
And Microsoft (NASDAQ:MSFT) here has a great management team. They`re really executing. They were late to the cloud but with the JEDI, you know, being awarded, they are really executing very, very well. And it`s all going to the bottom line. You have about $136 billion in cash. They`re returning it to the shareholders in a good dividend, almost as much as the 10-year. And so, great company to own with a lot of upside potential.
HERERA: Next on the list is Zoetis and as a dog owner, you know, we spent a lot on our pets. And you say that they`re very much well-positioned with their animal health line.
HARDEN: You know, they`ve become the market leader in this space for animals. And we do love our pets. And pets are a lot less political than the bio, and everything else out there.
So, with your animals, Sue, I know you have a few and mine, this is something we are willing to spend on with a lot less rink from the standpoint of other health care companies. So, I like this. They have a lot of room to grow. Good management team.
And they have done well all these have done well. But, again another outstanding company
GRIFFETH: And then you have Walmart, of course, the number one retailer, had good looking earnings yesterday. But again, this is another stock that had a stellar year and you`re specking another one next year, I guess.
HARDEN: Well, Walmart is one that let`s say the economy doesn`t do as well with. They actually increased their volume. So, they pick up in the down market and in the up market where the consumer is doing well, they grew over 40 percent on their online sales. Their groceries are doing well. So, as people go to buy more groceries, they are picking up shoes. It`s a great story. We all know it very, very well. And they continue to execute.
And this is a big market. They have a lot of room to grow. A lot of online to cover.
GRIFFETH: All right. Very good. Dave Harden from Summit Global Investments — again, thanks for joining us tonight, Dave.
HARDEN: You`re welcome. Thanks for having me again.
HERERA: Well, he presided over one ever the biggest corporate frauds of all time. But now, just halfway through his prison sentence, former WorldCom CEO Bernhard Ebbers wants to go free. Even the judge who sentenced him says that he has been punished enough. But has he?
Scott Cohn has the story.
SCOTT COHN, NIGHTLY BUSINESS REPORT CORRESPONDENT: In his prime, he was known as the “Telecom Cowboy”, big, bold, brash and loud.
BERNARD EBBERS, FORMER WORLDCOM CEO: The new company which will be called WorldCom is uniquely equipped to develop and market communications products and services that are growing the fastest — data, Internet, wireless, local, and international.
COHN: Bernie Ebbers turned a small Mississippi long distance company into a telecommunications behemoth.
WorldCom`s explosive growth in the `90s and competitor`s frantic efforts to keep up helped give rise to the Internet as we know it. But it turned out it was built on a lie. $11 billion in accounting fraud, allegedly orchestrated by Ebbers himself to keep the illusion of growth going.
EBBERS: We are going to come up with the ball. And we are going to right this effort like we never have before.
COHN: He claimed he wasn`t a numbers guy, that the fraud was the work of others.
EBBERS: What happened is not anything really different than a lot of other people, other than if it ends up being true that there is a lot of accounting issues. I don`t know the facts on that. I haven`t been privy to any of that information.
COHN: But a jury didn`t buy it, convicting Ebbers on nine counts in 2005.
Judge Barbara Jones imposing what she acknowledged was a life sentence, 25 years. But now, 13 years after reporting to prison, Ebbers now 78 wants out. According to court filings he is blind, has heart disease, has withered to 160 pounds.
His daughter says she fears he only has weeks to live. Even Judge Jones now retired says he has been punished enough.
But prosecutors in New York say that life sentence should stand. Prison doctors have said as recently as this summer that his condition is not so dire. A new judge has asked to hear from WorldCom victims and asked to hear more medical data. If she doesn`t set him free he is not due for release until 2028 if he lives that long.
For NIGHTLY BUSINESS REPORT, I`m Scott Cohn.
HERERA: Coming up, the rental market is red hot in Manhattan, even those with sky high top price tags.
HERERA: Next week, the housing market will be in focus, and here`s a look at what to watch.
On Monday, we`ll hear from the home-building industry about now optimistic they are on future orders. On Tuesday, a report on housing starts will indicate if ground breaking on new construction is picking up.
On Thursday, existing home sales for October are due.
And that is what to watch for next week.
GRIFFETH: But finally tonight, when we talk about real estate, Manhattan is literally an island unto itself, operating with a different set of rules and prices, even in the luxury rental market.
Robert Frank is in New York City for us tonight.
ROBERT FRANK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Luxury real estate sales have been falling in Manhattan for two years. But the wealthy who are not buying are renting. And that`s created huge demand and huge prices for luxury real estate rentals.
Prices for high-end rentals are up 4 percent this year at the very top it`s almost four times that. While luxury sales prices are down 10 percent this year. So why would people who can afraid to buy choose to rent?
New taxes have made owning and buying more expensive. The mansion tax on sale, the new cap on state and local taxes and renewed talk about a pieta terra tax on in New York City.
With so much uncertainty in the New York real estate market, wealthy buyers are opting to camp out in rentals until prices fall further. And with the oversupply of luxury apartments, sellers are opting to rent to at least collect some money on units that are languishing on the market. The demand has led to a new segment in Manhattan real estate, the $100,000 a month rental. An apartment at 15th Central Park West rented for $125,000 a month this spring.
And this apartment on Leonard Street downtown can be yours for $123,000 a month. It`s got 6,000 square feet, six bedrooms, four and a half baths, 14-foot ceilings and a 56 stories high views of all of Manhattan and both rivers.
TIMOTHY MELZER, DOUGLAS ELLIMAN REAL ESTATE: Sometimes people want to try out the neighborhood. They want to try out to see if it is a building that they necessarily like. Other times, there is people that only want to be in Manhattan for six months or one year at a time.
FRANK: Now, the owners of this apartment who bought it back in 2016 for $30 million have received offers for short-term rentals but they want a year long lease which would total $1.4 million to rent. Sky high views at sky high prices.
For NIGHTLY BUSINESS REPORT, I`m Robert Frank in downtown Manhattan.
HERERA: Wow. Before we go, here is another look at the day`s final numbers on Wall Street.
The Dow rose 222 points to close above 28,000 for the very first time. Speaking of sky high. The Nasdaq was up 61. And the S&P 500 added 23. It was the sixth straight weekly gain for the S&P 500, the longest win streak for that index since 2017.
And on that note, that does it for us tonight. I`m Sue Herera. Thanks for joining us.
GRIFFETH: Happy birthday, my dear.
HERERA: Oh, thank you.
GRIFFETH: You young whippersnapper you.
HERERA: I wish.
GRIFFETH: I`m Bill Griffeth. Have a great weekend, everybody. See you on Monday.
HERERA: Thank you.
Nightly Business Report transcripts and video are available on-line post broadcast at http://nbr.com. 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.
<Copy: Content and programming copyright 2019 CNBC, Inc. Copyright 2019 ASC Services II Media, LLC. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of ASC Services II Media, LLC. You may not alter or remove any trademark, copyright or other notice from copies of the content.>