Transcript: Nightly Business Report – November 3, 2017

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Sue

takeover? Broadcom (NASDAQ:BRCM) is reportedly planning a bid for Qualcomm
(NASDAQ:QCOM) in what could be the biggest deal ever in global technology.

market rebounds, the unemployment rate falls, but there`s more to the
latest jobs report than you might think.

HERERA: Time for a change? How a simple watch made of wood went from a
bright idea to a growing business.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Friday,
November 3rd.

MATHISEN: Good evening, everyone, and welcome.

An enormous deal maybe taking shape that could transform a critical part of
the technology business. Broadcom (NASDAQ:BRCM) is reportedly planning an
unsolicited takeover of rival chip maker Qualcomm (NASDAQ:QCOM). The deal
if completed could top $100 billion. Broadcom`s CEO has a history of
aggressively acquiring companies to bolster growth.

Now, the report sent shares of Qualcomm (NASDAQ:QCOM) higher by more than
12 percent. It`s been suffering this year. Broadcom (NASDAQ:BRCM)
advanced more than 5 percent.

Dominic Chu has more on this potentially massive acquisition.


of being one of the biggest merger deals ever in global technology.
According to sources familiar with the matter, Broadcom (NASDAQ:BRCM) is
looking into a potential deal to buy Qualcomm (NASDAQ:QCOM). Both
companies are in the business of computer chips, circuits, wireless
technology, that sort of thing. And sources say that the deal could value
Qualcomm (NASDAQ:QCOM) north of $100 billion, making it just about the same
size as Broadcom (NASDAQ:BRCM).

Now, there are a lot of reasons why this deal is getting so much investor
attention. First of all, it would combine two of the world`s biggest
semiconductor companies, which would likely trigger antitrust concerns by
regulators. Second, both companies are in the middle of making other big
acquisitions of their own. What would happen to those potential deals?

And there`s a political angle as well. Broadcom (NASDAQ:BRCM) is based in
Singapore. But just yesterday, Broadcom`s CEO stood alongside President
Trump to announce that he was moving the company`s headquarters to the
United States.

HOCK E. TAN, BROADCOM CEO: America is once again the best place to lead a
business with a global footprint.

CHU: That means that it could hypothetically be a U.S. company buying
another U.S. company, which might have a better shot at passing government

Now, those are just a few of the considerations. And, of course, a deal
may not materialize at all. But the prospects of a blockbuster deal in the
tech sector is swirling all kinds of speculation, both on Wall Street and
Main Street.



HERERA: The American jobs engine keeps on revving. The economy created
more than 260,000 jobs last month. A welcome rebound after September`s
disappointing report.

To show you just how strong the labor market appears to be, take a look at
this. The unemployment rate right now stands at a 17-year low. And the
economy has created jobs for 85 straight months, the longest streak on
record. Some economists are even suggesting that the labor market may be
close to full employment.

But as Hampton Pearson reports, others say the recent hurricanes are
distorting that data.


October, the job market recovered from the hurricanes that slammed the
Southeast in September. But the addition of 261,000 jobs was less than the
consensus forecast of 315,000 new hires. Those estimates were revised
upward this week based on new data forecasting strong private sector job
growth, a manufacturing surge, and growing consumer confidence.

One leading economist says that noise makes this month`s report

too much hurricane effect in this. The non-farm payroll number was a
complete guess. Average hourly earnings had some hurricane effect in it.

PEARSON: The unemployment rate fell to 4.1 percent, the lowest it`s been
in nearly 17 years. But it fell because 765,000 people dropped out of the
labor force and were not counted as unemployed. Wage growth was flat, just
2.4 percent year over year.

too. I mean, the real problem we`ve got is the labor force is only 5/10ths
of a percent per year. And we`ve got all these dreams, we`re getting 3
percent real GDP growth. But I don`t see how you get to 3 percent real GDP
growth unless you can find a way of increasing the labor force faster than

PEARSON: The leisure and hospital industry saw the biggest employment
swings. Hurricanes shutdown triggering a loss of 98,000 jobs in September,
but a rebound of 89,000 last month. The best highways job growth happened
among professional and business services, with 50,000 new hires.
Manufacturers also added 24,000 jobs. Retail was the biggest loser,
dropping 8,300 workers.

Economists say despite the volatility over the last two months, average job
gains are almost back on track with job growth before the hurricanes.

month for the last two months, that`s quite good pace given where we are
with such low unemployment and such modest growth of the labor force.

PEARSON (on camera): Those same economists say the Fed will have another
month of jobs data free of hurricane-related fallout before deciding on a
rate hike when monetary policymakers meet in December.

For NIGHTLY BUSINESS REPORT, I`m Hampton Pearson in Washington.


MATHISEN: Ethan Harris (NYSE:HRS) joins us for more analysis on the jobs
report. He`s co-head of global economics research at Bank of America
(NYSE:BAC) Merrill Lynch.

You think the jobs market is in very good shape.

LYNCH: Yes. I think as Alan Blinder said, this is a pretty good set of
numbers. I mean, obviously, the hurricane caused a very weak number and a
big rebound, but averaging across two months, the job market looks great.
And the unemployment rate just keeps falling, month after month. We`re now
down to levels that are normally associated with a fully employed economy.
So, there`s no sign of momentum fading either. So, this is good news.

HERERA: But you do point out the fact that there really wasn`t any wage
growth. How worrisome is that?

HARRIS: Well, I mean, I think it`s a matter of time. The economy has
enough momentum now that we`re going to see month on month further drops in
the unemployment rate. Economists have to be humble about their ability to
forecast wage growth. This is something that, you know, pinning it down on
a month to month basis is very difficult.

But as you keep pushing the unemployment rate down, the laws of gravity
will come in and we`ll start to see the wage pick up.

MATHISEN: One of the of course in the piece there talked about the
difficulty with the labor force being where it is, less growth, of getting
to 3 percent economic growth over time. We`ve had back to back quarters of
either 3 percent or 3-plus percent growth. What do you say to that?

HARRIS: Yes, I would agree. I mean, to get to 3 percent growth, we need
to have one of two things happen. We either need to have a big
productivity revolution where all this tech stuff we`re doing now comes to
fruition and we really see big gains in productivity, or we need to have a
strong growth in population and labor force. But we haven`t had strong
growth in population and labor force since the 1970s, 1980s. So, we can`t
— you know, I think 3 percent just is not sustainable.

HERERA: What do you think the Fed thinks about this report?

HARRIS: I think the Fed right now is very comfortable with the path
they`re on. I think that they look at how well financial markets are
doing. Very supportive of growth. They look at the steady drop in the
unemployment rate.

This makes them feel very patient about the idea of waiting for wage growth
and waiting for inflation. They still feel confident in that.

MATHISEN: Very quick thought on the tax cut as you see it, how much do you
think it would add, tenths of a percentage point, a full percentage point,
to growth?

HARRIS: It actually isn`t a big tax cut. $1.5 trillion over ten years is
the seventh or eighth largest tax cut in history for the U.S. It`s — and
so, I would think it adds a few tenths to growth next year if we get the
whole thing.

MATHISEN: Ethan, thanks.

HARRIS: Thank you.

MATHISEN: Ethan Harris (NYSE:HRS), Bank of America (NYSE:BAC) Merrill
Lynch. Appreciate it.

HERERA: Other parts of the economy appear to be seeing an increase in
activity. New orders for U.S.-made goods rose for a second straight month
in September, suggesting manufacturing activity was gathering momentum. A
separate report showed companies in the services sector grew at their best
rate in a dozen years. The services sector makes up the largest part of
the economy.

MATHISEN: The trade deficit widened more than expected in September,
meaning the U.S. bought more goods and services from other countries than
it sold to them. According to the Commerce Department, the trade gap
increased to $43.5 billion, in theory a rising trade gap reduces economic
growth here, which is why trade is a major part of the president`s first
official trip to Asia.

Mr. Trump left today on that trip and said he`s looking forward to making
progress on this economically sensitive topic.


have great success. We`ll be talking about trade. We`ll be talking about,
obviously, North Korea. We`ll be enlisting the help of a lot of people and
countries. We`ll see what happens. But I think we`re going to have a very
successful trip. There`s a lot of goodwill.


MATHISEN: And the president will visit Japan, South Korea, China, Vietnam,
and finally, the Philippines.

HERERA: On Wall Street, all three major indexes closed at records. The
rally in Qualcomm (NASDAQ:QCOM) shares which we told you about earlier
along with the rise in the shares of Apple (NASDAQ:AAPL) helped lift the

The Dow Jones Industrial Average added nearly 23 points to 23,539. The
Nasdaq advanced 49. And the S&P 500 was up eight. For the week, all of
the major indexes saw gains.

MATHISEN: Apple (NASDAQ:AAPL) was the best performing stock on the blue
chip Dow index today. Its shares hit a record following the company`s
strong earnings and guidance report that we told you about last night. The
market capitalization of Apple (NASDAQ:AAPL) now very close to $900

Today, Apple`s iPhone X went on sale, and long lines formed at Apple
(NASDAQ:AAPL) Stores around the world, a sign of strong demand for the
tenth anniversary smartphone.

HERERA: Still ahead, Amazon`s hunt for a second home.


Despite the Browns, Cleveland knows how to win. It`s got a vibrant economy
and it`s got the Rock and Roll Hall of Fame. Will it also get Amazon`s
second headquarters? A look at Cleveland and Ohio`s chances, coming up on



HERERA: Health care jobs are in demand, and so are jobs that focus on the
health of animals. And that takes Kate Rogers (NYSE:ROG) to Kennett
Square, Pennsylvania, to report on where the jobs are.


Barrett says she has the greatest job in the world.

outside every day with these wonderful animals.

ROGERS: Barrett is a dairy technical services veterinarian for a
pharmaceutical company Zoetis that produces medicine for animals. She`s
tasked with managing the health of cows and advising farm veterinarians and
dairy farmers on the best uses for the Zoetis` products.

BARRETT: On one farm we might be talking about taking care of the calves
as best we can in the first day of life, get them a healthy start. On the
next farm we might be talking about a vaccine protocol and how to boost
immunity and optimize it so that we`re preventing disease appropriately.

ROGERS: Demand for veterinary professionals like Barrett is on the rise,
driven by a growing world population that places a greater emphasis on food
supply and safety as well as the booming pet care industry.

(on camera): According to the Bureau of Labor Statistics, opportunities
for veterinarians will grow by some 18 percent through the year 2026, while
need for vet technicians will grow by 20 percent in that same time.

(voice-over): Salaries can raise into the high six figures. And career
options are broad ranging, from caring for companion animals to running
ones` own practice and working for big pharma companies.

Entering the profession requires intense training.

training to be a veterinarian is pretty much the same in the amount of time
and expertise cost as to be an MD.

ROGERS: An admission into the vet program is highly competitive.

HENDRICKS: In the United States, we don`t have enough slots to accommodate
all the students.

ROGERS: Briana Parsons is currently in her fourth year of veterinary
school at UPenn, studying to become a food animal vet. Her coursework
includes everything from large animal surgery to dairy production medicine.

variation in what you can be doing. It`s kind of tailored to your

ROGERS: She wants to focus on food safety and is hoping to run a
sustainable goat farm in West Africa, a project she`s been working on for
two years.

PARSONS: The best part for me has been thinking more globally about health
and the ways that veterinarians can be involved, in things that are larger
than just the individual animal. When you think about health in a more
comprehensive sense, then that`s what gets me excited.

Square, Pennsylvania.


MATHISEN: That was a nose right there.

Amazon (NASDAQ:AMZN), making noses great again. Amazon (NASDAQ:AMZN) has
begun evaluating more than 200 proposals from cities vying to be the home
of the company`s second corporate headquarters. The project could bring
50,000 jobs and $5 billion in investments. As Amazon (NASDAQ:AMZN) mulls
its choice, we`re going to take you to some of the cities that have joined
the race.

And Scott Cohn is in Cleveland, one of the three cities in Ohio that are
now playing to win.


COHN (voice-over): Cleveland knows a thing or two about winning, not just
last year`s NBA title, beating the competition for the Rock & Roll Hall of
Fame 25 years ago. And last year`s Republican National Convention.

Amazon`s new headquarters would be the biggest prize of all.

FRANK JACKSON (D), CLEVELAND MAYOR: Anytime you have 50,000 potential jobs
coming into a city, it`s got to be important, not only those jobs
themselves but all those other things that result in those jobs being

COHN: Ohio is a triple threat in the Amazon (NASDAQ:AMZN) race.
Cleveland, Cincinnati, and Columbus each have submitted bids. With more
than 2 million people apiece, all three metro areas exceed Amazon`s
population requirement. But that`s the easy part.

(on camera): Amazon (NASDAQ:AMZN) also wants a stable, business-friendly
environment, a place that can attract and retain top technical talent and a
place that can think big and creatively when it comes to locations.

(voice-over): It means overcoming the past, according to the state`s top
economic development official.

JOHN MINOR, JOBSOHIO PRESIDENT & CIO: So, we`re trying to shed this Rust
Belt image. And I think we`re doing that. We like to think of Ohio as
part of the knowledge belt.

COHN: Ohio has diversified into fields like health care and financial
services. And it has more higher education than all but a handful of
states. But Ohio has a shortage of technical workers, a difficult legal
and tax climate, and not a lot of flights. That`s a key for Amazon

Officials are refusing to release details on the Ohio bids beyond the
splashy videos.

Ohio Governor John Kasich, who declined to be interviewed for this story,
has been deliberately low key.

GOV. JOHN KASICH (R), OHIO: If you go out and you try to buy a deal, you
try to buy a company with these big incentives, I don`t think you to do it,
I don`t think you should do it.

COHN: But officials still say they have a shot. Three cities, one once
known as the mistake on a lake, trying to pull off a miracle.

For NIGHTLY BUSINESS REPORT, I`m Scott Cohn in Cleveland.


HERERA: BlackBerry is reportedly in talks to provide its software to
Jaguar Land Rover. That`s where we begin tonight`s “Market Focus”.

“The Wall Street Journal” says BlackBerry is in advanced conversations with
Jaguar owner Tata Motors (NYSE:TTM), about a deal to put its software in
next generation autonomous and electric vehicles. BlackBerry`s self-
driving software is already in the cars of several automakers.
BlackBerry`s shares rose 2 percent to $10.95.

The reported merger between CVS (NYSE:CVS) and Aetna (NYSE:AET) could
happen before the end of this year. “Reuters” says the companies are in
the process of finalizing terms and are aiming to announce a more than $70
billion deal as early as December. CVS (NYSE:CVS) shares were off a
particular to $69.25. Aetna (NYSE:AET) shares rose nearly 3 percent to

And Bloomin Brands, that`s the operator of Outback Steakhouse, said the
string of recent hurricanes significantly impacted its results. The
company missed profit estimates and cut its full year forecast. Revenue
also took a hit but it still beat estimates. Shares of Bloomin Brands were
flat, ending the day at $17.30.

MATHISEN: Sotheby`s reported a narrower than expected loss. Sales at the
auction house also beat estimates despite it being a slow time of year for
auctions. Sotheby`s shares were down more than 3 percent to $49.42.

After the bell, Berkshire Hathaway (NYSE:BRK.A) reported a drop in earnings
as insurance claims from the hurricanes and an earthquake in Mexico hurt
results. Operating profit also got nicked, but still came in ahead of
estimates. Class A shares of Berkshire were unchanged in the extended
session but finished the regular day down 1 percent to $280,470.

HERERA: Time now for our market monitor who has names he says will provide
some downside protection in your portfolio. The last time he was on in
May, he recommended Becton Dickinson (NYSE:BDX), which is up 21 percent,
Emerson Electric (NYSE:EMR), which is up 10 percent, and Oracle
(NASDAQ:ORCL), also 10 percent higher.

Allen Bond joins us, co-portfolio-manager of the top performing Jensen
Quality Growth Fund, which is up 20 percent so far this year.

Welcome, Allen. Nice to have you here, and congratulations on the results.


HERERA: You were looking for diversification and global growth with your
picks, that`s one of the themes, anyway.

Let`s start with your first one, Nike (NYSE:NKE). Tell me about it and why
you like it.

BOND: Yes, we think Nike (NYSE:NKE) is an interesting story right now.
Obviously, one of the most well-known brands in the world. And we think
it`s an interesting example of the disconnect that we see sometimes between
short term market sentiment and long term business fundamentals. Right
now, Nike (NYSE:NKE) is dealing with some challenges including increased
competition and some changing consumer behavior.

But long term, we still see their brand as resonating powerfully with
consumers around the world. We think that`s a powerful competitive
advantage that will reassert itself at some point. And we think recent
weakness in the shares is a great opportunity for long term investors.

MATHISEN: Well, they`re right out of your backyard, aren`t they, Allen, I

Let`s talk about MasterCard (NYSE:MA), which is your second pick. If
you`re going to buy some Nike (NYSE:NKE) gear, maybe you pull out your
MasterCard (NYSE:MA).

BOND: Right. And so, MasterCard (NYSE:MA), one of the world`s largest
electronic payment processors, and really in our view, scale is an
important part of the business. We estimate they will process more than 70
billion transactions this year. And we think that position has done very
well for the global trend in which electronic transactions are increasingly
displacing cash transactions. We think that poises MasterCard (NYSE:MA)
very well for continued growth and income and, importantly, free cash flow.

HERERA: And we`ll finish up with Cognizant Technology Solutions
(NASDAQ:CTSH). You say they have a very nimble business model which gives
it a big competitive advantage.

BOND: Yes, so, Cognizant is one of the world`s largest technology
consulting firms. We think they`re very well-positioned for the trend in
which businesses around the world are using technology to make themselves
more efficient.

Cognizant right now is in a bit of a maturation phase itself. It`s taken
steps to broaden its geographic revenue base. They just started paying a
dividend this year. And they`re in the middle of executing on a plan to
improve profitability. We think these factors will allow them to continue
to grow their top line and bottom line well into the future.

MATHISEN: Very quick thought, how do you think the market finishes the
year? Strong?

BOND: Market`s been strong this year. You know, it really feels like it`s
following earnings. We`ve seen a good pickup in earnings growth. We
expect that into next year as well. So that bodes well for the market.

HERERA: On that note, have a great weekend, Allen, nice to see you.

BOND: Thank you.

HERERA: Allen Bond with the Jensen Quality Growth Fund.

MATHISEN: And coming up in this complex world, one entrepreneur said now
is the time to simplify. His bright idea is next.


HERERA: Here`s a look at what to watch for next week.

On Wednesday, President Trump will be in Beijing as part of his 11-day trip
to Asia. He`ll be having meetings with the Chinese president on security
and economic issues.

Also on Wednesday, the former Yahoo (NASDAQ:YHOO)! CEO and the current and
former CEOs of Equifax (NYSE:EFX) are scheduled to testify on Capitol Hill
on the two massive data breaches.

On Thursday, Dow component Disney (NYSE:DIS) reports results. And
investors will be focused on ESPN and the company`s streaming strategy.
And that`s what to watch for next week.

MATHISEN: Most of us will set back the clocks this weekend. And if you`re
still using an old school but still fashionable wrist watch, you might
appreciate the handiwork of a Philadelphia entrepreneur who got the bright
idea to design a timepiece that displays natural materials, harkening back
to a simpler time in this digital world.


MATSHISEN (voice-over): If you make and sell wrist watches these days, you
have to compete with phones, Fitbits, smartwatches. It better be good.
And it ought to be different.

Lorenzo Buffa`s flexible wooden watch band, now, that is different.

LORENZO BUFFA, FOUNDER, ANALOG WATCH CO.: My personal interest in material
development led to the world`s first soft and flexible wooden watch band.
One you flatten it back out, pretty much appears unmarred.

MATHISEN: Wooden accessories were trending in 2012, but Buffa says wood
watches then weren`t up to snuff. Aiming to do better, Buffa`s senior
project at Philadelphia`s University of the Arts led him down a twisted
path, iteration after iteration, until he settled on a wood veneer backed
by leather, a process he has since patented.

Then posing as a professor, he began to contact design blogs and magazines
about a student who had made something he thought they should see. The
watch got some press and manufacturers as far away as China began to
contact him.

BUFFA: As the gumption you need as an entrepreneur. So, I have total —
total no shame.

MATHISEN: His moxie, and passion for natural materials, convinced Buffa to
start the Analog Watch Company. The thing is, his watches aren`t analog.

BUFFA: We actually use quartz movements which are battery-powered. A
conventional analog watch would be a mechanical watch, but we`re at the
lower price point.

MATHISEN: Analog`s wood watches sell for $150. That tick, tick, tick
movement of the secondhand is a quartz movement instead of a smooth sweep.

BUFFA: Analog references are desired to be focused on the simpler things.
Our goal obviously is to inspire people and to add a little bit of nature
to their every day.

MATHISEN: In 2013, Buffa got hundreds of preorders on Kickstarter, raising
$75,000. At the time, Kickstarter had partnered with New York`s Museum of
Modern Art. Buyers at the museum`s gift shop placed Analog`s first
wholesale order.

Today, the business is about 60 percent online retail and 40 percent
wholesale, mostly museum shops across the country.

BUFFA: They appreciate the ingenuity that goes into the design process,
really the materials on display.

MATHISEN: In 2015, Analog put a new material on display, marble, as well
as a line of classics with watch faces made of either wood or marble. The
mid-century aesthetic attracted orders from New York`s Guggenheim Museum.

GIGI LOIZZO, GUGGENHEIM MUSEUM: I barely have to sell these. The staff
barely has to sell them, because people recognize them for what they are.

MATHISEN: Gigi Loizzo helps pick products for the Guggenheim`s shop.

LOIZZO: We have to stay connected to the art collection or, of course, the
actual building which is a beautiful piece of art itself.

MATHISEN: That vision belonged to architect Frank Lloyd Wright who
famously connected his work to its natural surroundings. His circular
design and use of light, both inspired by nature, turned museum
architecture inside out. Nature inspires Buffa`s work, too. They have
wooden sunglasses now and a botanist collection of watches and jewelry,
featuring real flowers encased in resin.

Frank Lloyd Wright he`s not, but perhaps Buffa`s time is yet to come.

BUFFA: We`ve been able to carve some space for us because we`re really
creating conversation pieces or what some of our museums call wearable
works of art.


MATHISEN: Really beautiful pieces, aren`t they? Buffa was just 12 when he
started his first online venture, creating logos for small businesses
across the country. For his next trick, he`s working on a product using

And there`s a social good element here. Analog contributes to causes like
Trees for the Future and earth works every time it sells a wooden or marble

I think we probably helped him sell some Christmas gifts tonight.

HERERA: I think we might have a few stocking stuffers, if you will.

MATHISEN: Yes, really lovely.

HERERA: I`m a watch person, I know you are too.

MATHISEN: I am, too.

HERERA: So, maybe that will be in your stocking, who knows?

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

MATHISEN: And I`m Tyler Mathisen. Thanks from me as well. Have a great
weekend, everybody, and we will see you right back here on Monday.



Nightly Business Report transcripts and video are available on-line post
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Business Report is not and should not be considered as investment advice.
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