ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Sue Herera and Bill
SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Good evening, and welcome to
this special edition of NIGHTLY BUSINESS REPORT.
BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Every night, we bring you
the stories that impact business, the market news that you need to make
HERERA: And tonight with the market closed for Presidents` Day, we`re
going to do something a little bit different and take a step back from the
volatility on Wall Street and the political discord in Washington, D.C.
GRIFFETH: And since it is Presidents` Day, we decided to take a look at
how the market has performed under various administrations.
And we enlisted Dominic Chu to dig up the numbers for us.
DOMINIC CHU, NIGHTLY BUSINESS REPORT CORRESPONDENT: Markets have been on a
roller coaster ride as of late. Now that`s roughly halfway through
President Trump`s four-year term, it may be a good time to take stock on
how markets have performed through the years under variation
administrations. Since President Trump took office, the stock market is up
double digits. Of course, that return is for a partial term. And there`s
no crystal ball on what the future holds for the rest of his term.
Here are some, though, notable market returns under some other
administrations. The best S&P 500 performance for a U.S. president came
under Bill Clinton, whose two terms yielded a near 209 percent return on
the S&P 500. President Barack Obama`s two terms yielded a 166 percent
return, and President Franklin D. Roosevelt got around 141 percent during a
Worth noting, though, that the gains in the Obama and FDR administrations
came on the heels of bigger market losses that predated them. Meanwhile,
the depression era administration of President Herbert Hoover produced
around a 77 percent decline. So, what does the future hold for markets?
While every administration`s policies are unique, this time around it may
depend a lot on developments out of Washington, D.C.
For NIGHTLY BUSINESS REPORT, I`m Dominic Chu.
HERERA: So let`s take a look back at American presidents to see which were
good for the economy and the market. And we`re joined to do that by Mike
Santoli and Jeff Bush, a strategist with the Washington update.
Gentlemen, thanks so much for joining us tonight. Appreciate it.
I`m going to start with you if I could, Jeff. You say that presidents can
basically only bend the trajectory of the economy by setting up an
environment that is more positive or negative for businesses and for
investors and, therefore, the market as well. Correct?
JEFF BUSH, THE WASHINGTON UPDATE STRATEGIST: I believe so. The economy
has a rhythm of its own driven by a much larger factor than any one
president may control during their short tenure as president of the United
States. And I think throughout modern history, say post World War II,
those trends have been demographics and innovation cycles.
GRIFFETH: Mike, Dominic Chu looked at the performance of the S&P. We`re
going to look at the Dow here. Of the modern presidents in the 20th and
21st centuries, Calvin Coolidge had the best performance during his time.
He was lucky enough to be president during the Roaring `20s. But then
after Herbert Hoover`s debacle, then you had Franklin Roosevelt and his
gains were 194 percent, not too bad either. That was sort of back-loaded
because of the war, right?
MIKE SANTOLI, NIGHTLY BUSINESS REPORT CORRESPONDENT: Exactly right. If
you consider the 12 years of FDR`s terms, he did have a 9 percent annual
gain in the Dow, which is about what the historical average is, but
considering most of that is during the Great Depression. It`s a net
Calvin Coolidge is a great example, though, of the luck of timing, either
good or bad luck of timing. He came into office — his two terms exactly
expand the great years of the `20s after a bear market, after World War I,
and then, of course, he gets out right before the `29 crash. Obviously, a
business friendly environment, too. So, you can set a certain tone, but
you can`t really pick your moment necessarily, just where you are in the
HERERA: And, Jeff, Ronald Reagan`s administration, you talked about
innovation. And some would say his policies were innovative, but they
created kind of a confidence level for businesses to take risks, and that
resulted in a significant gain.
BUSH: Absolutely. Ronald Reagan was still riding the wave of demographics
of the baby boom generation. You had Ronald Reagan came into a fact when
those baby boomers were hitting prime earning years early in that cycle, so
he had that tailwind behind them. And then he enhanced that by creating an
environment of lower regulation, lower taxation, which gave those business
owners confidence to then reinvest in their business. Capital expenditures
break even were a lot shorter and that gave them confidence to make those
investments. Hence, investors followed that, prognosticating that the
investments would do well over time.
GRIFFETH: And, Mike, Bill Clinton to some degree also had the luck of the
draw. He was president during the dotcom boom of the `90s and that
improved his performance as well, right?
SANTOLI: Without a doubt. If you remember, of course, very famously, he
came into the office with the slogan the economy, stupid. Well, we were
coming out of a shallow recession. It was a very frustratingly slow pace
of growth when he started.
One thing that did happen, though, while he was president, of course, he
had a Republican Congress starting years after he got into office was the
government budget went toward balanced and we had a surprising at a time
decline in inflation and interest rates. So, all of that helped to foster
this backdrop, of course, with the technology boom of higher equity values.
And in fact, at the time, the longest economic expansion on record.
HERERA: Jeff, you also gave us an example of how an administration and a
president can dampen growth, and you point out George W. Bush`s
administration. I mean, timing is everything, but certainly some policies
also played a role in that.
BUSH: Without a doubt. George Bush was confronted with 9/11 and
subsequently started two wars in the Middle East. At the same time, he
also seeing the projected surpluses in the federal debt that he then
reinvested that in a tax cut. And that tax cut combined with the drain of
the cost of the two wars really put him at a disadvantage.
GRIFFETH: And, Mike, it`s too early to assess the Trump administration`s
impact on the stock market, but it has been, you know, coming at the tail
end of what has been the longest bull market in a long time here. But
we`ve still seen tremendous volatility return, haven`t we?
SANTOLI: You know, we see volatility, certainly especially in the last
year or so. Although it`s hard to really deny the fact that the election
of President Trump did catalyze a burst of business confidence and you saw
the markets really dramatically reprice higher and basically get out of
that kind of a little bit of a slow growth mindset that had set in before
that. But he also took off — actually when he was elected, the S&P 500
had basically been sideways for a year and a half. So, there was a little
bit of potential pent-up energy there.
And you`re absolutely right, though, in terms of not being able to make a
final verdict two years in. Two years into Ronald Reagan`s term, the
market actually had a big decline and only a partial rebound.
HERERA: You know, Jeff, what role, if any, do you think Congress plays in
the economic success of a president and an administration?
BUSH: Well, I think a great example of that would be the later part of
George W. Bush`s second term when clearly Congress was trying to incent
homeownership, home development, real estate development around the
country. And, of course, we know that added to dramatically the financial
crisis we had in 2008.
HERERA: On that note, gentlemen, thank you so much. Mike Santoli and Jeff
Bush, who is with the Washington Update.
GRIFFETH: And it`s also the time of year when people start filing their
tax returns. And given that this is the first filing under the new tax
laws, there are some things to keep in mind.
Here`s Sharon Epperson.
SHARON EPPERSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: If you`re used to
getting a big refund, you may be in for a big surprise. Early numbers from
the IRS for the first week of the tax filing season show the average refund
down 8 percent from the same time last year. Sweeping changes brought
about by the Tax Cuts and Jobs Act have had a significant impact on many
The new tax law nearly doubled the standard deduction to $12,000 for
individuals and $24,000 for couples. So many may no longer want to
itemize. Under the old tax law, an estimated 46 million taxpayers itemized
their taxes using a variety of deductions to lower their taxable income.
Under the new tax code, that number is expected to drop to just 18 million
because many widely used deductions were either capped or eliminated
altogether. If you`re worried about your tax bill, there is still time to
get a break. You can put money in a traditional IRA or individual
retirement account for 2018, up to $5,500 or $6,500 if you`re 50 or older.
And if you meet the income requirements, it will lower your taxable income
dollar for dollar. You have until April 15th to make that contribution.
And to avoid any tax surprises next year, do a paycheck checkup to make
sure your company is withholding the right amount of federal taxes
throughout the year. Grab your most recent pay stub and tax return. Then
use the IRS withholding calculator to check the amount is correct. If it`s
not, file a new W-4 form with your employer.
For NIGHTLY BUSINESS REPORT, I`m Sharon Epperson.
GRIFFETH: Douglas Boneparth is with us to talk more about the upcoming tax
season and the biggest changes that you may experience. He is the
financial advisor and president of Bone Fide Wealth.
Good to see you, welcome.
DOUGLAS BONEPARTH, BONE FIDE WEALTH FINANCIAL ADVISOR & PRESIDENT: Good to
GRIFFETH: Happy Presidents` Day.
You know, much has been made about how refunds so far have been sharply
below where they have been in the past as if that was a bad thing. It
really means taxpayers have not been overpaying as much as they did in the
BONEPARTH: Right. That`s a good thing if you`re not owing the government
a tremendous amount of money. That`s just your own money coming back to
you. But it doesn`t answer the question as to whether or not you`ve
getting it right.
HERERA: What about Sharon`s point about adjusting your withholding?
HERERA: A lot of people basically do not understand the calculation, and
even though you can go on the IRS website, it`s kind of intimidating to do
So how do you encourage your clients to make sure — I mean, obviously,
you`re giving them advice, but the general public that may not know how to
do it or may not even think they have to do it?
BONEPARTH: So I think 2018 is going to be a big test case, right? We have
a lot of moving parts happening. So it`s OK if you`re not getting it right
this time, but I want people to learn from that`s what happening here.
With all these moving parts happening, if you`re coming out by owing too
much tax, you`re going to want to take Sharon`s advice and take a look at
what you`re withholding. I like working with professionals who have a
really good understanding of what`s going on here. It is, to your point,
intimidating to look at all of these moving parts.
GRIFFETH: I mean, the W-4 is what people needed to go to last year.
GRIFFETH: And make those adjustments in their deductions so that they
didn`t overpay or —
GRIFFETH: Or they could get that refund again.
BONEPARTH: So it`s reactionary at this point if you`re going to make those
changes. That`s why I want to use this year as a test case. But that form
is going to allow you to basically mark down how many exemptions you can
have. The more exemptions you put down, the more — or excuse me, the less
they`re going to withhold from your taxes.
So, if you have a large number there and you end up owing a lot of money,
that`s going to be a problem. You might want to lower those exemptions,
and vice versa.
HERERA: The state and local tax deduction that was eliminated has hit a
lot of high-tax states like New York, New Jersey, Connecticut, but it
hasn`t hit all. How significant do you think that`s going to be as it
plays out in this tax year?
BONEPARTH: I think it`s a big part of the itemized deductions story, OK?
So, for those who have been itemizing and itemizing well and above what
that standard deduction is, that`s going to hit. That`s going to hit,
especially in California, New York, New Jersey to your point.
So I think that`s a big piece of the standard versus itemized story. You
saw some interesting statistics up there regarding that. That`s what I
have my eye on and there`s a number of other things that go into itemizing
that were affected and that`s really where I think a lot of people
truthfully are going to see that they owe a little bit more tax than they
were accustomed to in the year before.
GRIFFETH: And if people are not itemizing as much as they did in the past,
what do you think that does to charitable deductions?
BONEPARTH: So, I think it`s going to have an impact across the board,
especially when it comes to charitable deductions. However, I always say
that if you`re going to give, give because you want to, not because you
want a tax deduction. So have that come from the heart, not the pocket.
HERERA: It sounds like we all have to be very organized this year.
BONEPARTH: That`s the number one tip we can provide is don`t react, be
proactive. Get help if you need it. Get organized.
GRIFFETH: And don`t be too upset if your refund isn`t as big as last year.
BONEPARTH: Yes, zero is the ticket, right?
GRIFFETH: Thanks, Doug. Good to see you. Doug Boneparth with Bone Fide
Wealth joining us tonight.
HERERA: And speaking of expenses, still ahead, a different way to pay for
(BEGIN VIDEO CLIP)
SCOTT COHN, NIGHTLY BUSINESS REPORT CORRESPONDENT: America`s total student
loan debt is $1.6 trillion and rising. The average graduate coming out of
school with upwards of $30,000 in debt.
I`m Scott Cohn. We`ll take you to one school that may have at least part
of the answer to this crisis coming up on NIGHTLY BUSINESS REPORT.
(END VIDEO CLIP)
GRIFFETH: That was the time of year when high school seniors find out
whether they have been accepted to the school of their choice, and if that
isn`t stressful enough, so is figuring out how to pay for it.
With America`s student loan debt soaring, some new alternatives are
Scott Cohn is in West Lafayette, Indiana.
SCOTT COHN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Savannah Williams is an
education major in her third year at Purdue University. She knew going in
the math was not on her side.
SAVANNAH WILLIAMS, PURDUE UNIVERSITY STUDENT: I`m going to be a teacher,
and I won`t make a whole lot of income in the future.
COHN: How to pay for her education without drowning in debt. Purdue
offered an alternative. Instead of taking out loans, Savannah will pay a
percentage of her income for 10 years after she graduates.
WILLIAMS: If I would have gone with a traditional loan, I would have had
to pay it all off, you know, who knows how long that would have taken.
COHN: It`s called an income sharing agreement, the latest attempt to
tackle America`s college debt crisis.
That crisis is massive, a $1.6 trillion drag on the economy, affecting
people`s ability to buy a home, buy a car, start a family for years after
graduation. Purdue`s president says the program, now in its third year,
shifts the risk away from the student.
MITCH DANIELS, PURDUE UNIVERSITY PRESIDENT: It gives them a certainty and
some protection and safety. They`re not going to have that much money
borrowed piling up compound interest, whether they`re doing well or not.
COHN: If the graduate doesn`t work, she doesn`t pay. If she does really
well, her total payments are capped. 2017 graduate Charlotte Herbert, who
got a job as a technical writer making about $32,000 a year, financed her
senior year with the program.
CHARLOTTE HERBERT, PURDUE UNIVERSITY GRADUATE: I think it`s a good balance
between you have to pay for school and keeping people from decades and
decades of unmanageable debt.
COHN: Purdue says it`s the first four-year college to offer income
sharing, but the concept is taking off elsewhere in higher education as
In San Francisco, Austen Allred co-founded the Lambda School which teaches
computer coding. Free up front in exchange for 17 percent of your income
for two years if you make $50,000 a year.
AUSTEN ALLRED, LAMBDA SCHOOL CEO & FOUNDER: If your job as a school is
effectively promising a job, it doesn`t make sense that a student pays you
a bunch of money and it doesn`t work out on the other side. Schools don`t
want to do that for obvious reasons.
COHN: It`s too soon to tell if income sharing will be the way everyone
pays for college in the future. The programs are unregulated so far and
they still leave graduates with an obligation not that much different from
student loans. But this is one way some schools are trying to bend the
curve of the price of admission.
For NIGHTLY BUSINESS REPORT, I`m Scott Cohn in West Lafayette, Indiana.
HERERA: And now to a story that really caught our attention. Did you ever
can actually access it? Well, if you`re like most Americans, you probably
just click yes without ever reading it. And what you don`t read may
Andrea Day explains.
ANDREA DAY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Imagine your toothbrush
spying on you, your coffee shop blabbing about what you search online, even
your mattress listening in while you`re in bed.
MICHAEL KASDAN, WIGGIN AND DANA PARTNER: I think it falls into the
category of creepy.
DAY: Your personal info could be scooped up by a company, even handed out
to others, and you might not have a clue.
BRIAN VECCI, VARONIS FIELD CHIEF TECHNLOGY OFFICER: Consumers need to
behave in a really paranoid way, where you assume that any company that can
is probably going to collect information about you.
even read them and just click “accept” when you download or sign up.
KASDAN: These aren`t negotiated agreements.
DAY: We sat down with three pros to find out what`s really going on behind
the policies. Privacy attorney Michael Kasdan, cybersecurity pro Brian
Vecci, and cyber specialist, Attorney Alex Urbelis.
How long does it take for you to digest an average policy?
ALEX URBELIS, BLACKSTONE LAW GROUP PARTNER: Hours, at least. Hours.
DAY: Hours and hours to read, and he`s an attorney.
VECCI: I don`t know if it`s actually possible for somebody without a law
degree. They`re by lawyers for lawyers to protect the company.
DAY: A company that`s hungry for your private information.
When you look at some of the data that these corporations are collecting,
what do you think?
URBELIS: Why? We don`t know what`s happening there. What we do know is
that they find this very, very valuable.
DAY: We asked all three pros what policies they think raise some flags.
For Urbelis, it`s Philip Sonicare`s Bluetooth toothbrush. It connects to
an app to reveal brushing habits.
In the policy, the personal data we collect may include your first name,
username, profile picture, email address, gender, birthday, age, country,
language and password. And Philips may also work with third parties who
process your personal data for their own purposes.
URBELIS: But it`s up to you to find those other privacy policies that
relate to these third parties and figure out what they`re doing with your
DAY: Philips tells us they take data protection very seriously. The
privacy notice is aimed at transparency on this point, as it describes in
detail which data will be received by Philips, and Philips will only share
their data with these independent third parties at the user`s request.
According to Kasdan, Starbucks (NASDAQ:SBUX) collects loads of info that
has nothing to do with serving coffee. The policy, the web pages you view,
including the date and time, and the subject of the ads you click or scroll
over. Kasdan says Starbucks (NASDAQ:SBUX) then allows third parties to
access that info.
The policy: We have added certain features to our websites and mobile
applications that allow social networks such as Facebook (NASDAQ:FB),
Twitter, to track the activities of their members.
Can you be 100 percent sure about everything that`s been collected in most
of these policies?
KASDAN: Not necessarily. I think that`s — that that`s not an accident.
DAY: Starbucks (NASDAQ:SBUX) tells us the privacy of our customers is
incredibly important to us, and we regularly evaluate all policies to make
sure we`re protecting their best interests. We strive to be transparent.
We do not sell information to advertising companies. You`ll also note that
the terms of our policy provide customers options for choosing to share
information with us.
Vecci flags the policy for Sleep Number`s mattress. Last November, it was
found to have permission to record audio while you sleep. The policy once
said: We also may collect personal information, which may include audio in
your room, to detect snoring and similar sleep conditions.
told right up front.
DAY: According to Sleep Number, Sleep Number`s products do not record
So what can you do? The pros say read the policy before you click.
URBELIS: It is important to read because it does tell you what could be
done with your data.
DAY: And while it may seem crazy to read something the pros say even they
struggle with and that can change on a whim, the hope is if enough people
look, anything dubious will come to light.
For NIGHTLY BUSINESS REPORT, I`m Andrea Day.
GRIFFETH: Coming up, spring training is under way, and tonight you`ll meet
an entrepreneur who turned his passion for baseball into a thriving
GRIFFETH: Well, it may still be winter, but spring training is already
under way for Major League Baseball players. For hundreds of teams in the
vintage baseball association who honor the game as it was played in the
mid-19th century. That means finding vintage bats and that`s been no easy
That is until a woodworker from outside Columbus, Ohio, founded a company
that makes bats, not just for the vintage players, but also for the pros.
GRIFFETH: Few appreciate the crack of the bat like Charley Trudeau. A
woodworker by trade, he joined the Ohio Village Muffins Vintage team in the
early 1990s. But their vintage bats literally cracked far too often.
CHARLEY “LEFTY” TRUDEAU, PHOENIX BATS FOUNDER: They shouldn`t have been
breaking at all. I mean, it`s not like we are facing 90 miles an hour
GRIFFETH: The bats weren`t made to be used, they were souvenirs. So
teammates asked Trudeau if he could do better.
TRUDEAU: Some of the old bats were just enormous.
GRIFFETH: He studied pictures of the longer, heavier and thicker bats from
the mid-19th century.
TRUDEAU: The heavier the bat, they thought that was the better because the
more mass you had, the harder you can hit the ball.
GRIFFETH: The wavy grains that add character to furniture can actually
weaken a baseball bat. Straighter grains, they make a better bat. His
teammates were impressed.
TRUDEAU: Guys started going, hey, can you make me one? I want my own.
And it just kind of grew somewhat organically.
GRIFFETH: Other vintage teams began buying Trudeau`s bats. And Phoenix
Bats named for bringing back the vintage bat, became his full-time job.
The buzz reached Minor League pros in the Columbus area. So, he made them
modern bats. More weight in the barrel with thinner handles to improve bat
speed and power.
TRUDEAU: You want to get it through the strike zone fast and hard.
GRIFFETH: Naturally, he began to dream.
TRUDEAU: I was like, wouldn`t this be cool if we could have bats in the
GRIFFETH: Those Minor Leaguers then began reaching the majors in 2003.
And all the while, Trudeau was upping his game.
TRUDEAU: Even those guys in rookie ball, they`re different than everybody
else. Change is as small as like a fraction of a millimeter off of the
handle, they can feel it.
GRIFFETH: Trudeau stuck with the white ash to make the early bats but
became an early adopter of the harder maple and then birch which is in
TRUDEAU: Ash. Birch. Maple.
GRIFFETH: Phoenix customers have included Miguel Cabrera, the Triple Crown
winner, and Ohio native Adam Eaton (NYSE:ETN).
By 2003, one of Trudeau`s teammates Joel Armbruster became Phoenix employee
JOEL ARMBRUSTER, PHOENIX BATS CEO AND PRESIDENT: I told Charley, I regret
it every day.
GRIFFETH: A year later, they went to Italy to buy a computer-driven lathe.
It costs more than $200,000. It can cut and sand a bat every two minutes.
ARMBRUSTER: There`s the finished product.
GRIFFETH: Phoenix makes about 20,000 bats a year, mostly priced between
$50 and $150 each. Pros account for about 20 percent of the business, the
made to order business with custom shapes and colors.
ARMBRUSTER: We want to be that high-end boutique bat company all about
quality, customer service.
GRIFFETH: But Trudeau is really more about bats.
TRUDEAU: Probably my downside was that I wasn`t ever focused in on the
business and the sales.
GRIFFETH: About six years ago, Trudeau left Armbruster in charge and
happily went back to restoring houses, satisfied that his swings are indeed
bringing some vintage joy to Mudville.
TRUDEAU: I was always and always — probably always will be a production
UNIDENTIFIED MALE: You just witnessed the great game of baseball.
GRIFFETH: While Phoenix doesn`t pay the pros, by the way, to use their
bats, though it has been known to give them a discount. Now, everyone has
heard of Louisville Slugger, of course, which was sold for more than $700
million a few years ago but Armbruster believes that Phoenix bats with 10
full time employees now ranks among the top ten bat makers right now.
And again, you know, we`re heading into baseball season. There`s a lot of
hope out there. It was fun to watch some of those players using those mid-
19th century vintage bats and wearing the vintage outfits as well.
HERERA: That`s a great story. Hope you enjoyed it like we did.
That does it for this special edition of NIGHTLY BUSINESS REPORT. I`m Sue
Herera. Thank you for watching.
GRIFFETH: And I`m Bill Griffeth. Have a great evening, everybody. We`ll
see you again tomorrow.