Transcript: Nightly Business Report – December 1, 2016

NBR-ThumANNOUNCER:  This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Sue
Herera.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT-ELECT:  Companies are not going to leave the
United States anymore without consequences.  It`s                                                                          not going to happen.

(END VIDEO CLIP)

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR:  President-elect Donald Trump
draws a line in the sand and sends a warning to U.S. companies.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR:  Stepping down.  The
founder, long time chairman, and face of Starbucks (NASDAQ:SBUX) will no
longer be CEO.  And the stock tumbles.

HERERA:  Shot across the bow.  Why Caterpillar (NYSE:CAT) appears to be
telling stock market bulls, not so fast.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Thursday,
December 1st.

MATHISEN:  Good evening, everyone, and welcome.

What a day for manufacturing and specifically for about a thousand
manufacturing jobs at a furnace plant in Indiana.  More on that in a
moment.

But, first to the bigger picture.  There were signs today that America`s
long suffering manufacturing sector isn`t quite so long suffering anymore.
Factory activity expanded in November more quickly than in any month since
early last year.  The closely watched Institute for Supply Management Index
showed a pickup in production and new orders, a sign that demand will
likely remain solid.

The positive news follows a rocky few years for manufacturing companies.
They`ve been hit by weak business spending, a sluggish energy sector, and a
strong dollar.

Today`s report is good news for the more than 12 million manufacturing
workers in the United States, about 9 percent of the nation`s workforce.
And it comes ahead of the release tomorrow of the monthly employment
report.  That`s the last major piece of data before the next Fed meeting.

HERERA:  But it was in Indiana where manufacturing workers may have been
the happiest.  Today, President-elect Donald Trump spoke at a Carrier
plant, his first public appearance since the election.  And there he took a
victory lap after convincing the manufacturer to keep jobs in Indianapolis
and not move them to Mexico.  And he also had some tough words for
corporate America.

Phil LeBeau reports.

(BEGIN VIDEOTAPE)

PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT:  President-elect Donald
Trump soaked up the applause from workers as he walked onstage at a Carrier
furnace plant in Indianapolis, after promising as a candidate to keep the
plant from closing and shipping 2,100 jobs to Mexico, Trump and his team
worked out a deal with Carrier`s parent, United Technologies (NYSE:UTX), to
keep the plant open.

TRUMP:  I will tell you that United Technologies (NYSE:UTX) and Carrier
stepped it up.  And now, they`re keeping actually the number is over 1,100
people, which is so great.

LEBEAU:  The Carrier jobs deal calls for one of two plants in Indiana to
stay open, preserving more than a thousand jobs.  But a Carrier facility in
Huntington, Indiana, will still close as planned, eliminating 700 jobs.
The company will get $7 million in tax breaks.

In addition, Carrier`s parent, United Technologies (NYSE:UTX), which has
more than $6 billion in defense contracts stays in the good graces of the
Trump administration.

As for the workers who feared losing their jobs, a sense of relief.

UNIDENTIFIED MALE:  It was shocking.  It seemed surreal, phones going off
and people telling me that our jobs are being saved.  It was — it was just
crazy.  It was just surreal.

UNIDENTIFIED MALE:  They didn`t start clapping, they started talking and
being happy that they would be able to maintain their jobs, their homes,
and take care of their family once again.

LEBEAU:  But what happens to other manufacturing plants scheduled to close?
Will Donald Trump call those companies and pressure them to reconsider
shipping jobs to Mexico?  After getting Ford and Carrier to keep building
products in the U.S., Trump is hoping he has sent a message to corporate
America.

TRUMP:  Companies are not going to leave the United States anymore without
consequences.  Not going to happen.

LEBEAU:  For Donald Trump, this victory tour is a chance to show America he
can stop the loss of blue collar jobs.  Whether his administration can
actually grow manufacturing jobs is a question he`ll face when he becomes
president next month.

Phil LeBeau, NIGHTLY BUSINESS REPORT, Indianapolis.

(END VIDEOTAPE)

MATHISEN:  So, how will the soon to be President Donald Trump`s harsh words
to corporate America impact the business environment here in the United
States?

Robert Salomon is professor of management at New York University`s Stern
School of Business and he`s joining us to discuss that and more.

Professor, welcome.  Good to have you with us.

When the president refers to consequences on companies that might want to
move jobs overseas, what really can he do?

ROBERT SALOMON, NYU`S STERN SCHOOL OF PRO. OF MANAGEMENT:  That`s a good
question.  I would be — I think it`s hard to extrapolate from this one
situation to the entire economy.  But certainly, one of the things that the
president can do is use the bully pulpit as he showed during the campaign
with his rhetoric, that he can express his dismay and his concern when
companies announce that they`re leaving.  And that is probably his
strongest weapon.

(CROSSTALK)

HERERA:  I`m sorry, Professor.  Continue.

SALOMON:  No, please go ahead.

HERERA:  I wonder if this sets a precedent for companies that want the same
kind of tax breaks and incentives that Carrier got, even if they don`t
intend to leave the United States, why would they not go after the same
deal?

SALOMON:  They might, and that creates a slippery slope.  Companies that
have no intention of leaving the United States announce that they`re
thinking about it or that they are going to do it with the intent of trying
to extract concessions from the government.  So, the Trump administration
needs to be careful in how it deals with other companies that are either
planning to move overseas or just thinking about it.

MATHISEN:  I`m curious.  Are there things in law that a president could do
that would target an individual company?  Can you put, for example, a
tariff on a furnace that`s made in Mexico by an individual company and
brought back into the United States?

SALOMON:  So, I`m not a legal scholar.  However, I find it difficult to see
how a president can go after a singular company.  What a president could
do, for example, from a business standpoint, is go after goods coming out
of a certain country, to apply tariffs to goods coming from Mexico, let`s
say, or apply a tariff to a certain class of goods.

However, it would be — I think it would be quite difficult for a president
to go after one single company for taking one single decision.

HERERA:  How much of this do you think is the president-elect enjoying
somewhat of a honeymoon period?  I mean, United Technologies (NYSE:UTX),
which of course owns Carrier, certainly did not want to be the first target
in this particular battle with the president-elect.  Is that feasible, that
other companies might agree to keep jobs here just so that they aren`t on
the radar in the first, say, 60 to 90 days of his administration?

SALOMON:  Yeah, I do think companies are going to want to be careful with
this administration.  Those that are planning to go overseas will probably
want to be more discreet about it.  But I will say, and I`ll reiterate what
I said before is that companies need to be — companies — it`s hard to
extrapolate from this one situation to all other companies, because as you
mentioned, Carrier is a division of the larger United Technologies
(NYSE:UTX) Corporation, which has lots of contracts with the federal
government.

So, besides the concessions that Carrier was able to extract from the state
of Indiana, there is the potential that United Technologies (NYSE:UTX) did
this so they wouldn`t lose favor on the $5 billion or $6 billion of
contracts that they currently have with the federal government.

MATHISEN:  Professor Salomon, thank you very much for being with us
tonight.  Robert Salomon is with NYU`s Stern School of Business.

HERERA:  And ahead of tomorrow`s monthly employment report, the number of
Americans filing for first time unemployment benefits rose.  According to
the Labor Department, jobless claims increased by 7,000 last week, the
highest number since June.  A separate report shows that planned layoffs
fell last month to the lowest level of the year and are down double digits
from a year ago.

But it is tomorrow`s employment report that will likely give Wall Street
and Main Street a more complete picture of hiring in November.

MATHISEN:  On Wall Street, stocks why mixed today.  Blue chips companies
got a lift thanks to a rally in the financial sector.  But the NASDAQ was
hit hard as tech stocks fell sharply.  The Dow Jones Industrial Average
added 68 points, 19,191 the close there.  NASDAQ off more than 1 percent,
72 points.  S&P fell seven.

And oil prices continued to climb following that OPEC deal yesterday to cut
production.  Domestic crude settled up more than 3 percent today, it is up
more than 10 percent in two days at $51.06.

HERERA:  But as the blue chip sector rallies, Dow component Caterpillar
(NYSE:CAT) says Wall Street is too optimistic on its profit estimate for
next year.

And as Bob Pisani reports, the company could be sending a message.

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Caterpillar (NYSE:CAT)
just raised a big red flag today to all the market bulls out there.  The
equipment maker fired a shot across the bow to all the traders who have
rushed to buy up stocks based on the vague notion that 2017 earnings will
be significantly higher.  The markets are hyped up because they think tax
cuts, fewer regulations, and a massive stimulus program under a Trump
administration will lead to stronger economic growth.

Well, along comes Caterpillar (NYSE:CAT), speaking at a conference today,
saying that while the company is encouraged by all the talk of tax reform
and a reduction in earnings and potential infrastructure spending, earnings
estimates for 2017 for Caterpillar (NYSE:CAT) are too optimistic.  So, the
company raised the red flag, even though analysts haven`t really raised
their numbers based on the Trump victory, at least not yet.

So, what happened to Caterpillar (NYSE:CAT) stock today?  It moved down
slightly on the news but it ended the day in positive territory, in fact at
a 52-week high.  Why is that?  Because the market is convinced they`re just
being cautious and that the numbers will come up sometime next year.

But investors would do well to listen to them.  Caterpillar (NYSE:CAT)
would be a big beneficiary of any infrastructure spending.  That`s good
news.  But any big spending on roads and bridges, for example, is unlikely
to happen before 2018.

The bottom line?  There`s a lot of potential good news out there.  But
there`s still not a lot of flesh on the bones yet.

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

(END VIDEOTAPE)

MATHISEN:  The founder of Starbucks (NASDAQ:SBUX) will step down as CEO in
April of next year.  Howard Schultz, who turned the coffee house into an
iconic American brand, will remain as non-executive chairman.  He wants to
free up time to focus on Starbucks` new initiative, high end coffee shops,
among other things.  Mr. Schultz has no plans to step away completely from
the company.

Starbucks` chief operating officer, Kevin Johnson, will take over the role
of chief executive.  Shares initially fell on the news, as you see there,
in extended hours trading.

HERERA:  Sarah Hunt joins us to talk about the market and what lies ahead
in the final months of trading.  She`s portfolio manager at Alpine Fund.

Sarah, nice to see you again.  Welcome back.

SARAH HUNT, ALPINE FUND:  Thank you.  Nice to be here.

HERERA:  We have had quite a run.  December is starting out a little more
quietly than some thought, but, you know, we`ve seen all-time highs in a
number of indices repeatedly during the month of November.  Do you think we
have more to run, or is the market kind of extended at this point?

HUNT:  Well, I think the market turned around really quickly after the
election results.  You saw the market come down after the original reports
were in early in the morning.  And then by the end of the day, it had come
up again.  I think when people started to digest the idea that we might
have the opportunity to do some things that they hadn`t been thinking of
previously, such as corporate tax reform, personal tax reforms and
regulatory reform, I think you start to get a big interest in some of these
infrastructure projects.

And I don`t know what changes that in December.  I mean, obviously, we`re
going to have the fed come in, I think everyone is pricing in a rate hike
at least for December.  What they say going forward may have an effect.
You`ve got some things going on outside the United States.  In Europe,
you`ve got a referendum in Italy.  We`ll see how the financial markets take
that.

But I think that right now, the momentum is towards an optimistic look at
what`s going to happen in the future.  And I`m not sure that that changes
through December and into the beginning of the administration.

MATHISEN:  How — I heard a commentator today critical of the media for
being skeptical of how far the market has run in a short period of time.  I
thought our job was to be skeptical.  But you just said, it`s a time for
optimism.  How tempered should the optimism be, or is it really green
light, green light, green light?

HUNT:  Well, again, that`s really going to depend on what actually happens.
Right now, the market is doing what the market does, anticipating what they
now see as a change in a number of different areas where they did not think
that they were going to get a change.

And so, you`ve seen the markets move up.  You`ve seen bonds come down.
You`ve seen rates go up.  So, there`s been a lot of changes based on the
anticipation of what could happen once you get a new administration.  Now,
there`s going to be a lot of questions as to how many of those things can
happen, how quickly they can happen.

And I think that in the first hundred days, if you don`t see some movement
or whether or not Congress agrees with them, then you`re going to see
whether or not the market can continue to stay optimistic.  I don`t see in
the very short term what changes that picture.

MATHISEN:  You know, one area that we`ve seen a dramatic change in, in the
last couple of days, is the energy sector, with huge percentage gains based
on OPEC`s decision to cut for the first time in eight years.  So, would you
wade into that particular area?  And if so, any particular stocks that you
like?

HUNT:  So, you`ve had oil up 10 percent in two days, which is a very big
move, one of the biggest moves you`ve seen probably in the last several
years.  I think there`s an enormous amount of optimistic, again, on OPEC.
And are they really going to cut?  This deal seemed a lot tighter than
anyone was expecting, and it was a lot more specific than people were
expecting.

I think you`ve seen a lot of these oil stocks moved pretty dramatically.
And we like dividends, so we`re involved in a number of oil stocks, BP is
one of them.  The majors have not moved as much as some of the independent
stocks like an EOG, which we also own, which are only producers and they
don`t have any refining.

So, I think you need to be a little bit careful with how fast those stocks
have moved.  If it seems like the oil price is going to start to stabilize
and it looks like that surplus comes off the market, then the energy sector
has room to run.  You`ve seen some very big moves in the couple of days.
So, I would be a little cautious here.

HERERA:  All right.  On that note, thank you, Sarah, as always.  Sarah Hunt
with Alpine Funds.

HUNT:  Thank you.

MATHISEN:  Still ahead, will anything happen to your mortgage interest
deduction if the incoming administration overhauls the tax code?

(MUSIC)

HERERA:  Americans are buying up cars.  Sales got a lift last month from
Black Friday deals, and a rise in confidence post-election.  Total U.S.
sales rose more than 3.5 percent, putting the industry within reach of the
annual sales record set last year.  Of the big three, General Motors
(NYSE:GM) up 10 percent, Ford saw an increase of 5 percent.  Fiat Chrysler,
though, was the outlier, with sales dropping 14 percent.

MATHISEN:  One of the most popular of all tax write-offs, maybe the most
popular, is the mortgage interest deduction.  But there may be some changes
to it under a Trump administration and its expected overhaul of the tax
code.  How might this affect you, the homeowner?

Diana Olick is in Washington with the numbers.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT:  For anyone buying a
home, the mortgage interest deduction is a little icing on the cake.  It`s
been around since the introduction of taxes.  But now, it could be on the
chopping block.

President-elect Trump`s pick for treasury secretary included it in a list
of deductions he`d reduce.

STEVE MNUCHIN, TREASURY SECRETARY NOMINEE:  We`ll cap mortgage interest.
But we`ll allow some deductibility.

OLICK:  The mortgage deduction benefits far fewer homeowners than you might
think.  Less than a quarter of U.S. households.  It is already capped at $1
million loans, which is pretty high, given that the median home price in
America is just over $200,000.

Still, its popularity makes it a hot potato that lawmakers really don`t
want to touch, interesting in itself in that only 62 percent of adults own
a home, and of those that do, one-third do not have a mortgage.  The vast
majority of the benefit from the mortgage deduction goes to people who earn
more than $100,000.

MARK MASON, CEO HOMESTREET BANK:  I think it would have an impact on home
prices at the lower end, because the market would have lower ability to
pay, if you will.  So, they could qualify for a smaller loan based upon
their income.  And that would bring down the prices of homes on the lower
end, I would expect.

OLICK:  Here is a look at the math behind the deduction.  Let`s say you
have a $500,000, 30-year fixed mortgage at 4.5 percent and you`re in the 33
percent tax bracket.  In the first year, the deduction saved you just over
$10,000 in taxes.

So, what if the Trump administration capped deductions at even $100,000?
Well, your total interest payment was only about $23,000, so it doesn`t
affect you on just the mortgage, which is one of the biggest deductions for
most people.

Still, with mortgage rates and home prices rising, taking away the
deduction entirely would make home ownership that much more expensive.  You
can expect a big fight on this one from realtors, homebuilders, anyone
trying to sell a house.

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

(END VIDEOTAPE)

HERERA:  Apparel chain Express (NYSE:EXPR) cuts its full year outlook
again.  And that`s where we begin tonight`s “Market Focus”.

The company lowered its profit guidance while also saying results for the
holiday season will sharply miss estimates.  Express (NYSE:EXPR) says it
cease promotional retail environment and challenging store traffic as
headwinds.  Shares plummeted 20 percent to $10.64.

Dollar General (NYSE:DG) missed profit and revenue estimates as that
discount chain contends with falling food prices and a cutback on
government food stamp coverage in several states.  The company posted a
surprise drop in same store sales.  Shares fell nearly 5 percent to $73.48.

Kroger (NYSE:KR) also cited lower food prices as a problem in its recent
quarter.  The nation`s largest supermarket chain recorded lower profit and
cut its full year guidance, saying it expects the deflationary environment
to continue.  But the company did see revenue rise above expectations.  So,
shares rose 3 percent to $33.36.

MATHISEN:  Land`s End posted a wider than expected loss as results at the
store were hit by more than $4 million in inventory write-downs.  The
apparel retailer saw same store sales fall, but said it is executing new
initiatives that it hopes will improve future results.  Shares were off 4.5
percent at $16.95.

The activist investment fund Starboard Value reportedly asking Rockwell
Collins (NYSE:COL) to walk away from its planned $6.5 billion takeover of
BE Aerospace (NASDAQ:BEAV).  Bloomberg says Starboard wants the aircraft
component maker to consider selling itself.  But Rockwell says it remains
committed to the merger.  Rockwell shares up 3 percent at $96.07, while BE
Aerospace (NASDAQ:BEAV) fell more than a percent at $59.02.

Parker-Hannifin (NYSE:PH) which makes hydraulic systems for equipment
manufacturers will buy the air filtration system maker Clarcor for more
than $4 billion.  The deal expected to add various industrial air and
liquid filtration products to Parker`s portfolio.  Parker-Hannifin
(NYSE:PH) shares were up 3 percent at $143.47.  Meantime, shares of Clarcor
soared 17 percent to $82.58.

HERERA:  Coming up, what the next generation of retail investors are buying
as the market continues its run higher.

(MUSIC)

MATHISEN:  Here`s what to watch tomorrow, folks.  As we told you earlier in
the program, we`ll find out how many jobs were created last month with the
release of the November employment report.  A few Fed officials speak on
information stability and the economy.  And following a big week for the
energy markets, we`ll find out how many oil rigs are in use in the U.S.
And that`s what to watch, Friday.

HERERA:  The House of Representatives passed a bill that would speed up the
drug and medical device approval process.  The pharmaceutical industry has
been pushing for that legislation.  Consumer advocates argue it could
jeopardize safety.  The bill also increases federal funding for biomedical
research.  The Senate is likely to take up that legislation next week.

MATHISEN:  According to a recent survey, only a third of millennials invest
in the stock market at all.  But at Lafayette College, you`d never know it
was such a small percentage.

Morgan Brennan takes us inside a meeting of the nation`s oldest student-run
investing club.

(BEGIN VIDEOTAPE)

MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Early this morning,
the Lafayette College Investment Club sat in a classroom while students
presented PowerPoint presentations about Netflix (NASDAQ:NFLX) and Amazon
(NASDAQ:AMZN), deliberating a bet on big cap tech, which has sold off since
the election.

UNIDENTIFIED MALE:  What we really want to stress is Amazon`s presence in
its space.

BRENNAN:  The club chose to buy $10,000 worth of Amazon (NASDAQ:AMZN).  In
the latest sign that the Trump rally isn`t just playing out on Wall Street,
but also among retail investors, including the next generation.

KAT STEVENS, LAFAYETTE COLLEGE INVESTMENT CLUB:  As this group of students,
it`s for a lot of us the first time voting.  So, it was neat that we got to
research the candidates and their policies.  We actually did have a few
presentations about looking at what this election means for the economy in
the short term, in the long term, and foreign investment portfolios.

BRENNAN:  Lafayette College is home to the oldest student-run investment
club in the country, one that manages nearly $600,000 worth of stocks,
exchange traded funds, and cash.  And it`s part of the school`s endowment.

Following the election, the club is actively seeking out new investments.

OTHMAN GUENNOUN, LAFAYETTE COLLEGE INVESTMENT CLUB:  We`re heavy on health
care, it`s like 18 percent of our portfolio right now.  We want to continue
especially now Hillary Clinton was not elected.  She wanted to reduce the
prices of prescription drugs.  And now that that`s not happening, I think,
it will help health care a lot.

JASON SHAVEL, LAFAYETTE INVESTMENT CLUB:  Our first buy at the heel of the
Trump rally was Barclays (ph).  We`re interested in diversifying into
financials.  Moving to next year, I think we`re definitely going to look
into energy, you know, looking at upstream oil production as the price of
oil definitely rises.

BRENNAN:  These up and coming investors have yet to be tested in a true
bear market.  But they`re hoping their choices will protect and grow their
school`s money for the long term.

RAND LEWIS, LAFAYETTE COLLEGE INVESTMENT CLUB:  We`re doing a lot of
different things.  We still enjoy stock picking.  We have a philosophy in
the club that there`s no such thing as a safe stock investment, only safe
portfolios.

BRENNAN:  And they do tend to invest conservatively.  Part of the reason
perhaps, their fund is modestly trailing the S&P 500 this year.

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan in Easton, Pennsylvania.

(END VIDEOTAPE)

HERERA:  Good luck to `em.

MATHISEN:  Yes.  Good luck to them, only safe portfolios.

HERERA:  That`s right.

MATHISEN:  Time will tell.

HERERA:  That`s NIGHTLY BUSINESS REPORT tonight.  I`m Sue Herera.  Thanks
for joining us.

We want to remind you, this is the time of year your public television
station seeks your support.

MATHISEN:  And we thank you for your support.  I`m Tyler Mathisen.  Have a
great evening, everybody.  We`ll see you back here tomorrow night.

END

Nightly Business Report transcripts and video are available on-line post
broadcast at http://nbr.com. The program is transcribed by CQRC
Transcriptions, 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) 2016 CNBC, Inc.

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