Transcript: Nightly Business Report – December 24, 2019

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

BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR:  No Santa, no rallies. Stocks were quiet heading into the holiday, but as the season of the Santa Claus rally kicks off, what do these trading days mean for investors in the New Year?  

Final push.  It`s the last minute shopping rush for the holidays.  Which
retailers are the big winners this season?  

And going for growth.  Tonight`s market monitor is a known value
strategist.  What he thinks growth may be a winner in 2020.  

All that and more tonight on NIGHTLY BUSINESS REPORT for Tuesday, December 24th.

And we do bid you a good evening, everybody, and welcome.  Sue has the
night off.  

`Twas the night before Christmas and all through the street, nary a bad
word was found, not even a tweet.  Investors all watched the market with
care in the hopes that St. Nicholas soon would be there.  Alas, there was
no rally, but it`s all right.  Because compared to last year, calm was a
welcome sight.  

Apologize to Clemente Clarke Moore, but investors might well had been
relieved there wasn`t the same turmoil we saw last Christmas Eve when the Dow fell more than 650 points and the S&P briefly entered bear market
territory.  Today in our holiday shortened session, the Dow fell just 36
points, Nasdaq climbed another seven to close at its ninth straight record.  
That`s the first time that`s happened since 1998.  The S&P 500 was off a
fraction today.  

Bob Pisani has more on what a difference a year makes.  

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT:  This time last year, the market was closing on the years for the year.  What made the
difference?  It was a combination of four factors, the Fed cut rates and
added liquidity to the market.  Second, economic data has been strong to
indicate no recession.  Third, hopes for a truce on the tariff and trade
wars and the global economy may be bottoming.  

One clear trend likely to continue in 2020, the bigger getting bigger.  S&P
is up 28 percent this year, but the ten largest stocks are up an average of
40 percent.  Apple (NASDAQ:AAPL) is up 77 percent.  Microsoft (NASDAQ:MSFT) is up 55 percent.  Only Amazon (NASDAQ:AMZN) up 19 percent has underperformed the S&P in the top five this year.  

What`s next?  Some are arguing the markets are expensive given that
earnings have been flat this year.  But stocks can trade at higher prices
if there`s sign the economy is still expanding and most believe that`s
indeed, going to happen.  

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

(END VIDEOTAPE)

GRIFFETH:  So what would a Santa Claus rally, if it comes, bring in these
final days of the trading year?  

Joining us right now, our friend David Sowerby, portfolio manager at Ancora Advisors.

David, always good to see you.  Welcome.  

DAVID SOWERBY, ANCORA ADVISERS PORTFOLIO MANAGER:  Merry Christmas, Bill.  

GRIFFETH:  We`ve already had a good year, as Bob pointed out, a good
December.  Best December on Wall Street since 2013.  What would these last five days mean if we continue this rally?  

SOWERBY:  Momentum is still the market`s best friend.  As you indicated,
the 11th best year for the S&P 500 in more than 90 years of S&P 500
history.  Let`s just put it in perspective.  This is elf on a shelf meets a
Festivus miracle for year end 2019, with momentum carrying into early 2020, because we`re still in the seasonal period where stocks are going to be the investors` best friend and meaningfully outperformed the low yields we`re getting in the bond market.  

GRIFFETH:  But as Bob pointed out, the Fed was cutting rates this year.  
They`re not expected to do anything in 2020.  We were worried about a trade war, there seems to be progress on that now.  I mean, all of these
headwinds that we`re facing are falling by the wayside.  Can it be that
easy that we`re going to see a higher market in 2020?  

SOWERBY:  I think so.  But you and I have had the conversation before that
in a single calendar year, the stock market almost never returns to the
sweet spot of 9 percent to 10 percent.  It`s usually better than 13 percent
or less than 6 percent or 7 percent.  So, next year, maybe a little more
tepid growth of a stock market, but I think a stock market that still
favors where you`re going to see active investors do quite well, where
there`s rotations into some of the laggards of this year like energy and
healthcare.  I think it`s still a market that`s going to be fairly healthy,
net of inflation and taxes.  

GRIFFETH:  And speaking of laggards, what about the international markets? We were worried again another headwind this year.  The soft economy overseas which seems to be bottoming out right now.  

SOWERBY:  Terrific question.  I think if I start with a blank piece of
paper with $100, I want $80 to $90 in U.S. stocks.  The remainder in
international but emerging markets, I simply don`t see the efficacy or the
desire to be in developed international markets.  That`s been the case
since 1995 when S&P 500 stocks have compounded better than 4 percentage points per year better than developed international markets.  Europe, Japan in particular, because the growth rates simply aren`t there to support the growth rates we`re seeing here in the United States.  

GRIFFETH:  Technology, that`s long been the favorite of anybody when you
ask them what they like.  Is that still the case for you as well?  

SOWERBY:  I think within reason, yes.  So, tech we know this year was up
better than 45 percent.  

GRIFFETH:  Right.

SOWERBY:  So, for example, in a mutual fund that I co-manage, on the
margin, we still have a good weighting in tech, but we`ve been on the
margin reducing names that have gone quite well this year — Apple
(NASDAQ:AAPL), Accenture, Microsoft (NASDAQ:MSFT), come to mind.  And we`ve been adding to the names that we think have the potential next year in healthcare, names like Amgen (NASDAQ:AMGN) or CVS (NYSE:CVS) on the healthcare side.  I think that`s the version that`s going to take place in 2020.  

GRIFFETH:  David Sowerby with Ancora Advisors, merry Christmas and happy New Year`s.  

SOWERBY:  Likewise, right back at you, Bill.  

GRIFFETH:  Thanks, David.  

It`s the final few hours before Christmas, and the last big shopping push
is on.  It could be big.  This past Saturday, known in the retail world as
Super Saturday, it`s estimated that sales reached more than $34 billion.  
And while a consumer is driving its economy, the way we spend that money is different than we did it 20 years ago.  

Ylan Mui digs into the numbers for us tonight.

(BEGIN VIDEOTAPE)

YLAN MUI, NIGHTLY BUSINESS REPORT CORRESPONDENT:  While everyone else is focused on Christmas presents, I`m here to talk about Christmas past.  

Let`s rewind the clock all the way to 1999.  How are consumers spending
when the Internet was young and we were facing a brand new millennium? Online shopping barely even registered back then.  The National Retail Federation hadn`t begun tracking Internet sales.  

Now, the trade group forecast it could reach $167 billion this holiday.  
Now that would help drive sales this season to another record high.  

EDWARD HERTZMAN, SOURCING JOURNAL FOUNDER & PRESIDENT:  This holiday season is looking to be our best in years.  This past Saturday was a single strongest shopping day of the season.  All early indicators are showing that this holiday season has been quit strong.  

MUI:  Twenty years ago, a bigger portion of our annual budget went to food
and clothes.  Food used to eat up 13.6 percent of our income, now it`s 12.9
percent.  Apparel was almost 5 percent of the budget, now it`s 3 percent.  
Part of the reason is lower prices and the rise of fast fashion, but it`s
also the result of a rising incomes.  A smaller share of the budget needs
to go to necessities.  

And there`s more good news on the housing front.  While the share of income we spend on housing has stayed the same, we`re paying a lot less in
mortgage interest, thanks to rate cuts from the Federal Reserve.  A 30-year
fixed rate in mortgage in 1999 was 7.4 percent.  Today, it`s less than half
that.

So that means we should have a lot of extra money, right?  Not so fast.  
Take a look at healthcare costs.  They`ve got up from 5.3 percent of the
budget to 8.1 percent.  Spending on health insurance has more than doubled.  

Economists say the big culprit is inflation.  Healthcare costs have risen
by 3.5 percent over the past two decades, while overall inflation has been
at just about 2 percent.  But America`s aging population means that
healthcare will continue to be an issue in 2020 and beyond.  

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

(END VIDEOTAPE)

GRIFFETH:  Let`s turn now to Dana Telsey to talk more about the winners and losers this holiday shopping season.  She, of course, is the CEO and chief
research officer at the Telsey Advisory Group.  

Dana, always good to see you.  Thanks for joining us tonight.  

DANA TELSEY, TELSEY ADVISORY GROUP CEO & CHIEF RESEARCH OFFICER:  Thank you for having me, Bill.  

GRIFFETH:  Let me cut to the chase to begin with.  The optimists were
saying 4 percent sales growth this year, maybe a little bit more.  Do you
think we hit that this year?  

TELSEY:  I think we hit that this year, yes, I do.  I think it was the
season of the haves and have-nots.  Value and convenience mattered.  This
is the first season for buy online, pick up in store through all the
different retail chains.  It mattered because the attachment sales are
incremental.

GRIFFETH:  Yes, consumers and the retailers have become much more
comfortable with this online phenomenon, you know, the brick and mortars know that they`ve got to be online as well to grow their sales.  

How much more do they have to be online in future holiday seasons?  

TELSEY:  I think we continue to see online growth but it doesn`t mean
you`re not going to stores be that essential.  Every time someone does buy
a online pick up in store purchase, guess what?  They`re spending an
additional 20 to 30 percent more when they pick up their item because
they`re buying other things.  When you have a physical store, your online
sales go up.  If you close a physical store, your online stores can go down
50 percent.  So, I think over the next decade, we`re going to see the
integration of digital and physical even more tethered than it is today.  

GRIFFETH:  We keep hearing about the demise of malls, but I then hear that, you know, the younger generations like to go to the malls right now.  It`s become more of a social gathering place for them in addition to a shopping center right?  

TELSEY:  It is.  I think one of the things is people want to interact.  
They want to socialize.  You want to meet people.  You want to be able to
have dinner or lunch together.  

And I think one of the items we`re seeing is everyone wants that
acceptance.  Why do you see whether Sephora, whether it`s Lululemon, you`re seeing people doing activities together?  The activity of buying has to be married with the activity of doing and you can do that at shopping centers. We`re seeing whether it`s the Gen-X or the millennials, they`re all working together to make that happen.  

GRIFFETH:  Who are the winners this season do you think?  

TELSEY:  I think it`s going to be Target (NYSE:TGT), Walmart, Amazon
(NASDAQ:AMZN).  I think it will be Lululemon.  I think Sephora, Vans.  I
think — it`s going to be some of the luxury stores like Louis Vuitton.  I
think the off prices like TJX, Ross and Burlington also win and win big in
holiday 2019.

GRIFFETH:  This was a record year for closures of retail stores, more than
9,300 closing.  Who`s on your watch list after the season?  

TELSEY:  I think you`re going to see some of those retailers who didn`t
close all the stores they needed to.  I think you`re going to potentially
see more.  Certainly, Pier One, Forever 21 continue to be on the bucket
list of what needs to be watched.  

GRIFFETH:  Dana Telsey with the Telsey Advisory Group, happy holidays.  
Thanks for joining us as always.  

TELSEY:  Happy holidays.  

GRIFFETH:  Thank you.  

With all that shopping being done, let`s not forget about deliveries.  Well
more than 2 billion packages will have been shipped this season.  So, how
are the UPS`s and FedExes of the world handling that last mile to your
doorstep?  

Frank Holland takes a look.

(BEGIN VIDEOTAPE)

FRANK HOLLAND, NIGHTLY BUSINESS REPORT CORRESPONDENT:  There`s more pressure than ever to go from online order to on time delivery for major shippers.  In the last week before last Christmas and Hanukkah, UPS delivered the highest percentage of packages on time at 98.9 percent. Anything above 95 percent is considered good.  

The major shippers separated by a few tenth of a percent, but when even a
tenth below 100 percent represents 86,000 packages that were not delivered on top, sometimes good isn`t good enough.  However, logistics analyst Satish Jindel from ShipMatrix says he was impressed by the overall
performance.  

SATISH JINDEL, SHIPMATRIX PRESIDENT:  The few people who don`t get it, they get to make a lot of noise on social media.  But those will be very few
compared to the hundreds, millions of people who will be receiving their
package in time for Christmas.  

HOLLAND:  The full holiday rush since Black Friday, UPS is also the leader
for on time deliveries.  New data shows the shippers are on pace to deliver
2.5 billion e-commerce packages this season, breaking previous records.  
Also, they`re doing it in the shortest window possible, only 33 days
between Black Friday and New Year`s Eve.  

JINDEL:  Next year, we`re going to see over 3 billion packages in the same
period.  This pace of growth will continue for at least a couple more
years.  So the carriers need to start thinking about how they`re going to
handle this in the future years.

Some of that buy will also be returns of gifts and self-gifts that people
bought for themselves during the holiday sales.  Returns of online items
will increase by over $5 million over last year.  

For NIGHTLY BUSINESS REPORT, Frank Holland.

(END VIDEOTAPE)

GRIFFETH:  Coming up, why tonight`s market monitor likes growth stocks in the New Year.  

(MUSIC)

GRIFFETH:  More and more Americans shop for their mortgages online these days.  And that`s actually helping some underserved borrowers get approval.  

Diana Olick explains how one company is trying to remove potential bias
when it comes to getting a mortgage.  

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Online lending is fast taking over the mortgage market, with older names like Quicken and Lending Tree, as well as upstarts like Better.com.  And these online platforms may actually be leveling the playing field for borrowers and reducing bias in the market.  

Better.com which reported 350 percent growth itself last year also found
some interesting numbers regarding its borrowers.  A tenfold increase in
married LGBTQ couples, five times the number of single women, a 675 percent in Gen Z borrowers, over 500 percent for Hispanics, and just over 400 percent growth for African-Americans.  

Under the Fair Housing Act, mortgage applicants are not required to
disclose their race, gender or sex, so the online process removes any
potential bias, whereas in person or phone applicants could still face
discrimination.  

VISHAL GARG, BETTER.COM CEO:  A mortgage broker might judge and say, hey, maybe you shouldn`t qualify for this or you shouldn`t buy in a particular neighborhood.  Maybe your monthly payment should be this.  We`re able to express the criteria that all the major investors and the government have, and take that judgment out of the process and actually empower the consumer to make their own best decisions.  

OLICK:  Garg says more than 40 percent of Better.com`s customers use their mobile phones to start the mortgage process.  That accessibility is a key driver of the company`s growth.  

GARG:  Last year, we were doing $150 million a month in mortgages.  This
year we`re doing $700 million a month.  By the end of next year, we`ll
probably be doing about $2 billion.  

OLICK:  And Better.com`s agents do not work on commission.  Another aspect designed to empower the borrower.  

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

(END VIDEOTAPE)

GRIFFETH:  Uber`s former CEO and co-founder cuts ties with the company and that`s where we begin tonight`s “Market Focus”.  

Travis Kalanick said today he will be leaving the ride-hailing company
after exiting his board of the director`s post at the end of the year.  
Kalanick will now be focusing on his philanthropic pursuits and he`s
currently working on an interesting food delivery startup as well.  Shares
of the company rose a fraction today to $30.44.  

Spirit Airlines said it`s going to be buying 100 Airbus A320neo jets to be
delivered through 2027.  They also have options to purchase 50 additional
jets.  The carrier says the deal includes a variety of Airbus models.  
Spirit`s current fleet of 140 jets is entirely made up of Airbus.  The
stock was up a fraction as well today to $41.19.  

Electrical and industrial products maker Wesco is offering to buy a
networking equipment manager Anixter for $90 a share.  Now, Anixter already received a bid from a private equity firm for $86 a share.  Wesco says its proposal would create a leading electrical and data communications
distributor.  Anixter shares rose nearly 3 percent today to $90.03.  Wesco
rose more than 5 percent to $58.57.  

U.S. regulators have fined Credit Suisse`s U.S.-based securities unit $6.5
million for supervisory failures.  Authorities say that the bank did not
properly monitor potential trading violations.  Credit Suisse was down a
fraction today into $13.22.  

And RBC Capital has raised its price target on Advanced Micro Devices
(NYSE:AMD) $53 a share from $50, citing the chip maker`s growth in its
gaming and data center businesses.  AMD gained more than 2 percent to
$46.54.  

Now, all week, we`re getting you ready for the New Year by bringing back
some familiar market monitor guests.  Tonight`s guest is buying some growth names heading into 2020.  Last time he was with us in August, he
recommended Lowe`s, which is up 11 percent since that time, Nice Systems up 2 percent, and Yelp, a 4 percent gainer since that time.  

We welcome back Richard Steinberg, the chief market strategist at The
Colony Group.  

Rich, always good to see you.  Thanks for joining us tonight.

RICHARD STEINBERG, THE COLONY GROUP CHIEF MARKET STRATEGIST:   You too, Bill.

GRIFFETH:  And before we get to your stock picks, I want to pursue this.  
I`ve always thought of you as a savvy value investor through the years.  
But it sounds like growth is your strategy for 2020, is that the case?  

STEINBERG:  I think we`re looking at names that are going into next year,
you — we`re finding some mispriced growth names that we would call GARPy, growth at a reasonable price.  So, I think we`re finding names, two of which are GARPy and one is the value name that we think will turn back into a growth name once things will work themselves out.  

GRIFFETH:  OK.  So, you haven`t completely given up on value.  

Let`s look at these three companies.  Booking holdings deal Priceline.  And
if there`s ever a company that needs to split its stock, this is it here.  
Why do you like this one here?  

STEINBERG:  Yes, they own Kayak.  They also open table.  It`s a play on
international travel, which is 50 percent of sales.  The consumer is
sticking around in what we call alternative accommodations or holiday
rentals.  

We think these businesses are really strong.  It`s well-managed.  Over the
last 10 years, this company has returned shareholders 25 percent,
annualized CAGAR and we think the stock has a 28 percent upside to the
2570-ish level.  It`s a big price name, but I think it`s a name that should
be in people`s stockings.

GRIFFETH:  CVS (NYSE:CVS), we`ve talked about this one again recently.  
This is a company obviously that wants to be on the vanguard of refiguring
the healthcare industry.  We`re showing you a one year chart.  It`s had a
pretty good year.  

But for the last three or four years, this has gone lower.  It`s been
trending downward.  Why do you think this is a growth stock for next year?  

STEINBERG:  Yes, this is the value, hopefully, it will turn growth.  We
think that the Aetna (NYSE:AET) purchase is transformative and we think
that the market is mispriced.  Amazon`s risk into the pharmacy business.  

The stock — we look to trade at least to 94.  It`s trading at 10 times
earnings.  So, it`s going to value a play on it and as you said, it hasn`t
had a big move over the years and this may be the year for CVS (NYSE:CVS)
next year.  So, you have mid 20s upside to this name.  

GRIFFETH:  All right.  Finally, a company I was not familiar with, it`s an
interesting business model.  John Bean Technologies (NYSE:JBT) in food
processing and air t.  

STEINBERG:  Yes, think slicers and packaging and loading planes and deicing planes.  Two separate businesses.  

GRIFFETH:  Right.

STEINBERG:  They`ve been — but think of also, ready to make foods and food delivery, and that`s the business that they make the equipment for.  The stock is — we pick cheap based on its future growth.  And the food
processing business in particular is very fragmented.  So they have a
strong M&A culture.  Almost like a mini-Danaher (NYSE:DHR).  So, we think
that this is an exciting stock.  It could trade into the 150s next year,
which would have big upside.  

GRIFFETH:  Very good.  Richard Steinberg with The Colony Group, Happy New Year, good to see you, thanks.  

STEINBERG:  Happy New Year, Merry Christmas, Bill.  Always great to be on
this side of the camera with you.  

GRIFFETH:  Thank you very much, Rich.

And coming up, a family dynamic that could make navigating your finances very complex.  

(MUSIC)

GRIFFETH:  Finally tonight, the holiday season filled with family
gatherings and traditions can be a tense time for some, including those in
a so-called blended family.  You know, when you marry a partner with
children from a previous marriage, your family becomes blended.  

And as senior personal finance correspondent Sharon Epperson reports, this increasingly common family dynamic can make figuring out money issues especially challenging.

(BEGIN VIDEOTAPE)

SHARON EPPERSON, NIGHTLY BUSINESS REPORT SENIOR PERSONAL FINANCE CORRESPONDENT:  At first glance, Ronnie and Lamar Tyler are a typical modern family.  The Tylers own a media company and live outside of Atlanta with their four children.  The two got married 14 years ago.  

RONNIE TYLER, TYLER NEW MEDIA CO-FOUNDER:  It was basically love at first sight for Lamar.  

EPPERSON:  What sets them apart?  They`re part of a growing group of
American families defined as blended.  A couple that joins together with
children from one or both of their previous relationships, creates a
blended family.  Ronnie already had two children before meeting Lamar.  The couple had the youngest two after they married.  

R. TYLER:  It kind of blindsided me, I wasn`t really intentional about
trying to figure out what does this mean for me, what does it mean for my
husband, what does it mean for my kids.  

EPPERSON:  Navigating the complexities of a blended family can be difficult enough.  So, couples often put off having a money talk.  A critical piece of the blended family puzzle.

LAMAR TYLER, TYLER NEW MEDIA CO-FOUNDER:  One of the first things we said, we had to go out and get someone who was more educated, that knows more about these things that can advise us on what are the proper steps to take, and also what are the steps not to take.  

EPPERSON:  Marriage and family therapists Ron Deal has counseled families for two decades.  He says understanding the role money plays in combining two families is crucial.  

RON DEAL, FAMILY & MARRIAGE THERAPIST:  As you move forward as a family, you can`t address everything, you just got to get started.  One of the
things we recommend is that couples create what`s called a togetherness
agreement.  That`s a detailed plan of how they`re going to care for one
another in their marriage and in their family, care for one another`s
children.  

EPPERSON:  The Tylers often work together from their home office, juggling work and family.  On this point, they never wavered.  They`re both all in for all of their children financially.  

How did you come up with your decision for financials for children?  

L. TYLER:  Financially and everything else, I treat the children as if they
were my own.  And I`ll give them money, will pay for things as if they were
my own.  Sometimes I refuse to give them money as if they were my own.  

EPPERSON:  Laurie Marchel is the author of the book “The Stepmoms Club”.  
She wrote the book as a guide to empower stepmoms, who like herself were struggling to navigate the nuances of a blended family.  

LAURIE MARCHEL, AUTHOR, THE STEPMOMS` CLUB:  What are your financial obligations to your ex?  Child support?  Is there alimony?  Are you
responsible for paying for housing?  

Having that conversation, asking those questions immediately.  How hard is that?

EPPERSON:  For their part, the Tylers say they work the financial questions
by following one simple rule.  

R. TYLER:  Communicate, the more you can show the united front, even from a financial perspective, the better off you`ll be as a couple.  

EPPERSON:  And when the money talk gets tough, the Tylers say ask an expert for help.  

For NIGHTLY BUSINESS REPORT, I`m Sharon Epperson.  

(END VIDEOTAPE)

GRIFFETH:  And before we go, a final look at this shortened day on Wall
Street because of the holiday.  The Dow just fell 36 points.  Nasdaq
climbed 7 to close at its ninth straight record, first time it`s happened
since 1998.  The S&P was off a fraction today.  

That is NIGHTLY BUSINESS REPORT for tonight.  I`m Bill Griffeth.  Thank you so much for watching.  Have a great evening.  We will see you tomorrow with a special holiday edition of NBR.  Good night.  

END

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