Transcript: Nightly Business Report – December 21, 2017

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

House passes a spending bill to avert a government shutdown. But it`s not
a done deal yet. And the deadline is tomorrow.

look inside the Canadian company that finds itself at the center of a
brewing trade war with the U.S.

GRIFFETH: Too old? Why Facebook (NASDAQ:FB) is raising eyebrows when it
comes to job ads and age.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for this
Thursday, December the 21st.

Good evening, everybody, and welcome. I`m Bill Griffeth, in tonight for
Tyler Mathisen.

HERERA: Nice to have you here.

GRIFFETH: Thank you.

HERERA: Welcome, everybody. I`m Sue Herera. The race is on to get a
spending bill through Congress before tomorrow at midnight in order to
avert a government shutdown just ahead of the holidays.

The House took a first step by passing its spending bill. But there`s
still more that has to get done.

Kayla Tausche has been following the story for us from Washington.

So, Kayla, the House passed the bill. What happens now?

needs to pass the bill, Sue. They`re considering it as we speak. We`ll
let you know when that vote comes in. Republican Rand Paul has voiced
opposition over one of the provisions but it`s unlikely that that will sway
enough lawmakers to vote against it. It is expected to pass.

GRIFFETH: Well, what are the sticking points left over? What are they
fighting about?

TAUSCHE: Well, Senator Paul is really not a fan of one of the provisions
that lifts spending caps in order to provide the funding for the deal. He
thinks the country should be more fiscally responsible.

Now, this bill, because it`s streamlined, it doesn`t contain many of the
add-on goodies that you normally see to win lawmakers over. In fact,
leadership wasn`t really able to offer Democrats anything except the
ability to avert a shutdown. Most of their policy priorities were punted
to January.

HERERA: And what does that mean in January, when that short term bill

TAUSCHE: Well, this sets up another showdown on January 19th. Lawmakers
hope to have longer term deals worked out by then. But the White House
also wants to do entitlement reform, immigration, health care, and get a
massive infrastructure package under way.

It`s proving to be a daunting to-do list. And it`s still a few weeks away.

GRIFFETH: What happens if the Senate doesn`t pass this bill tonight? The
House has already adjourned and I happen to know that some of the members
of the House are leaving Washington right now.

TAUSCHE: Yes, they are not only leaving Washington, they are done for the
year. So they say. That is why the expectation is that the Senate is
going to pass this. You would imagine that leaders from both chambers
would have had conversations about the most likely outcomes and that they
wouldn`t have let the house go out if there were a chance that the Senate
wouldn`t pass this.

If the Senate chose to send something back to $e house, then they would
have to consider it, and make any changes and repass that again.

HERERA: Keep us posted, Kayla. Thanks so much.

TAUSCHE: We will.

HERERA: Kayla Tausche in Washington.

GRIFFETH: Elsewhere late today, Dow component Nike (NYSE:NKE) reported
better than expected earnings. It was a crucial quarter for the company,
which has been facing heightened competition from the likes of Adidas. The
good news is revenue rose by about 5 percent on stronger sales growth in
some key markets.

But reaction was mixed and the stock was volatile in initial late-day

Eric Chemi breaks down Nike`s quarter for us tonight.


Nike (NYSE:NKE) beat on the top line and the bottom line better than
expected for earnings per share and total revenue, what sticks out, the one
big takeaway that analysts are going to look for, the North America
business, it was down 5 percent. People were expecting it to be only down
about 1 percent to 3 percent. So, 5 percent is a lot worse than people
were expecting. And that`s going to be the key.

Is there too much supply in that business? Are price being discounted too

The company is still targeting a $50 billion revenue target five years from
now. They`re at about $36 billion right now. So, they`ve got a long way
to go. It will be interesting to see what happens in the next few
quarters. Can they stay on track for that $50 billion number? The big
takeaway on Nike`s earnings, that down 5 percent number in their North
American business.



HERERA: The American economy expanded at its fastest pace in more than two
years in the third quarter. The final reading of gross domestic product
came in at 3.2 percent annual rate, slightly lower than the last reading.
An increase in business spending offset a slight decline in consumer

The report marks the first time since 2014 that the economy experienced
growth of 3 percent or more for two straight quarters.

GRIFFETH: A former top economic adviser to President George W. Bush is
reportedly being considered for the job of vice chair at the Federal
Reserve. It`s Larry Lindsey. He also served as a governor of the central
bank from 1991 to `97. As first reported by CNBC, Mr. Lindsey has
expressed interest in that position. The vice chair seat was vacated in
October by Stanley Fisher for personal reasons.

HERERA: On Wall Street, stocks traded higher after a growing list of
companies said they would spend their tax savings on higher wages and
investment. That helped lift the mood of the market and bank and energy
shares helped lift the major averages. The Dow Jones Industrial Average
added 55 points to 24,782. The Nasdaq was up four. And the S&P 500 rose

While no one really knows what the impact of the tax bill will be on
stocks, some wonder whether it might spark a rush into the market.

So, Mike Santoli takes a look.


corporate tax cut bill about to become law are promising a boost to U.S.
economic growth in part by encouraging companies to engage in a bit of
rational recklessness. That`s not a phrase Republicans in Congress are
using. But the idea of slashing tax rates and allowing companies to deduct
the cost of new equipment right away creates strong incentives for
companies to ramp up investments in their business, more than eight years
into an economic expansion, at a time when otherwise we might be bracing
for an eventually slowdown.

More money flow into the private sector is no doubt a net positive for
corporate growth and profits. Still, encouraging heavy new rounds of
spending by companies that have not found many promising projects during a
long period of growth and low interest rates is a bit of a novel
experiment. Some economists are saying that the tax cuts, coming with
unemployment already low, could be a recipe for an outbreak of inflation
and higher interest rates which could offset some of the anticipated boost
to growth and corporate profits.

And, of course, it remains unclear just how much of the tax cut will be
used toward future investment, how much will flow to the bottom line as
profits, and how much will be handed back to investors as stock buybacks
and dividends. Stock investors could be counting on getting some of the
same windfall cash that workers have been promised and vice-versa.

For believers in the tax package, the goal is to let the economy run a good
deal hotter, in part by getting CEOs to set aside their caution and do more
building and hiring in the U.S. Whether this is called rational
recklessness or the more familiar animal spirits, it`s an economic mode
we`ve scarcely seen in nearly two decades.



GRIFFETH: And as Mike just said, it remains unclear how much of the
corporate tax cut will be handed back to investors in the form of
dividends. But some are betting that dividends will continue to go up.
And investors, of course, need to be ready.

Eric Aanes is the president and founder of Titus Wealth ones joins us
tonight to talk about this.

You know, already we`ve heard from — there have b a number of share
buybacks announced in the month of December, leading up to the tax bill
being passed. Do you expect that to continue? And the dividend increases
as well.

question. One of the things I do want to touch on is the rest of America,
the majority of America will benefit from this tax cut. Some of the
states, California, New Jersey, and New York, obviously are going to be a
little strain when you look at buying a cottage for $750,000 and having a
$10,000 property tax cap, and not being able to write off your state income

But, by and large, as a whole, we feel like there`s room to run and for
basically companies to get money back to shareholders — if indeed that
does come true that companies bring money back from overseas, paying that
out to shareholders and continuing that dividend increase seems like a
logical progression.

HERERA: Any sectors you think might excel at increasing those dividends?

AANES: So, great question, Sue. If you look at large growth in the
technology companies, they`ve soared this year. And the bar just keeps
getting set higher and higher. We look at the S&P paying a dividend of
around sub-2 percent and high dividend basket of stocks baying over 3
percent, if we see it creep up to 4 percent, that could be a good thing.
Your question on inflation is well put. If inflation takes off, is that
going to adversely affect some dividend-paying stocks? The answer is
probably. But that basket, remember, is full of financials.

GRIFFETH: Today I think was an interesting microcosm. As they — we were
talking about the passage bill, on Wall Street today, energy stocks and
financial stocks were the leading groups. Utilities and real estate, very
sensitive, were the big laggards market.

AANES: Right.

GRIFFETH: Going into 2018, do you think that`s how the market will play
out? Is that where you would put money to work right now, in those leading

AANES: It seems like we`re seeing a bit of a reversion to sectors that
haven`t really taken off as much, as example those sectors half as much as
the market overall. So, we do see a rotation potentially, if the large
growth names and technology names do not continue to grow exponentially,
that we may see some drift back into these names. The big caution is if we
do have inflation and we certainly don`t want to see another 1994, we had
huge interest rates, six of them in a short amount of time and it really
did have an adverse effect on the market.

So, slow and steady on the interest rate increase would be a sign for these
stocks to do well.

HERERA: What else is on your radar as something that might possibly hold
back the continued rally in stocks or even derail it?

AANES: Well, it`s pretty simple. Geopolitical. Right now, not knowing
what`s going to happen in North Korea, in the Middle East. We don`t k
exact what could creep up. Remember, we haven`t seen a pullback of any
magnitude since January of 2016, Sue.

So, I`m not saying we don`t have a continued upward slope. But we may take
a small breather along that stair step upwards.

GRIFFETH: Traditional dividend-paying sectors, I often think when I`m here
on NIGHTLY BUSINESS REPORT — I know many of our viewers are still in
utility stocks. Utility stocks have performed well until the last eight
years or so. In fact the Dow utilities hit an all-time high last month.

But they`ve be falling lately. As I mentioned, they`re among the laggards

Would you be putting money still to work in the good old-fashioned
dividend-paying utility stocks?

AANES: Just because of the interest rate sensitivity, I`m a little more
cautious. I like financials a lot more, financial, consume staples, names
that will pay good dividends, even some of the mobile carriers that are
going to continue to have subscribers, whether the iPhone X sells or not.
We want to make sure that we`re looking at names that are going to be
somewhat safe, secure, and have a growing dividend.

GRIFFETH: Eric Aanes with Titus Wealth Management in San Francisco —
thanks for joining us, Eric.

AANES: Thanks, Bill.

HERERA: Well, we all know about the concerns some residents of those high
tax states are having following the passage of the tax bill. Many, as
we`ve mentioned, will lose a lot of key deductions. But now it appears
some of those states may be starting to think more creatively.

Robert Frank explains.


taxes, governors and legislators of high tax states are focused on a
different response to the new tax bill. Avoiding it. Governors of
California, New York, and New Jersey have deployed armies of tax experts
and lawyers to find ways of preserving part or all of the deductions that
residents get for their state and local taxes.

The Republican tax bill would eliminate deduction for state and local taxes
over $10,000. There are two main ideas taking shape. The first is aimed
at income taxes. States could replace the income tax with a payroll tax
where they tax companies the equivalent of the income tax for each worker.
The companies then can deduct their payroll taxes so they would pay it out,
then take the refund and pass that on to the employee at the end of the tax

Now, this a long shot. Companies have to agree, you ha issues with the
progressive tax rates in every state, and it could run afoul of longer term
employment contracts.

Now, the second idea, it relates to property taxes. New Jersey and
California both looking at the possibility of turning their public school
systems into 501(c)(3) charitable organizations. Taxpayers could then
deduct the taxes that go to the schools. So, New Jersey, about half of
your property taxes would go to the school system. You could then deduct
that as a charitable gift.

Now, 18 states already do something similar where they offer tax credits to
scholarship granting organizations, i.e. private and religious schools. If
all else fails, the states are also considering suing the federal
government to end the policy, saying that taking away the SALT deductions
is unconstitutional.



GRIFFETH: And still ahead, a U.S./Canadian trade spat.


the heart of a trade war between the U.S. and Canada. And the person who
runs this company calls it ridiculous.

I`m Phil LeBeau, just outside of Montreal, Canada, with the story of the
Bombardier C Series, coming up on NIGHTLY BUSINESS REPORT.



HERERA: Boeing (NYSE:BA) and Brazilian aircraft-maker Embraer are in
merger talks. The two companies issued a statement today confirming that
they are engaged in discussions but that there`s no guarantee a deal will
get done. Such a get-together would strengthen Boeing`s position in the
regional jet market at a time when rival Airbus is trying to do the same.
But any tie-up would be subject to approval by the Brazilian government.

GRIFFETH: And Boeing (NYSE:BA) also finds itself at the center of a
brewing trade war between the U.S. and Canada. United States wan to slap a
nearly 300 percent tax on Canadian rival Bombardier`s commercial airplane
before it can be sold to Delta and other American Airlines. Bombardier
says the allegations that it`s facing are ridiculous.

Phil LeBeau is at that Bombardier assembly plant in Mirabel, Quebec.


LEBEAU: As deliveries of Bombardier`s new C Series plane take off, there`s
a push in the U.S. to slap a heavy tax on the plane. Boeing (NYSE:BA) says
the price of the C Series is so low, it`s being dumped in the U.S. and
could hurt Boeing (NYSE:BA).

An accusation Bombardier`s CEO calls ridiculous.

ALAIN BELLEMARE, BOMBARDIER CEO: We`re doing exactly what everybody in the
industry do, which means that when you launch a new program, you have
aggressive pricing to start with. And Boeing (NYSE:BA) does the same
thing. They did the same thing on the 787. And that`s no different than
what we did at Delta to relaunch the program.

LEBEAU: The C Series has a list price of $80 million. Boeing (NYSE:BA)
claims it`s being sold to Delta at just $19 million, so low, it helped
Bombardier land a key U.S. customer. Boeing (NYSE:BA) says that`s not

competition. You know, we love competition. Competition makes us better.
I`m glad to compete any day and I`m very confident that when we play on a
level playing field, we`re going to win. But it`s important that everybody
plays by the same rules.

LEBEAU: Is Bombardier breaking the rules with its new plane? Analysts say
the company is simply doing what every other plane maker does.

exist? Absolutely. Boeing (NYSE:BA) certainly has point. The Commerce
Department has a point. This wouldn`t exist if it weren`t for an almost
unprecedented level of public expenditure.

But having said that, it`s very difficult to see how Boeing (NYSE:BA) was
harmed by it.

LEBEAU: Bombardier says the real harm in taxing the C Series could be
limiting the $30 billion of economic impact the plane would have in the
U.S., because so many of the plane`s components and parts come from
suppliers in the U.S.

While Bombardier is planning to also build the C Series at a new plant in
Alabama, it is not backing down in its fight with Boeing (NYSE:BA) and the
Trump administration.

The final decision on whether these planes would be taxed by the U.S.
should come by early February. If the proposed tariffs stick, it would
further hamper an increasingly tense trade relationship with companies here
north of the border.

Phil LeBeau, NIGHTLY BUSINESS REPORT, Mirabel, Canada.


HERERA: Finish Line raises its full year earnings guidance. That`s where
we begin tonight`s “Market Focus”.

The athletic shoe retailer reported earnings and sales that beat
expectations and came despite a lot of discounts on footwear. The company
also saw same-store sales rise as more shoppers made purchases. Shares
jumped nearly 13 percent to $13.20.

Sales of used cars slowed, hurting the bottom line of CarMax (NYSE:KMX).
Earnings came in below expectations as foot traffic was down. The company
did benefit from a rise in the average sale price of its used cars. Shares
slipped more than 3 percent to $66 even.

Electric utility PG&E is suspending its dividend because of the potential
legal liability the company may face for the California wildfires. While
no cause for the fires has been determined yet, the company said it could
be liable for property damages if its equipment is found to have played a
role. Shares got pummeled. They fell nearly 13 percent to $44.50.

GRIFFETH: Food maker ConAgra more than doubled its profit in the latest
quarter and said the hurricanes actually caused customers to fill up their
shopping carts more. The results topped expectations as a result. And the
company is also forecasting organic net sales and earnings for 2018 to be
at the high end of its earlier guidance. ConAgra shares fell fractionally,
though, to $37.85 today.

Biogen said one of its drugs to treat Alzheimer`s failed to meet its main
goals during a study. The biotech company still plans to finish the trial
to gather additional data. Investors were clearly disappointed. They sent
shares of Biogen down 3 percent to $322.52.

And metal and glass maker Apogee Enterprises (NASDAQ:APOG) said that it`s
seeing solid performance in the majority of its segments of the business.
The company`s results, however, did not impress investors. Both sales and
profits climbed higher but failed to beat estimates. Shares got crushed
today, falling 16 percent to $42.32.

HERERA: Well, some iPhone owners had suspicions that Apple (NASDAQ:AAPL)
was slowing the operation of older phones. Now, Apple (NASDAQ:AAPL) is
pretty much confirming it. But the company says it is doing so on purpose
as a way to help older batteries perform better after a new version of iOS
is downloaded.

GRIFFETH: Sure they are.

There`s a new report out tonight on Facebook (NASDAQ:FB) that is raising
concerns about age discrimination related to job ads that appear on its

But as our Julia Boorstin reports now, the company is refuting those


reported that dozens of companies use Facebook (NASDAQ:FB) to exclude older
workers from job ads, saying that Verizon (NYSE:VZ), Amazon (NASDAQ:AMZN),
Goldman Sachs (NYSE:GS), and Facebook (NASDAQ:FB) itself are among the
employers that place recruitment ads limited to particular age groups,
questioning whether this ad targeting violates the federal Age
Discrimination in Employment Act which bans bias against people age 40 and
older in hiring.

A class action complaint alleging age discrimination was filed in San
Francisco federal court yesterday. Facebook (NASDAQ:FB) pushing back with
a post from its VP of ads titled: This time, “ProPublica”, we disagree,
saying Facebook (NASDAQ:FB) tailors our employment ads by audience. For
example, we may use pictures of women or older people depending on the
context. These individual ads are part of broader based recruitment
efforts designed to reach all ages and all backgrounds. We completely
reject the allegation that these advertisements are discriminatory.

these job ads is exactly what they do in product ads and other types of
ads, which is, you know, really segment the audience really effectively and
doing so, you know, in real-time.

BOORSTIN: Facebook (NASDAQ:FB) compares showing certain job ads to
different age groups on Facebook (NASDAQ:FB) or Google (NASDAQ:GOOG), to
running employment ads in magazines or TV shows that target older or
younger viewers or readers. Targeting Facebook`s 1.4 billion daily active
users is one factor that has helped drive the social giant`s stock up
nearly 50 percent over the past year.

And this past February, Facebook (NASDAQ:FB) expanded into jobs,
introducing the ability for companies to post jobs and applications.

Facebook (NASDAQ:FB) knows that “ProPublica” has uncovered a number of
problems, including racist targeting terms and discriminatory housing acts,
for which Facebook (NASDAQ:FB) has apologized and made changes.

HENRY BLODGET, BUSINESS INSIDER CEO: This is part of the larger story
which is that Facebook (NASDAQ:FB), Google (NASDAQ:GOOG), a few other
companies in Silicon Valley, have created the most powerful media and
communications platforms in world history. They are now being forced to
take responsibility for that, and all of the different ramifications.

BOORSTIN: But while Facebook (NASDAQ:FB) has taken responsibility for
problems in the past, this time, Facebook (NASDAQ:FB) isn`t wavering,
saying it helps educate advertisers about legal requirements and is
committed to transparency for its users.

For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in San Francisco.


HERERA: Coming up, while some small business owners don`t fear Amazon
(NASDAQ:AMZN), they`re thankful for it.


HERERA: Here`s a look at what to watch for tomorrow. The economic
calendar is jam-packed ahead of the Christmas holiday. First, there`s the
release of new home sales. Then we`ll find out how many big ticket durable
goods were ordered last month, and that will be followed by a report on
consumer sentiment, which has been rising as of late.

And that`s what to watch for on Friday.

GRIFFETH: Meantime, enrollment for health plans turned out under the
Affordable Care Act to be very strong, despite the shortened sign-up
window. Officials today said nearly 9 million customers selected a plan by
the deadline. And that was more than expected. Enrollment overall,
however, was down by about 400,000 compared to a year ago.

HERERA: Walmart wants to lure luxury shoppers. The world`s largest
retailer, which is known for its discount prices, is reportedly developing
a personal shopping service. According to Re/code, couriers will deliver
household products free of charge to shoppers` doorsteps. The goal is to
attract high net worth urban consumers.

GRIFFETH: As we know, it can be tough for small businesses to compete with
Amazon (NASDAQ:AMZN), especially this time of year. But when they team up,
it can sometimes be a win for both parties.

Kate Rogers (NYSE:ROG) reports for us from Newark, New Jersey, tonight.


says more than half of the items it sells online are from small businesses
like JR William, which ships its luxury goods out of this New Jersey
warehouse to be fulfilled by Amazon (NASDAQ:AMZN). Fulfillment by Amazon
(NASDAQ:AMZN) lets small businesses offer prime two-day shipping by pre-
shipping their products to fulfillment centers and letting them handle
packaging, shipping, and customer service.

Amazon (NASDAQ:AMZN) says 2 billion items were sold that way last year, and
that number is expected to grow.

According to one estimate, the number of sellers on Amazon (NASDAQ:AMZN)
has more than doubled in the past five years. One of them is Jack Brecher,
owner of JR Williams, who says the exposure and time saved make pairing
with the web giant a worthy business move.

JACK BRECHER, JR WILLIAM CO-FOUNDER: The positive attributes of using
Amazon (NASDAQ:AMZN) cannot be underestimated there are some incredible
aspects, not having to deal with day to day shipments, not having to deal
with specific issues with fulfillment and picking and packing. I mean,
these are things a small business owner like myself, it takes us all day.

ROGERS: But it also costs small businesses a degree of control. Brecher
says he has little contact with his customers and he faces lower rankings
on Amazon (NASDAQ:AMZN) if he opts to fulfill on his own.

BRECHER: If you`re listing as fulfilled by merchant on Amazon
(NASDAQ:AMZN), then the chances of you becoming a hot seller is slim to

ROGERS: There are also storage and shipping fees for sellers. Even though
Amazon (NASDAQ:AMZN) can take a big cut, Steve Grubbs, owner of, says it can be up to 30 percent on his giant greeting
cards and sings. The payoff is exposure since many people limit searches
to prime results and winning new customers.

STEVE GRUBBS, VICTORYSTORE.COM OWNER: People trust it. They know that
Amazon`s going to take care of them. And so, they use FBA or Prime all the
time now.

ROGERS: So, what do small business owners think of Amazon (NASDAQ:AMZN)?

CNBC and Survey Monkey polled them last quarter, about a third said they
think Amazon (NASDAQ:AMZN) is good for business. Nearly half think Amazon
(NASDAQ:AMZN) is bad for business. But less than 10 percent say they
actually compete with the web giant for customers.

For NIGHTLY BUSINESS REPORT, I`m Kate Rogers (NYSE:ROG) in Newark, New


GRIFFETH: So, are you finished with your shopping?

HERERA: Mostly. I haven`t seen started the wrapping, though.

GRIFFETH: Me either.

HERERA: Oh, that makes me feel so much better.

GRIFFETH: I`m rushing home to wrap tonight, as a matter of fact.

HERERA: I`ll be thinking of you, I`ll be doing the same thing.

GRIFFETH: Same here, yes.

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

GRIFFETH: I`m Bill Griffeth. Wrap well. We`ll see you tomorrow. Good

HERERA: Exactly. Lots of tape.


Nightly Business Report transcripts and video are available on-line post
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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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