Transcripts For KQED Nightly Business Report 20171202 : vima

Making. Republican Senate Leaders say they have the votes now to pass their massive tax cut bill. The day was spent deal making to convince uncommitment lawmakers to support the measure. It appears enough have fallen into line to pass historic legislation that will affect virtually every household and business in america. That prospect, and the likelihood of sharply lower tax rates especially on businesses, pleased investors, and they watched as stocks mostly recovered from sharp intraday losses. Ylan mui covers the story for us tonight from capitol hill. Ylan, whats the latest . Reporter tyler, it looks like republicans have the votes to pass their tax bill through the senate 5149. The only republican holdout appears to be senator bob corker of tennessee. He said that hes disappointed, this is a very tough vote for him, but at the end of the day, he could not cast aside his fiscal concerns over how this bill might impact the national debt. Now, gop leadership has had to make several concessions to win over the other members of their caucus. Those include increasing the deduction for passthrough businesses from 17. 4 to 23 . They also restored the property Tax Deduction up to 10,000. Those concessions, however, do come with tradeoffs as well. And one of those is that theyre going to be keeping the alternative minimum tax for both individuals and corporations. I spoke to republican senator james lankford, and he said this is all part of there was really a tradeoff, you have to be able to get to lower rates to be able to make sure youre revenue neutral. No one wants to be revenue negative. We have to to be able to compensate for bringing down the rates. Reporter a final vote on this tax bill is still expected to come tonight. Assuming it passes, republicans will be on track to get this bill to the president s desk by christmas, tyler. Ylan mui, thanks, ylan, on capitol hill tonight. The great tax debate wasnt the only thing investors watched and reacted to out of washington today. Former National Security adviser Michael Flynn pleaded guilty to charges he lied to federal investigators. And as first reported by abc news, was expected to testify that President Trump and transition officials directed him to make contact with the russians on a variety of matters. Eamon javers is at the white house tonight. Reporter dramatic scenes at the federal courthouse in washington, d. C. Today as Michael Flynn, former National Security adviser to President Trump, appeared to plead guilty to a single count of lying to the fbi. A bit of a media scrum on the scene there. Heres what we know about the case today. In a development that moved the stock market, flynn pled guilty to lying with the fbi about talks with the Russian Ambassador before president took office. Remember, there was t period after the election but before the inauguration. Prosecutors say he spoke with russian officials on instruction from the trump transition team, including jared kushner. The president s lawyer says this guilty plea doesnt implicate anyone other than flynn himself, and that the false statements mirrored the false statements which resulted in his resignation. Vice president of fired for the united states. The significant developme here is that mike flynn is cooperating with the special counsels office. That could be ominous news for the white house. Its not clear what information flynn may have that could be of value to robert mueller. That cooperation could go on for some time. Eamon javers at the white house for nightly business repor late today, additional reports that former deputy National Security adviser k. T. Mcfarland spoke to Michael Flynn about his contacts with russian officials. Those two events out of washington created a tugofwar on walking street today big time, resulting in a turbulent day for investors. When all was said and done, the dow jones industri d 40 points to 24,231 after being down more than 300 points midday. The nasdaq ended off 26. The s p 500 fell five. Bob pisani was in the middle of the wild action at the new york stock exchange. Reporter talk about a turbulent day for the markets. We havent seen this in quite a while. The markets have been fix a lotted on global growth, record earnings, and the prospects for tax cuts. Traders have spent almost no time thinking about the risk in the market for President Trumps potential legal troubles. We dropped 350 points today when abc reported that mike flynn was prepared to testify against President Trump and that trump directed him to contact the russians. Originally reports said it had been about the fight with isis. The dow plummeted 300 points on reports that a memo from former fbi director james comey surfaced, saying trump asked him to stop the investigation into Michael Flynn. Stocks sold off and rose again when senator jeff flake announced he was supporting the tax bill and Mitch Mcconnell said he had enough votes to pass the bill. The bottom line, the markets are in a tugofwar between tax cuts and President Trumps potential legal troubles. But tax cuts have proven today that they still have a lot of juice in them. For nightly business repor im bob pisani at the new york stock exchange. So how might todays developments in washington continue to impact markets . Here to discuss that with us is ed mills, washington policy analyst at raymond james, and mike jones, chairman of riverfront investment group. Ed, does bob have it right that for today at least and probably going forward, taxe absolutely. I think what a lot of folks are looking at is that the fight over tax reform is very much influenced by a political crisis that Congressional Republicans are facing, that they dont have any accomplishments yet to truly run on in the election next year. So what a lot of republicans are looking at on the hill is that anything that adds to that political trouble adds to the pressure to get tax reform done. So todays news on Michael Flynn in a way actually adds to the likelihood we get a tax bill. Mike, let me turn to the assumption now that this tax bill, i call it a tax cut, not tax reform, i dont see much in here that simplifies anything, but thats just me, maybe. If it passes the senate, there is still the matter of reconciling their bill with the house. This senate bill is very different in certain key particulars from the house bill. How tough is that r well, i think that one of the biggest obstacles to the reconciliation was actually solved today. Because i think that 10,000 in deductibility of state property taxes, if that was not in the senate bill, that would be a very difficult pill for republicans from blue states with high taxes, that would be a very difficult pill for them to swallow, because essentially they wou be saying to their middle class voters that your taxes are going to be going up, not down, in our tax reform. So i think by putting in that 10,000 deductibility for property taxes, the senate has really smoothed the path for getting a reconciliation done. So back to you, if i might, ed, on the question of where this tax cut is most important. It seems to me that it is much less material for individuals than it will be for corporations and businesses. Absolutely. I think what youre looking at here is that there is a lot of controversy about individual provisions on the individual side of the code. I view that as a lot of lobby bait, attracting all of the attention, all of the fight. Weve almost seen no fight whatsoever on the corporate side of this code. And moving the statutory rate from 35 to 20 without a lot of reforms, thats a significant change that almost gets no debate. And so kind of to the extent that congressional leaders can keep that debate quiet and have all of the fight on the personal side of the code, they keep the eye on the prize, getting this tax bill done, especially the corporate side of the bill. Mike jones, lets turn back to the matter of Michael Flynn and his guilty plea today. The indication that he is he cooperatg now with special counsel mueller. How big or potentially catalyzing or maybe even paralyzing a problem do you see this as being, and what do you see as the market impact, if any . Well, i think the market got it pretty well right. After the initial panic and the selloff, essentially the market decided to sort of just toss it out. And i think the reason for that is threefold. First of all, we do not know that flynn is going to testify against the president. That is a rumor that has not yet been confirmed. Second of all, trumps core supporters are never going to believe flynn when he says i was lying then but im telling the truth now against the president. They will stick by the president. Weve seen that over and over again. And the key to surviving scandal historically has always been a core set of supporters that never abandon you. Thats how clinton survived his scandals. Thats how trump s the hollywood access tape. Thats what would allow him to ride through this as well. Final thought, ed. Weve got another big event this week, that is a vote on a budget matter that could not lead to a government shutdown, debt ceiling, and more. Where are you on that . We dont shut down. I think we have a short Term Extension th give us to right before christmas. The house and senate try to get this bill conferenced and ready and the whole package is a Christmas Present for the republican party. Thank you very much, gentlemen. Still ahead, shifting gears, americans went shopping over the thanksgivingay Manufacturing Activity expanded last month on an increase in production and rising orders. Steady consumer spending, improving overseas markets, helped lift the industry. A report also showed that factory inventories shrank at the fastest pace in a year. Americas appetite for new cars and trucks remains strong. In fact november sales came in at a robust clip, thanks to strong sales over thanksgiving. But as phil lebeau reports, early estimates for 2018 suggest that auto sales may slow dow reporter black friday was lined with green for automakers, as buyers took advantage of greater incentives. As a result, november sales were relatively strong, despite results that were mixed. Ford did better than expected with sales up more than 6 , while business for gm and Fiat Chrysler was down slightly. Trucks and suvs are in demand. Ford had its best november sales of the f series pickup since 2001. While the average price consumers paid for a new gm model hit an alltime high of 37,000. Overall, 2017 is on track to be one of the five best years ever for the auto industry. On pace for a Third Straight year with sales topping 17 million vehicles. But the head of the National Auto Dealers Association says sales will cool off next year. Were expecting over 17. 1 million car sales this year in 17. And for 18, were expecting about 16. 7 million. So its still a great robust market for automobile dealers as well as for the consumer. Reporter for buyers, the best news is that yearend deals will be fairly rich. And with Consumer Confidence at its highest level in years, even those who dont buy a new car or truck this month are likely to continue looking as we head into the new year. Phil lebeau, nightly business chicago. Profits disappointed at clothing retailer genesco. The company said weaker demand for nflthemed merchandise pressured sales at its Sports Apparel store lids. Despite revenue and samestore sales that edged past estimates, genesco is cutting Earnings Guidance for the full year. Shares fell 18 to 25. 55. The discount retailer big lots said stronger demand for furniture helped the Company Report better than expected profits. The company also raised its earnings guida q and the full year but samestore sales came up short, causing big lots shares to slip a percent to 58. 21. Disney suing red box for copyright infringement, alleging the company is selling codes that let users download digital copies of disney movies. Privately run red box began offering the feature last month. Red box doesnt have a Distribution Agreement with disney. Disney shares up fractionally at 105. 25. Holiday shoppi off to a robust start. The retailer said it would hire an additional 7,000 workers to keep up with foot traffic. Macys initially said it would hire 80,000 employees for the period, down from last years 83,000. Macys shares up more than 1. 5 at 24. 19. This weeks market monitor has three picks durable in the face of changing tax policies. Cisco up 21 , you like that. Johnson johnson, 17 . Northrop grumman, 22 higher. Eddie kapran, welcome back, nice performance there. Lets talk about broadly about what we expect tonight is going to be a tax reform bill passed by a tax cut bill passed by the senate. Lets say it happens. How much are lower Corporate Tax rates going to boost american corporate profits. I think in a big way. But i think the more important question is who is it going to benefit more. What weve seen is the dow jones industris have done much better than the more techheavy nasdaq. That has everything to do with who benefits. Industrials tend to have capital expensing costs, they tend to tax rates. Raditional Business Tech Companies Pay lower taxes, tax reform doesnt give them a boost, it might actually hurt. Smaller companies, it might help them as well. Thats right. Interesting picks. Weve got a beer, a Package Delivery company and a gas company or oil company. Lets start with the beer company first. Sure. So the company im recommending is molson coors, an interesting one. Beverages itself is a hard industry. Why metabol coors . Its merging and pivoting towards more niche beer brands. Blue moon, for example, is one of their brands thats growing as opposed to stagnating. I like that one, its actually a good one. It is a good one. If you want beer, you have to have it delivered. Fedex. Thats right. Fedex describes itself as an Ecommerce Company on steroids. Thats really what they are. They benefit from a lot of the trends in consumer shopping, which is we want to have it delivered to our door, we dont want to go to the store anymore. They can do it profitably. Amazon doesnt make money off of delivering packages to your door. Fedex does. Thats an important difference and makes people bullish on them. If you hav lots of trucks and planes, you need fuel to run them. I like european oil giants better than american ones. Why . You dont have to worry about what tax reform does. Tax reform could be good, it coul bad. The other reason is theyre cheaper. After a number of difficult years in europe and abroad generally, theyve gotten materially cheaper than the chevrons of the world. Andy, continued good luck to you. Coming up, are Business School students choosing bitcoin . Heres a look at what to watch next week. On tuesday we find out if the trade deficit continued to widen last month. Any bets on that . On friday, investors will focus on the nov reports. And also friday we get new data on how consumers feel about their Financial Health and the economy. That is what to watch next week. Regulators will allow the Worlds Largest Futures Exchange to list Bitcoin Futures contracts. The cme and the cboe will become the first traditional regulated exchanges where bitcoin related financial contracts can trade. That could open the door to added regulation. But some say it could also lead to more mainstream adoption of the controversial crypto currency. Graduate students at some of the countrys most wellknown Business Schools also have a growing interest in bitcoin. And its impacting their career decisions, steering them away in some cases from traditional wall street. Seema mody is at the wharton sc. Reporter a growing number of students are saying no to traditional finance roles and are increasingly looking to blockchain and crypto currencies for opportunity. Quite a large number of students in the class who ive seen come from private equity, hedge fund, consulting, those traditional backgrounds, and have foregone the chance to go back to that traditional path and instead are looking at how best to immerse themselves in the blockchain and crypto currency world. Reporter earlier this year, stanford mba student robbie michnick along with other classmates wrote a letter to stanford faculty requesting a class to be taught on blockchain. Stanford was quick to respond. The first class will be taught in the spring of 2018. A similar story is playing out across the country at harvard Business School. Finance, entrepreneurship, strategy, technology operations, all thinking about, you know, how do we think about the blockchain and the set of questions it raises in our disciplines and the demand from the students i think surpasses that. Reporter as students prepare to enter the corporate world, data shows that employers interest in blockchain experience is rising. Global freelancing firm upworks says blockchain was the second Fastest Growing skill in the Third Quarter out of 5,000 skills on the platform. In fact upworks saw a 26 jump in billings related to blockchain compared to this time last year. As demand grows, students are launching blockchain clubs to learn, collaborate, and connect with like minded individuals. Students are now approaching the critical recruiting season which kicks off in early january. It will serve as a real world indicator as