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ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Sue Herera.
TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Fragile union. How today`s terror attacks in Brussels threaten the European Union and the global economy.
SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Airports on alert. What our government is doing to keep key transportation hub here safe.
MATHISEN: And thanks anyway. The FBI may have found a way into the iPhone used by one of the San Bernardino terrorist, halting for now its months- long fight with Apple (NASDAQ:AAPL).
All that and more tonight on NIGHTLY BUSINESS REPORT for Tuesday, March 22nd.
HERERA: Good evening, everyone, and welcome.
Brussels, Belgium, it`s the de facto capital of the European Union. It is where NATO is headquartered, it is where companies like Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) and Google`s parent company Alphabet are increasing their presence.
And today, it`s where explosions hit. The Islamic State claimed responsibility for the bombings at the country`s main airport and a subway station that killed more than 30 and resulted in scores of injuries. This is the fourth attack in Europe in four months. Security had been heightened across the continent. Travels and transportation, a key pillar of modern economies, disrupted.
And all of this comes as the European economy struggles to recover and continues to feel the pressure caused by the migrant crisis.
Hadley Gamble joins us now from Brussels.
Good evening, Hadley. What`s the latest?
HADLEY GAMBLE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Good evening, Sue. So, right now, Brussels is a city that is subdued. It`s a city that is questioning the leadership not just in Brussels itself but also, of course, Belgium and the European Union.
Basically, what we saw earlier today was some serious, coordinated attacks. We understand that right now, Belgium police are searching for a man they believe are connected with the attack. It left as many as 30 people dead and hundreds wounded.
Earlier today, of course, we understand that he was caught, his image was caught on CCTV just moments before the first two explosions at Brussels International Airport. And the Belgium police are asking for anyone to come forward with his whereabouts and possible identity.
And, of course, right now, behind me as you can see, we`re just steps away from the Maalbeek metro station, the area where the third explosion took place later in the morning and that area is still cordoned off. It`s just down the street from the center of European politics, the European parliament and European council buildings, with the ministers go to meetings every single day. So, this is really striking at the very heart of Europe.
MATHISEN: Hadley, are raids ongoing so far as you can tell and I gather there are some complications having to do with Belgium law about whether or not raids can be prosecuted after certain hours of the day.
GAMBLE: That`s right, Tyler. As you can see behind me, this is a city that`s almost asleep as well as being subdued. You have to remember, of course, that this is Europe. This is a place where hours are strictly adhered to and also jurisdictions as well. So, these we know the raids are ongoing. Whether or not they prosecution will follow and it`s a bigger question.
Of course, the other question for the Belgian prime minister. Many people being critical asking what`s happening next. He`s come out with some strong statements. He tweeted this country that`s going to defend its values, that they`re not going to be subject to these barbaric attacks.
But at the same point, many people now are questioning whether or not the leadership here at the heart of Europe is really ready to take this threat on.
HERERA: Now, Hadley, I know that in the late afternoon, one of those raids produced yet another explosive device and some chemicals, leading some to speculate that perhaps other incidents were planned. Do we have any clarity on that yet?
GAMBLE: There hasn`t been much clarity on that so far, Sue. But we do understand, of course, that this is not on something that was beyond the pail. Belgium officials even over the weekend, after they were able to secure the third brother, they were involved in the Paris attacks. They said the Belgian prime minister himself saying that another attack was probable. I think that this just really does speak to the level of insecurity services not just here in Belgium but also across Europe and the United States that really don`t know what`s going to happen next.
MATHISEN: Hadley, let me ask you a little bit about the fact that in Brussels and in Belgium there`s lots of different jurisdictions and there has been some criticism about how well or not well they communicate on police operations and share intelligence. What can you tell us?
GAMBLE: That`s correct. You have to remember, of course, this is a country that as we say is at the heart of the European Union. And as such, this is a country that speak several different languages. They`re speaking English. They`re speaking French. They`re speaking Flemish.
And, of course, many of the folks that they`re trying to infiltrate their cells, especially those that they believe have ties to the Islamic State. They`re speaking Arabic. So, not only do you have different jurisdictions but you also have so many different languages, barriers to communication and certainly to intelligence sharing as well.
HERERA: All right. Hadley, thank you so much. Hadley Gamble for us live in Brussels.
Ty?
MATHISEN: Today`s terror attacks reverberated across Europe and shook the foundations of the European Union. The assaults came just weeks ahead of a vote in Britain on whether the U.K. will remain in the E.U.
Here to discuss the stakes and the global impacts of today`s violence is David Malpass, president and founder of his own economic research firm Encima Global.
David, always great to see you.
I want to make distinctions between the E.U. on the one hand, and the currency, the common currency, the euro on the other. Let`s talk about the European Union. Does this weaken or temporarily strengthen the European Union?
DAVID MALPASS, ENCIMA GLOBAL PRESIDENT: Hi. Well, it`s a tragedy. I think at first people pull together and try to make some sense out of it and make some direction out of it. But that overtime, the country are being forced more and more to look out for themselves. You know, they have to act in their own self-interest.
So, I think this is part of the European Union`s decline. Not necessarily the euro`s but the European Union. It`s a trade union where they`re supposed to have open borders and allow investment and trade to flow among them. And that becomes very difficult in this kind of situation.
HERERA: So, David, does it heighten the odd that the June vote in Britain about whether to stay part of the union or not sides with those who want to exit the E.U.?
MALPASS: I think it makes it hard to win that vote to stay in the European Union. So, Britain is going to vote yes or no, and the problem is this kind of attack focuses the British opinion on the risk of Brussels, the expense of Brussels. You know, the U.K. has been subsidizing to an extent the European Union, and it also focuses on the bureaucratic nature of Europe.
That previous report discussed how hard it is for Europe to operate among itself. If you`re sitting in Britain, you say we`d be better off without that. I`m worried that that`s what`s going to happen.
MATHISEN: Are these attacks as you sit and look at them, an attack on the European Union per se? In other words, the people who claim responsibility for this say this attack was in retribution for Belgium`s support of and participation in raids that targeted ISIS in the Middle East in Syria and so forth. France the same thing. Attack us, we`re going to attack you. Stay out, and we won`t bother you -- as would be the case in countries that have not participated in that.
MALPASS: Well, I think that`s the hope of radical Islam. That`s one of the war techniques to scare the opponent into inaction, and so, certainly they`re hope in Europe is the countries will freeze and respond that way. You know, Europe is in a weak position for this because they haven`t had much of a defense budget. And they also don`t have unity on what to do about the refugee inflow.
This is a giant human catastrophe of the flow of refugees that want to come in to Europe and the expense of it. So, Europe has got multiple problems to deal with. What`s the right thing to do and how do you pay for it?
HERERA: And, quickly, David, what about doing business in Europe. This is the fourth attack in four months. They were not small attacks, by any means. Does it deter U.S. companies or other companies from around the world from doing business in Europe? What`s the economic global impact?
MALPASS: It does deter. You know, world growth has been so weak that you may not notice the deterioration. So, the bigger issue is in the long run, over the next 10, 20 years, there won`t be enough investment. And I`m worried at some point, the euro itself might come under attack, which would be a catastrophe for the world if it began breaking up.
MATHISEN: You just answered my last question, which is going to be quick on the Europe. So, you think it puts pressure on it. Very quickly, do you think it will ultimately survive or not?
MALPASS: You know, it depends on leadership. They`ve got to make a choice of how to defend it. The reason it`s so dangerous is debt is denominated in euro. If you begin to devalue, then the whole thing unravels. I think it they`re protected as long as they can, the euro.
MATHISEN: That kind of unraveling will be a real mess, as you point out.
David Malpass with Encima Global, thanks.
MALPASS: Thank you both.
HERERA: President Obama condemned the bombings in Brussels. Speaking in Cuba, the president urged international unity in the fight against terror.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The thoughts and the prayers of the American people are with the people of Belgium, we stand in solidarity with them in condemning these outrageous attacks against innocent people.
We will do whatever is necessary to support our friend and ally Belgium in bringing to justice those who are responsible.
(END VIDEO CLIP)
HERERA: President Obama called the Belgium prime minister to offer his condolences and support, saying the U.S. would stand alongside the E.U. and NATO in defeating terrorism.
MATHISEN: On Wall Street, the trading action today was muted, shaking off somewhat the news out of Brussels. Stocks opened slightly lower and climbed to break even midday. And they ended mix.
At the close, the Dow Jones Industrials fell 41 to 17,582, snapping its seven day advance. The NASDAQ was up 12. The S&P 500 down nearly two.
Investors did buy up safe haven assets such as gold, which saw prices rise in the wake of those terror attacks. And today, one group of stocks garnered particular interest.
Bob Pisani reports from the floor of the New York Stock Exchange.
(BEGIN VIDEOTAPE)
BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: The attacks in Belgium have again focused attention on airlines and travel stock. Airlines stocks in Europe and U.S. were down roughly 2 percent as were cruise lines like Royal Caribbean and travel sites like Priceline.
But the truth is that so far, terror attacks have had only a limited short term effect on the global equity markets. Stocks tend to dip and rise a few days later. Some stocks like the company that runs the Paris airport took a bit longer to recover, but overall, even airline stocks quickly went back to performing roughly inline with the overall market.
Now, airline and travel stocks did underperform in January and February but they underperformed because of concerns about a recession slowing down travel, not on terrorist concerns.
For NIGHTLY BUSINESS REPORT, I`m Bob Pisani, at the New York Stock Exchange.
(END VIDEOTAPE)
HERERA: A flight from Brussels that took off just minutes before the attack inside the airport landed safely in Orlando. According to local news reports, there was no announcement on the flight about the attacks and the passengers did not have Wi-Fi. They were told of the bombing when a caravan of law enforcement officials met them on the tarmac.
The Orlando airport wasn`t the only one to increase security measures. Airports across the country were on heightened alert.
Mary Thompson reports tonight from Newark International Airport in Newark, New Jersey.
(BEGIN VIDEOTAPE)
MARY THOMPSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: In an all-too familiar pattern, terror strikes abroad and in U.S. cities like New York, officials prep for the worst.
MAYOR BILL DE BLASIO (D), NEW YORK: Expect to see extraordinary NYPD presence out over the coming days as a sign of our readiness to protect people at all times.
THOMPSON: At Newark Liberty Airport, stepped up security very visible following the attacks in Brussels. The travelers showed little concern about a similar attack at home.
UNIDENTIFIED MALE: I thought there might be more delays in security, but I feel pretty safe.
UNIDENTIFIED FEMALE: I`m a seasoned traveler. So, you have to do what you have to do, yes. So, I`ll be OK.
THOMPSON: United Airlines and Delta rerouting flights to Belgium, where FlightAware says 400 of them in and out of the Brussels airport were cancelled Tuesday. Travelers saying while the attacks won`t impact their domestic travel plan, they would if they were traveling abroad.
UNIDENTIFIED FEMALE: I wouldn`t want to put myself in that position too soon.
UNIDENTIFIED MALE: I wouldn`t go to countries that are apparently having problems.
THOMPSON: For travelers in trouble, American Airlines offering refunds if their planes were impacted. Meanwhile, hotel operator Marriott offering to waive cancellation fees for their four properties in Brussels.
Businesses and travelers becoming too familiar with making quick adjustments to terrible circumstances.
At Newark Liberty Airport in Newark, New Jersey, I`m Mary Thompson for NIGHTLY BUSINESS REPORT.
(END VIDEOTAPE)
MATHISEN: Following today`s attacks, a number of U.S. wireless carriers waived their fees for calls and texts to and from Belgium. AT&T (NYSE:T), Verizon (NYSE:VZ), T-Mobile, Sprint all offering free service for those trying to communicate with friends and family in that country. Separately, Facebook (NASDAQ:FB) activated the safety check for users located in Brussels. The safety check automatically sends your status to friends in the form of a notification that you are safe.
HERERA: A court hearing between apple and FBI wads cancel today after the government revealed that a third party hacker may be unable to unlock the encrypted iPhone used by one of the terrorists in the San Bernardino terror attack, which could also ultimately eliminate Apple (NASDAQ:AAPL) from creating a backdoor entry.
Are we relieved or not that the government has found another way?
Joining us to talk about that and get his take is Paul Viollis, CEO of his own security firm, Viollis International.
Paul, welcome. Nice to have you here.
PAUL VIOLLIS, VIOLLIS INTERNATIONAL CEO: Thank you, Sue. Thanks.
HERERA: If this is indeed the case, if there`s a third party, what`s your reaction to that development?
VIOLLIS: Well, I have to tell you, Sue, if in fact this is correct, and they have found someone that can help them unlock the key to get intelligence out of that phone, then, you know, I`m delighted about that. I think that`s fantastic.
MATHISEN: Why?
VIOLLIS: Well, because we need the information, Tyler. At the end of the day, this is not -- this is why this is such a unique situation, because this is not an example of the FBI looking to have an intelligence gathering exercise. This is part of a criminal investigation post a terrorist attack with 14 people killed on American soil.
So, in order for us to get information from this phone, if it`s a third party, whoever it is, it`s critical for us to have that information so we know who was involved in the attack and also if other attacks were being planned.
HERERA: Does the incident today in Brussels and the arrest on Friday of one of the terror suspects in Paris, who reportedly used encrypted messages to communicate with a cell, does it strengthen the argument that Silicon Valley needs to cooperate more with law enforcement authorities?
VIOLLIS: It really does. But also, I think we have to be prudent here, you know? This isn`t a full court press against Apple (NASDAQ:AAPL) or against, you know, corporate America, because we live in a capitalistic society, we expect people to be able to be able to do well and to profit. But there has to a level of measurement and balance.
And part of the problem here, when we talk about encryption is, yes, we want people to feel that their communications are safe and private. But by the same token, we have to lay that line in the sand, Sue, so that we clearly understand that in cases like this, levels of encryption are fine on the privacy side, but nothing will ever supersede us keeping people at home, end of story.
MATHISEN: Let`s say, Paul, that the Justice Department succeeds breaking into this phone or developing some sort of key that enables it to get into other similarly encrypted phones, aren`t we going to sooner or later find ourselves back in exactly this situation because isn`t Apple (NASDAQ:AAPL) then going to respond by a new and more difficult to break form of encryption?
VIOLLIS: Absolutely, Tyler. You`re 100 percent on point.
Let`s look at this, right? Apple (NASDAQ:AAPL) has some of the most brilliant minds in the world. They have over 100,000 employees. So, if, in fact, this comes to fruition and the FBI has a source that can get into this particular phone, and you can bet that Apple (NASDAQ:AAPL) will find a way to add different encryption and different key going forward. There`s no question about that.
HERERA: Paul, thank you very much for your perspective. We appreciate it.
VIOLLIS: Always a pleasure. Thank you.
HERERA: Paul Viollis with Viollis International.
Ty?
MATHISEN: And shares ahead -- still ahead, shares of Nike (NYSE:NKE) have been on a long run. So what tripped them up in the most recent quarter? We`ll take a look after this.
(MUSIC)
HERERA: A revenue miss for Dow component Nike (NYSE:NKE). The world`s largest active wear maker said a strong dollar hurt sales in Europe and emerging markets like Brazil and Mexico. The company reported earnings of 55 cents per share. That was better than the estimate of 48 cents. Revenue of a little bit of more than $8 billion was weaker than expected, but 7 percent better than a year ago. Investors weren`t all that happy with that revenue number pressuring shares initially after the report.
Sara Eisen takes a closer look at Nike`s quarterly result.
(BEGIN VIDEOTAPE)
SARA EISEN, NIGHTLY BUSINESS REPORT CORRESPONDENT: It was a mixed quarter for Nike (NYSE:NKE). Profit came in much better than expected, but it was the overall sales number that came in light.
Two weak spots: China coming in a bit less than analysts were expecting and Western Europe as well. And the common theme could be the stronger U.S. dollar chipping away at Nike (NYSE:NKE) sales.
Nike (NYSE:NKE) says sales grew 8 percent from a year ago but that number would have been 14 percent higher if you take out how much the sales were dinged by the stronger U.S. dollar.
As far as the outlook ahead, Nike`s particularly bullish about its prospects in China. Nike (NYSE:NKE) gave future orders to investors a look forward a few months for the lead-in to the suffer Olympics. It says that in China, those orders are set to grow 36 percent.
Keep in mind, Nike (NYSE:NKE) has been a high flying stock outperforming the S&P 500 this year and over the last 12 months. So, it was priced for a good quarter. That miss on sales could have an impact on the stock.
For NIGHTLY BUSINESS REPORT, I`m Sara Eisen.
(END VIDEOTAPE)
MATHISEN: A warm winter drags down sales for G3 apparel, and that is where we begin tonight`s "Market Focus".
The seller of brands such as Calvin Klein and Levi`s saw its shares tumble after it reported quarterly profit and revenue analyst targets. The CEO said lower sales in outer wear drove those weak results. Now, the company plans to reduce its outer wear offerings next year. G3 also issued guidance for the year. It came in below expectations and, as you might expect, shares of G3 fell sharply, more than 19 percent to $44.52.
Shares of Acorn surged today after the drug maker posted its 2015 results and 2016 guidance. Last year, the company said it would restate its 2014 financials after it identified accounting errors. The company plans to file the report with Securities and Exchange Commission by May. Shares surged more than 40 percent to $26.32.
And the securities software company Symantec (NASDAQ:SYMC) initiated its $1 billion accelerated share buyback program. The program part of the company`s $5.5 billion capital return plan. Symantec (NASDAQ:SYMC), though, down fractionally to $18.82.
And Lumber Liquidators paid the California Air Resources Board $2.5 million in an agreement to settle allegations that the flooring company`s products contained formaldehyde above permitted levels. Under the agreement, the company will also practice certain compliance procedures to ensure its products meet the regulators` requirements. Shares soared 16 percent to $13.94.
HERERA: General Electric (NYSE:GE) is exploring potential business opportunities in Cuba. The company has signed memorandums of understanding with the Cuban government, expressing interest in one day selling aviation, medical and power products in that country. Shares of General Electric (NYSE:GE) fell fractionally to $31.06.
Beginning in May, Carnival (NYSE:CCL) will offer cruises from the U.S. to Cuba, making it the first U.S. cruise company to provide travel between the two companies. The Carnival (NYSE:CCL) CEO said there`s huge demand for U.S. travelers to see the Caribbean country, and the company will offer cruises every other week. Shares fell 2 percent to $48.75.
Discount chain Five Below topped both earnings and sales estimate for its latest quarter and saw a more than 3 percent rise in comparable store sales. However, the company issued weaker than expected outlook for the year. Shares initially fell in afterhours trading. The stocks ending the regular session down more than 1 percent to $38.89.
MATHISEN: The Supreme Court today sided with thousands of workers at Tyson Food, as we reported earlier. The employees sought to recover overtime pay. Tyson Foods (NYSE:TSN) challenged the nearly $6 million class action judgment. But in a 6-2 vote, the 2014 decision was upheld.
HERERA: The FDA says it is requiring new, stronger warnings about the risk of addiction, abuse and overdose for short acting opioid pain medications. That decision is seen as a step toward addressing and curbing the epidemic of narcotic use in the U.S. The FDA commissioner called opioid addiction one of the most devastating crises facing our nation today.
Coming up, Tax Day is just a few weeks away, I`m sorry to say. Tonight, some tips on how to avoid the one thing no one wants, an audit.
(MUSIC)
MATHISEN: Silicon Valley has lost an icon. Former Intel (NASDAQ:INTC) CEO Andy Grove passed away at 79, considered a central figure in the era of modern computing. He was instrumental in building Intel (NASDAQ:INTC) into the world`s largest chip company. Grove was CEO of Intel (NASDAQ:INTC) from 1987 to 1998. He served as chairman until 2005 and was "Time`s" Man of the Year in 1997.
HERERA: A sobering study on retirement. Only about 20 percent of the Americans are very confident in their financial future. According to the latest annual survey conducted by the employee benefit research institute, that percentage of workers hasn`t changed much in 26 years. In this survey, roughly four in 10 workers said they and their spouses have less than $10,000 in savings and investments.
MATHISEN: And speaking of investments, it`s time to get out those income statements because tax filing season is here. Every Tuesday from now through April 18th, the deadline day, we will tackle a different topic to help you navigate this annual task.
Sharon Epperson is here to help.
Sharon, let`s start with what taxpayers worry most about, maybe a little more than they need to. How can I avoid getting audited, besides not cheating?
SHARON EPPERSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Exactly. Well, everyone talks about it, how do I about an audit?
But the reality is, less than 1 percent of Americans are being audited. And it really impacts you if you make a lot of money actually. If you make over $200,000 a year, you`re going to have a 3 percent chance. Make over a million dollars, more than a 9 percent chance of being audited. So, you make a lot of money, you have a chance of being audited.
Also, if you`re self-employed, not that they think you are hiding anything, but your tax return is just a lot complicated. And so, that often can raise a red flag. And then, also, if you make large charitable donations, make sure you just document everything because if you don`t, that`s another red flag.
HERERA: Right. And if you fall into that 9 percent or something lower than that but a high risk group or if you`ve been audited before, what can you do to lower your chances of being audited once again?
MATHISEN: I hope Donald Trump is listening to this because he says his tax returns getting audited every year.
EPPERSON: One of the things you want to do is make sure that you report all your income. So, all the W2s, all the 1099s, know that the IRS is getting copy of those papers as well.
MATHISEN: And they can cross reference.
EPPERSON: And they`re going to cross reference and match all those numbers. Some people inadvertently say, I`m just going to lump all my dividend income together, all my investment income together.
No. Each account, they want to see how much you have and make sure you break it down in that way. And just be accurate with the numbers. That`s the best thing you can do and often when you do, you`re filing online, there`s a lot of things that can help you.
MATHISEN: Are my chances of being audited higher if I file early or higher if I file later, or no different?
EPPERSON: It`s much higher if you miss that deadline. The deadline is critical, because a lot of folks, if they miss it, then they also don`t pay what they owe if they owe money. So, that`s another red flag.
