Transcript: Nightly Business Report – November 20, 2017

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

Justice Department sues to block AT&T (NYSE:T)`s proposed takeover of Time
Warner (NYSE:TWX), setting up one of the biggest antitrust cases in

that jobs are being outsourced to India, an Indian company is bringing jobs
to the U.S.

GRIFFETH: Hidden taxes. There are some little known provisions in the
proposed tax bills that might surprise you, and your wallet.

Those stories and much more tonight on NIGHTLY BUSINESS REPORT for this
Monday, November the 20th.

Good evening, everybody. I`m Bill Griffeth, in tonight for Tyler Mathisen,
coming to you as always from the New York Stock Exchange.

HERERA: Good to see you, Bill. I`m Sue Herera. Good evening, everybody.

The government tonight put up a major roadblock to an $85 deal. The
Justice Department will file a lawsuit to block AT&T (NYSE:T)`s takeover of
Time Warner (NYSE:TWX). The move creates a major blow to the companies,
who together would have created a media and telecom empire.

When first reports surfaced, shares of Time Warner (NYSE:TWX) fell while
AT&T (NYSE:T) finished the day higher, but the story is far from over.

Julia Boorstin has our report tonight.


Department is suing to block AT&T (NYSE:T)`s acquisition of Time Warner
(NYSE:TWX). Assistant attorney general Makan Delrahim of the Department of
Anti-Trust Division saying, quote: This merger would greatly harm American
consumers. It would mean higher monthly television bills and fewer of the
new, emerging innovative options that consumers are beginning to enjoy.

The Department of Justice has not gotten any state attorneys general on
board with blocking the merger. The DOJ is the only remaining regulator
hurdle in closing the transaction.

AT&T (NYSE:T) is planning to fight this suit. AT&T (NYSE:T)`s general
counsel and senior VP, David McAtee II, saying, quote: Today`s DOJ lawsuit
is a radical and inexplicable departure from decades of antitrust
precedent. Vertical mergers like this one is routinely approved because
they benefit consumers without removing any competitor from the market. We
se no legitimate reason for our merger to be treated differently.

Next up, AT&T (NYSE:T) and Time Warner (NYSE:TWX) will ask the court to
schedule a hearing on the Department of Justice`s claims as soon as

For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Los Angeles.


GRIFFETH: Meanwhile, here on Wall Street, stocks started this holiday
shortened week higher, thanks in part to a rise in financial and industrial
shares. In the fact, the Dow Jones Industrial Average advanced 72 points,
closed to 23430, the Nasdaq added seven, the S&P 500 was up three.

You know, after a steady run-up this year, questions are starting to emerge
will where stocks can go from here? In fact, one school of thought says
that the bears may have missed their latest opportunity to make some noise.

Mike Santoli has that for us tonight.


Wall Street were served the makings of a juicy stock market drop. Global
stocks were in retreat. Investors were fleeing risky corporate bonds, and
key sectors such as bank and small-cap shares were struggling. If the
broad index is only managed to dip of just over one percent from record
high levels, for a late-week rebound, as good economic data and resilient
tech stocks limited the damage.

Now, analysts are asking if that was the bear`s last good chance to play a
serious pullback for 2017, a year that`s on track to go without even a 3
percent dip in the S&P 500 index. Beginning this week, seasonal factors
start to favor further market gains and when a year has been as strong and
as calm as this one has been, history shows a better than average chance of
more upside into the new year.

This pattern offer no sure thing, of course. But fresh numbers on
industrial, housing and consumer conditions all indicate a humming economy.
And expectations for further corporate earnings growth and a chance of
business tax relief offer further support.

While the bears might have been thwarted again, the way markets wobbled in
the first half of November could be a preview how they might eventually
grow more dicey. A group of strong stocks laboring to hold up the indexes,
pockets the weakness and the vast market in corporate debt, a hint of a
slowdown in China, these are some of the cracks that might well open up
eventually in an expensive market that`s been on a prolonged hot streak in
a long economic running cycle.

For now, the underfed Wall Street bears might have to be patient in
awaiting their next big meal.

For NIGHTLY BUSINESS REPORT, I`m Mike Santoli at the New York Stock


GRIFFETH: Clearly, this is a big week for retail and retail stocks as the
holiday shopping season kicks into a high gear. Historically, this week
before and after Black Friday, retailers have been the clear outperformers
in the stock market, gaining as much as 5 percent on average since 2007.

Charlie O`Shea is with us tonight. He`s here to discuss what we can expect
this season. He`s lead analyst, retail analyst at Moody`s.

Good to see you. Welcome back.

Thanks. Great to be back.

GRIFFETH: Clearly, this has been a watershed year for retail.

O`SHEA: Yes.

GRIFFETH: We`d had high profile bankruptcies, we`ve had store closures,
we`ve had the Amazon (NASDAQ:AMZN) effect that everybody is talking about.
Everybody is rushing to get online to combat the Amazon (NASDAQ:AMZN)

How will that affect the holiday season do you think this year?

O`SHEA: I think what we see is the holiday season gets longer and longer
every year and it`s driven a lot by the online phenomenon, and it`s driven
by Amazon (NASDAQ:AMZN) and then everybody who tries to compete can Amazon
(NASDAQ:AMZN). I think Black Friday itself has lost some of its luster,
it`s still an important day. But with the Thanksgiving openings, and then
Cyber Monday and then the elongation of the season —


O`SHEA: — it makes it harder to mention this year over year when you try
to say, well, this Black Friday is what compared to last year. I don`t
know that those comparisons are necessary anymore.

HERERA: You know, Charlie, one of the ways though that they`re getting
people into the doors, whether it`s on Black Friday or this week alone, is
cost-cutting, discounting and promotions. How much is that going to hurt
the industry?

O`SHEA: I think what you see this year more than any year is the Amazon
(NASDAQ:AMZN)/Walmart battle. I`ve called it the Ali Frazier of retail,
where Amazon (NASDAQ:AMZN) and Walmart are both fighting over market share.

And there`s a lot of collateral damage that`s come out of that. If you`re
a second or third-tier competitor to either of those companies in a product
segment that they`re fighting over, you could get beat up pretty bad. And
the question or the issue for those retailers that are in those sectors
are, how low can I really go on price and still preserve my margin?

Because this is going to be a heavily promotional season. We`ve already
seen the beginnings of that with Amazon (NASDAQ:AMZN). As I said earlier,
Black Friday, 50 days of Black Friday.

That`s a unique concept this year, and I just think the retailers have,
again, this tough choice to make, whether I play that game or whether I try
to stay on the sidelines and pick my spots. If you`re a smaller retailer,
you`re probably better off picking your spots and being more tactical than
trying to get in the ring with either of those guys.

GRIFFETH: If you`re — I mean, you clearly feel Amazon (NASDAQ:AMZN) and
Walmart are the clear winners this year. Walmart has been very aggressive
with their online strategy in 2017.

What about the losers? Are there losers that you can identify that you are
worried about this holiday season?

O`SHEA: Yes, we`ve got a list of — it`s in the 20s now, distress names,
CAA-rated and below. That`s the highest pure number we`ve had since the
Great Recession. We`re not in a recession now. The consumer is fairly
healthy. The economy is moving fairly well.

So, what`s happening? Those retailers are the ones that really are in

GRIFFETH: Can you think of the names?

O`SHEA: Well, we had Toys “R” Us, at a B3, that filed Chapter 11.


O`SHEA: I cover Claire`s, which is the lowers rated retailer in the retail
portfolio in the U.S. Claire`s obviously needs a holiday season to help
itself. You`ve got — Sears (NASDAQ:SHLD) is in that category, Neiman
Marcus (NYSE:MCS), J. Crew, there`s a whole slew of them, all that need to
do well this holiday.

GRIFFETH: Charlie O`Shea of Moody`s — always good to see you. Thanks for
joining us.

O`SHEA: Thanks for being — having me.

GRIFFETH: You bet.

In other news, Fed Chair Janet Yellen plans to step down once her successor
is sworn into office. Ms. Yellen, of course, was the first woman to lead
the Federal Reserve, and she has presided over almost four straight years
of steady economic growth, sluggish inflation and a falling unemployment
rate. In her letter of resignation to the president, she said she was
gratified that the financial system is much stronger today than it was a
decade ago.


HERERA: Bill, meantime, Nebraska has approved a route for the Keystone
Pipeline. It was the last major regulatory hurdle facing the pipeline`s
operator, TransCanada. That pipeline will deliver oil from Alberta to the
Texas Gulf Coast refineries.

The project has been criticized, though, by environmental activists and
some landowners for years now. The shares of TransCanada did rise on the

GRIFFETH: Oil prices fell today as investors grew edgy ahead of an OPEC
meeting that`s scheduled for next week. Domestic crude settled just above
$56 a barrel.

You know, OPEC is a key force in the energy markets, and so is Saudi
Arabia. And tonight, investors are looking at the potential for political
changes in that country, which is also the world`s largest oil exporter.

Jackie DeAngelis explains tonight.


Saudi Arabia`s leadership, and oil markets tend to stand on edge. The
Saudis are OPEC`s largest producer. They`re also a key to stability in the
Middle East.

Since the summer, rumors have circulated that King Salman in his 80s and
possibly ill, is ready to pass the torch to his son, Mohammed bin Salman,
affectionately known as MBS.

What we know about MBS is that he`s already begun shaping policy and
implementing reform. He`s the architect of the Saudi 2030 vision, which
decreases Saudi`s economic dependence on oil, and at 32 years old, he`s a
driving horse behind modernizing the kingdom.

MBS has had influence in Saudi Arabia for some time, but the title of king
grants him absolute power. As king, MBS would have an impact on
geopolitics. Setting the agenda with foreign nations, like the United
States, Israel, and Iran, making important decision like if the Saudis
should work with Israel against Iran.

But how politics play out defendants on business interests as well. The
Saudis still derive most of their revenue from oil, so prices matter. The
Aramco IPO is also key. It seems it would attract a foreign investors.
Consensus right now, King MBS would be positive for oil prices.

SCOTT NATIONS, NATIONSSHARES: Any change in leadership in Saudi Arabia is
likely to roil crude oil futures. Crude oil is a little bit like gold,
that it spikes higher when we see geopolitical turmoil, and it`s also no
surprise that we saw the highest level in crude oil prices just a few days
after the arrests started in Saudi Arabia. We know that Saudi Arabia has a
vested interesting in keeping crude oil prices high, because of the Aramco
IPO. So, for all sorts of reasons, we would expect the changes in
leadership in Saudi Arabia to be bullish for crude oil prices.

DEANGELIS: Ahead of next week`s OPEC meeting, there are a lot of
questions. What will the group say about compliance with promised
production cuts? Will they extend those cuts? And could a young new
visionary be leading the way in Saudi Arabia in 2018?



HERERA: Still ahead, little-known provisions in the proposed tax bills
that could prove very costly.


GRIFFETH: Uber is planning to expand its driverless fleet with thousands
of cars from Volvo. This new order for 24,000 vehicles marks the first
commercial purchase for the ride-hailing company. The fleet is small,
though, and compared with the Uber`s 12 million drivers overall. But it
does reflect its vision of an autonomous future.

HERERA: The White House is tightening scrutiny of skilled worker visas.
According to the “Wall Street Journal,” the administration is making it
harder for businesses to hire foreign workers, citing numbers from the
agency which administers the program, one in four applications between
January and August that`s been sent back for requests for further evidence.

The president has said that legal immigration creates unneeded competition
for Americans.

GRIFFETH: The president has also expressed concern about U.S. jobs being
outsourced to India. But now, an Indian company is moving jobs here to the

Michelle Caruso-Cabrera reports tonight from Auburn Hills, Michigan.


UNIDENTIFIED MALE: Three, two, one, cut.

official ribbon-cutting for an assembly plant of off-road utilities
vehicles. The company behind it, the Mahindra Group of India.

Anand Mahindra is in charge of the huge Indian conglomerate, which also
makes tractors, electric race cars and electric two-wheelers.

engineering experience that Detroit is steeped in. Why on earth would we
bring people from India, when we are here to offshore and to outsource
engineering talent from the U.S.? We`re going to be selling our product to
the American consumers. We want to have Americans who understand American

CARUSO-CABRERA: Mahindra`s plans call for 650 employees at this facility
by the year 2020. Nearly all of them will be from the United States.

Kristin Dziczek is with the Center for Automotive research. She says it`s
been a long time since a new plant opened in this region.

We haven`t had an assembly planned in this region for sometime, more than a

CARUSO-CABRERA: The company has facilities in Canada and Mexico, where
they assemble tractors. But Mahindra is not worried about President
Trump`s threats to abandon the North American Free Trade Agreement.

I`ll terminate.

MAHINDRA: I think that your president is a consummate negotiator. I`m an
optimist about NAFTA merely being updated. But I don`t think it will be a
situation where NAFTA is going to explode.

CARUSO-CABRERA: As CEO, he`s watching to see what will happen with U.S.
corporate taxes.

MAHINDRA: The ease of doing business is already an attraction here. The
large market is already an attraction. On top of that, if you`re going to
get lower taxes, you`re going to get a huge amount of investment traveling
to the U.S.

CARUSO-CABRERA: It would be a bonus to a company already committed to
investing here.

For NIGHTLY BUSINESS REPORT, Michelle Caruso-Cabrera, Auburn Hills,


HERERA: Michelle just mentioned NAFTA and today, talks between the U.S.,
Canada and Mexico resumed. One state that has a lot at stake in the
negotiations is Tennessee. John Harwood recently spoke to one of the
senators from that state, Lamar Alexander.


that he`s going after the people who are part of the global establishment
clique who look down on the blue collar Trump voters. So, how do you plead
on that?

SEN. LAMAR ALEXANDER (R), TENNESSEE: I don`t know what he`s talking about.
I mean, I know —

HARWOOD: Are you a globalist?

ALEXANDER: I know who — well, I`m — I`m sitting in the Bluebird Cafe 40
miles from the largest auto plant in America. It`s called Nissan, and it
helped to attract 1,000 auto suppliers to Tennessee, raised our family
incomes, made us richer. I went to Japan to help get it.

I`m interested in us being a part of the world. That`s why I think the
president has gotten bad advice from Mr. Bannon or others about NAFTA.
Argue with Mexico, argue with Japan, leave NAFTA alone. Mexico and China
have helped make us rich in Tennessee, richer. I mean —

HARWOOD: Why do you think the president doesn`t get this?

ALEXANDER: He gets advice from different people, and so, I`m giving him
other advice.


GRIFFETH: John Harwood joins us tonight.

Now, John, where does Senator Alexander stand on the tax reform plan in the
Senate that they`re going to take up after Thanksgiving?

HARWOOD: He`s enthusiastically for it, Bill. He`s a moderate Republican,
but he says that cutting the corporate rate to try to spur investment is
the way to go, just like he sees expanding international trade is the way
to go. So, that`s good news for the White House and for Republican leaders
that he`s with them.

HERERA: What about the bipartisan Affordable Care Act fix? Senator
Alexander has been working on that. Where does he stand on it now?

HARWOOD: Well, Sue, that`s interesting because it`s become a bargaining
chip in the debate. He and Patty Murray have proposed a bipartisan fix
that gives extra money for insurance companies who have high cost patients.
Critics, conservatives say, oh, that`s a bail out for insurance companies.

Alexander says it will stabilize premiums. Donald Trump asked him to
negotiate that, but he`s wavered on whether or not he`s for it. Now, some
moderate Republican senators are saying, if we`re going to vote for the tax
bill, we need that Alexander/Murray bill to stabilize Obamacare, and
Senator Alexander is hoping he can persuade President Trump to give the
thumbs-up finally and get that into law by the end of the year.

HERERA: We will see. John, thank you.

HARWOOD: You bet.

HERERA: John Harwood in Washington.

GRIFFETH: Elsewhere, chip maker Marvell Technology is buying its small are
rival. That`s where we begin tonight`s “Market Focus”.

In an attempt to expand its wireless connectivity business, Marvell said
that it`s going to buy network equipment maker Cavium, for about $6
billion. Marvell said the deal will grow and diversify its revenue base
and allow it to offer more services to its customers. Shares of Marvell
Tech rose 6 percent today to $21.59. Shares of Cavium popped 10 percent to

Dish Network subscribers are at risk of losing CBS (NYSE:CBS) programming
as early as this evening if the two companies cannot reach a new agreement
on how much Dish will pay for CBS (NYSE:CBS) content. CBS (NYSE:CBS)
warned that its customers that a possible blackout would happen and it
would affect the full slate of football coverage that the network is
broadcasting over this holiday weekend. CBS (NYSE:CBS) shares fell 1
percent to $55.93. Shares of Dish Network were also off 1 percent to

Pharmaceutical company Roche Holdings said that its immunology therapy
treatment when used in combination with chemo therapy helped to slow lung
cancer progression in untreated patients. The results were not a positive,
though, for rival Merck (NYSE:MRK), which already has a drug used to treat
lung cancer. Merck (NYSE:MRK) shares fell by nearly 2 percent today as
investors reacted to this news that another lung cancer contender could be
entering the market. Shares closed the day at $54.10.

HERERA: In a regulatory filing, activist hedge fund Jana Partners
disclosed a nearly 9 percent stake in Outback Steakhouse owner Bloomin
Brand. Jana said shares of the restaurant operator were undervalued and
represents as active investment opportunity. Bloomin Brands jumped more
than 12 percent on that news to $20.54.

And after the bell, Urban Outfitters (NASDAQ:URBN) said strong demand for
its Free People clothing brand helped that company deliver better than
expected quarterly results. Urban Outfitters (NASDAQ:URBN) also cited a
rise in online sales and improved apparel execution pretty much across all
brands. Shares initially rose in the extended hour session, and ended the
regular day up 1 percent, to $28.27.


GRIFFETH: Sue, as you know, Oregon is trying to make saving for retirement
just a bit easier. It`s become the first state now to roll out a plan that
covers private sector workers who do not otherwise have access to a
workplace savings program. The deduction is an automatic 5 percent of
gross pay unless the worker opts out.

Savings, of course, is just one of the topics that we`ll be covering during
our special Thanksgiving Day program, “America`s Retirement Crisis: Funding
Your Future”. Hope you can join us on Thanksgiving.

HERERA: Well, everybody who is concerned about saving for retirement is
paying attention to the tax proposals making their way through Congress.
But there are hidden taxes that are not getting a lot of attention.

Our Robert Frank, though, has the details.


very vocal about how they would like to cut taxes as part of tax reform.
But they`ve been more quiet on who could potential get tax hikes. Here are
just a few of the hidden tax increases in the House and Senate bills. The
Senate bill includes a tax hike on certain stock investors through what`s
known as first in/first out accounting. The bill would prevent investors
from lowering their taxes by choosing the specific shares of stock that are
being sold.

Now, usually, investors sell the most expensive shares they purchased, or
those that have lost money to get the tax write-off. The bills would force
them to sell their oldest shares first, known was first in/first out sale,
no matter what the purchase price. Now, this takes effect in 2018, and
would raise a projected $2.7 billion in revenue over 10 years.

Initially, the mutual fund firms like Fidelity were also subject to the
tax. But after lobbying last week, they are now exempted.

Now, another hidden tax hikes, tuition waivers. The House bill would label
as taxable income college tuition waivers, that`s when a university waives
their tuition and sometimes provide a stipend for grad students who work as
a teaching or research assistant. About 145,000 grad students and 27,000
undergrads are awarded the waiver every year. They would now be taxed on
incomes they don`t actually receive.

And people who collect art, cars and other family treasures may also get a
possible tax hike. The House bill does away with what`s called 1031 swaps,
or exchanges in kind. That`s when someone sells in asset, but postpones
the capital gains tax. If the cash is used to buy something similar.

Now, art collectors use this a lot to sell one painting and buy another
without paying a tax. So do buyers of airplanes, tractors and sometimes
car. Sotheby`s mentioned it in their earnings call as a possible negative
for the art market.

But Congress specifically carves out one group that will be allowed to keep
using the tax loophole. That`s real estate developers and real estate



GRIFFETH: Coming up, we`re crisscrossing the country as Amazon
(NASDAQ:AMZN) hunts for a second home.


Carolina, a state that`s been attracting out-of-state innovators since a
couple of guys from Ohio came here to fly their airport. But does the
state have enough to get Amazon (NASDAQ:AMZN) second headquarters? We`ll
take a look coming up on NIGHTLY BUSINESS REPORT.


GRIFFETH: One Wall Street firm is now saying that shares of Amazon
(NASDAQ:AMZN) could head much higher to perhaps $1,360 a share. That would
be the highest price target on Wall Street right now. Nomura Instinet says
the company will maintain its leadership position because of its ability to
invest aggressively in multiple industries. That price target is roughly
20 percent higher than its current price.

HERERA: And it has been one month since Amazon (NASDAQ:AMZN) began
evaluating bids for its $5 billion second headquarters project. And so
far, we have taken you to Chicago and also Cleveland. One of the keys to
victory, according to the company, is the city`s ability to attract a
skilled and diverse workforce. And that is a big test for the bids coming
in from North Carolina.

Scott Cohn is in Raleigh tonight.


COHN: North Carolina has been attracting innovators from out of state
since the Wright Brothers came to Kitty Hawk from Ohio. More recently, the
research trial of Raleigh, Durham and Chapel Hill has been fostering
innovation for nearly 60 years. The triad of Greensboro, Winston-Salem and
High Point is a hub for manufacturing old and new.

Hickory may lack the population Amazon (NASDAQ:AMZN) wants, but its data
centers make it a main junction on the information superhighway. Charlotte
is the financial capital of the south, and to hear the people there tell
it, a magnet for millennials.

All four regions have submitted bids to Amazon (NASDAQ:AMZN), all of them
back by Governor Roy Cooper.

GOV. ROY COOPER (D), NORTH CAROLINA: When I talk to CEOs about whether
they`re going to expand or bring their company to a state, the first thing
they talk about is workforce and talent. North Carolina checks all of
those boxes for Amazon (NASDAQ:AMZN).

COHN: The ingredients were all here with the possible exception of one.
Amazon (NASDAQ:AMZN) says it wants to locate in a diverse community that
supports diversity. That last part has been the subject of intense debate

North Carolina has partially repealed its so-called bathroom bill, which
governed which facilities transgender people could use. Amazon
(NASDAQ:AMZN) opposed a similar law in Washington state. But North
Carolina has kept other parts of the law, including a ban on local
ordinances against discrimination.

Governor Cooper, elected last year on a promise to fully repeal the law,
must now convince Amazon (NASDAQ:AMZN) to disregard all that, even as he
tries to make the state more inclusive.

COOPER: North Carolina is indeed a welcoming state. For decades, we`ve
been a beacon in the south, a place where people know that they can come
and get a great education, open a business, have the kind of environment,
the cost of living for their employees.

COHN: North Carolina boosters say educated workers are coming to the state
regardless. The goal now — get Amazon (NASDAQ:AMZN) to do the same.

For NIGHTLY BUSINESS REPORT, I`m Scott Cohn in Raleigh, North Carolina.


HERERA: And that is NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera.
Thanks for joining us.

GRIFFETH: I`m Bill Griffeth. Have a great evening. We`ll see you


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