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ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Sue Herera.
Funded in part by HSS.
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TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Sprinting back. The president-elect announces that the Japanese owned telecom giant Sprint will bring 5,000 jobs back to America.
CONTESSA BREWER, NIGHTLY BUSINESS REPORT ANCHOR: Navigating the headlines. Stocks are near record levels. Home prices are at a new peak and consumers are feeling good. So, how do we avoid getting swept up in all the euphoria?
MATHISEN: And found money. Why the government may have a rich surprise waiting just for you.
All that and more for Wednesday, December 28th.
Good evening, everybody. I`m Tyler Mathisen.
BREWER: And I`m Contessa Brewer, in for Sue Herera.
President-elect Trump is meeting with several more CEOs, today. It included the head of Sprint. And just a few minutes ago, the president- elect said Sprint is moving jobs back to the United States.
John Harwood joins us from Washington.
John, good to see you. So, what do we know about the CEOs that Trump met with, and what it could mean for the future for jobs in America.
JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, what we know was that Donald Trump came out of Mar-a-Lago after the meetings that you mentioned, Contessa, and announced that Sprint would be bringing 5,000 jobs to the United States, and that One Web which is a firm that has taken investment from the Japanese Softbank is going to add 3,000 jobs.
What we don`t know is whether these are different jobs than the ones that were announced by the president-elect and Masayoshi Son, the chief executive of Softbank, a couple weeks ago. When they met at Trump Tower, he came out and said he was going to invest $50 billion. And create 50,000 jobs in the United States. These could -- are these the same jobs or are these new jobs?
Nevertheless, 8,000 jobs, which is not a whole lot in the context of the U.S. economy, nevertheless will make 8,000 families happy when they do materialize.
MATHISEN: Were these jobs or do we know, John, because the announcement just a few moments ago was brief to put it mildly. Do we know whether these jobs were jobs that had left America and are coming back? Or are they newly created jobs? Not that it really makes all that much difference?
HARWOOD: Well, the president-elect suggested that they were jobs that had gone outside the United States and were coming back, but we really don`t know details, there wasn`t paper issued with this. This was clearly something that when Sean Spicer, the incoming White House press secretary, foreshadowed it on a daily transition conference call for reporters said would be coming 4:00 to 5:00 later today. That was an illusion I believe to the phone call that the president-elect had with Marcelo Claure, the chief executive of Sprint. Claure did not go to Mar-a-Lago, they talked by phone, and that was the precedent I believe for this announcement.
BREWER: And so, John, when we look at the fact that Trump has been discounting traditional measures of economic success, things like unemployment and growth, is this where he`s hoping to make his mark on manufacturing jobs, and other kinds of job growth in this country?
HARWOOD: Absolutely. That`s part of the argument he made in the campaign, he was in particular, going to look after those blue collar workers in the United States who had seen their opportunities, their jobs, their wages diminished by trade, automation, foreign competition, all that sort of thing, immigration as well. And the question is, how much of an impact can he have?
Over the last 12 months, the United States economy has averaged about 188,000 jobs a month. This is 8,000. But he`s not president yet, and he`s just getting started. If he can develop a virtuous cycle of confidence, investment, momentum, that could make an impact.
BREWER: All right. John, thank you.
HARWOOD: You bet.
MATHISEN: We all know online sales were a big booming business this holiday season, leaving many to wonder how the brick and mortar retailers fared. Well, the numbers are starting to trickle in and they suggest that the procrastinators made a late push, and made a dent in the holiday season.
Kate Rogers (NYSE:ROG) tries to answer the "how did they do" story.
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KATE ROGERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Consumers opened up their wallets in stores in the final weeks of the month, helping to drive holiday sales higher after a sluggish start to the season. According to new data from analytics firm, RetailNext, drawing on sales reports from more than 1,000 retailers nationwide, brick and mortar sales for the week ending December 24th, rose 6 1/2 percent year over year.
But one week doesn`t tell the whole story just yet, as data from December 1st to December 26th shows sales down over 10 percent. Separate data from MasterCard (NYSE:MA) showed strong demand for furniture, home furnishings and men`s apparel from the beginning of November through December 24th, helped to push retail sales higher by 4 percent over last year.
Even with a few extra days to shop, as the Christmas holiday fell on a Sunday this year, some analysts are not sure the last minute shopping surge had a meaningful impact on holiday sales overall.
MARY EPNER, MARY EPNER RETAIL ANALYST: We saw that sales got a little bit better, but still, we may see a flat to slightly up season. However, I still believe that margins are going to be another story when they`re reported in 2017.
ROGERS: Brick and mortar businesses are still struggling to compete with giants like Amazon (NASDAQ:AMZN) by offering aggressive discounts throughout the holiday season. And while retailers have three shopping days left to close out the year, the proof of whether holiday spending comes down to the consumer and where they spent their cash.
JAN KNIFFEN, J. ROGERS KNIFFEN WORLDWIDE ENTERPRISES: Housing and cars steal dollars away. Trips are stealing dollars away. All the experiential stuff is stealing dollars away.
So, we see sales are probably fine nationwide, so we saw bigger penetration and bigger growth online and pretty flat brick and mortar, and the money is going other places.
ROGERS: Retailers and the government will report their final numbers next month. But with the national retail federation saying sales were down 3 1/2 percent in November, it appears that 2016 holiday season may turn out to be a mixed bag.
For NIGHTLY BUSINESS REPORT, I`m Kate Rogers (NYSE:ROG).
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MATHISEN: On to housing with a National Association of Realtors says pending home sales dropped 2 1/2 percent in November. Economists had been looking for a gain of nearly half a percent. Pending home sales measure contracts signed but not yet closed.
Now, this comes as "The Wall Street Journal" reports the number of investors who flipped a house in the first nine months of the year, hit the highest level since the glory days of 2007. We told you yesterday that according to a leading index, national home prices are at a record level as well.
BREWER: OK. So, with housing prices at peak levels, consumer confidence is up, spending is surging, is it all a good thing? The all around good news on the U.S. economy?
Shlomo Benartzi is professor and co-chair of the Behavioral Decision-making Group at UCLA`s Anderson School of Management.
All right. When we`re looking at all of these wonderful numbers, consumer confidence, peak home prices here, the stock markets at an all time high -- is there any danger of all of us jumping in on this rah rah rally?
SHLOMO BENARTZI, UCLA`S ANDERSON SCHOOL OF MANAGEMENT: I get nervous. I get very nervous, when everyone sees one future, and it`s all good.
We just heard that a lot of people have been flipping houses this year. I get scared with all my friends thinking they can buy a house, fix it quickly, flip it, the next thing they talk about is building a condo building.
I get scared when we all see one future, because we all know there`s a lot of uncertainty out there, and we have to be prepared when everyone sees everything going up, that`s when I worry about everything going down.
MATHISEN: So, if I sort of deduce from what you just said, you`re concerned that there is too much bullishness, too much positive anticipation in the stock market among other places, as to what the president-elect will be able to accomplish quickly, once he assumes office.
BENARTZI: It`s difficult for me to kind of know for me to know whether it`s because of the president-elect, but I get nervous when everyone sees the same train going the same way and don`t see any possibilities of getting derailed. That is true today, that was actually true in `08 and `09. Everyone saw the market going down. People were selling at the bottom. People were shocked that they lost their jobs and 401(k) plans at the same time. And thought the world would collapse.
I got nervous about that, but in a more positive way, it was an opportunity. When everyone saw the world collapsing, I felt that maybe it`s an opportunity to see it might actually come up one day. So, the issue I have is, we`re in a sense, become blind to all the possibilities out there. Good and bad.
Today, obviously, everyone is thinking everything is going to be fine, and that`s where we should be a little nervous about all the bad possibilities that could happen. I don`t have a crystal ball. Maybe it will not happen in 2017. But we should at least be on alert.
BREWER: So, some psychologists and perhaps behavioral economists would call that herd mentality. When does that also, the flip side of it, become crowd-sourcing and taking advantage of the group wisdom to look at the economic future of our nation?
BENARTZI: A lot of amazing things about herding behavior. If I were to see everyone running out of the studio in Los Angeles, I would only run with them.
BREWER: Yes.
BENARTZI: Maybe there`s a terrorist attack. Maybe there`s a fire. So, it`s part of how human nature to be part of the herd. And that`s generally a good thing, but it was definitely not a good thing in `08 when people saw the 401(k) plans as 201k plans.
BREWER: Professor, thank you so much for sharing your wisdom and perception with us. We appreciate that.
BENARTZI: Thank you.
MATHISEN: All right. Those pending home sales we told you about a moment ago, put a damper on the Dow`s push to 20,000. And stocks did pull back and in a big way today. Dow suffered just its second triple-digit loss since the election. The Dow fell 1,100 points. It finished back below 19,900, at 19,833. The NASDAQ dropped 48 points and the S&P 500 was off just about 19.
BREWER: Takata is reportedly closing in on a deal with the Department of Justice, to settle a criminal investigation into the Japanese company`s handling of faulty air bags. "The Wall Street Journal" says Takata could pay up to a billion dollars and possibly plead guilty to criminal misconduct early next year. Those air bags which run the risk of rupturing and spraying shrapnel have been linked to 11 deaths and nearly 200 injuries in the United States alone.
Coming up, why our market monitor thinks large cap stocks are not the way to go.
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BREWER: Well, this year, tech is smack in the middle of the S&P pack, ranking sixth out of the 11 S&P sectors. So, which tech stock was the best for investors and which was the worst?
Josh Lipton has the answer.
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JOSH LIPTON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Tech investors place their bets in 2016 and no bet proves smarter than Nvidia. The stock has soared some 240 percent this year. Nvidia isn`t just the best performing tech stock in the S&P 500, it`s the best performing stock, period.
Why all the excitement? Because Nvidia`s semiconductors are powering many exciting fields that investors want exposure to, including artificial intelligence and self-driving cars. It`s core graphic processing units or GPUs also enable popular video games.
Analysts say that business is what could drive this stock higher.
BETSY VAN HEELS, LOOP CAPITAL MARKETS SVP: What`s driving that in the near term is the hardcore PC gamer. And so, we are seeing is we`ve got new title releases that are coming out for this season. So, for example, "Battlefield I" is out. That`s a very high performance game and what`s happening is those hardcore PC gamers want the next generation greatest GPU, and that`s Nvidia`s Pascal architecture. It`s a higher gross margin, higher HP product, higher performing product.
LIPTON: Still, not everyone is a fan of Nvidia. This morning, short seller Citron Research tweeted that the market is disregarding headwinds for the company including increasing competition. Citron seized the stock, heading back down to $90. Nvidia declined comment on that report.
From leaders to laggards, one of the worst performing tech stocks this year is Salesforce. CEO Marc Benioff says the business software maker could reach $20 billion in annual revenue faster than any other enterprise software company. But investors haven`t been impressed and the stock is down some 10 percent this year -- in part, analysts say the street is worried that Benioff might make a big acquisition, given his flirtation with Twitter earlier this year.
KIRK MATERNE, EVERCORE ISIS: For Salesforce to start moving higher in 2017, I think it`s pretty simple. First of all, they just need to get back on message around growth plus margin expansion equals mid-20 percent cash flow growth.
This is a strong fundamental company. They`ve got a lot of open ended opportunities from a growth perspective. But you`ve got to move away, frankly, from a lot of the discussion about M&A.
LIPTON: Bulls like Materne are betting that causes of concern like aggressive deal-making will now ease in the New Year. He says the companies fourth quarter results expected in mid-February could be pivotal in terms of lifting the overhang on the stock.
For NIGHTLY BUSINESS REPORT, I`m Josh Lipton, San Francisco.
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MATHISEN: Kate Spade may be thinking about putting itself up for sale, and that is where we begin tonight`s "Market Focus".
In November, the activist hedge fund Caerus Investors urged the high end handbag maker to sell itself, saying it was frustrated with the company`s financial performance. And now, according to "The Wall Street Journal", Kate is working with a bank and has reached out to potential suitors about a possible takeover deal.
For its part, Kate Spade said it doesn`t comment on rumors or speculation. The stock rallied up 23 percent -- yes, you heard me right, that`s a lot of handbags -- to $17.86.
GNC temporarily closed more than 4,000 U.S. stores today, as the vitamin and supplement retailer works to update its pricing system. GNC says it plans to eliminate the price disparity between products sold online and in store, by creating a single price for the same item no matter where you buy it. The company plans to reopen tomorrow. GNC shares fell 3 percent on the session, they finished at $11.12.
BREWER: Galena Biopharma said its treatment for a rare blood disorder would advance to a late stage trial. The drugmaker also said it received confirmation from the FDA that it can now file a new drug application with the agency. Shares surged 21 percent to $2.38.
South Korea hit Qualcomm (NASDAQ:QCOM) with an $854 million fine, alleging the chipmaker violated antitrust laws. The Korea fair trade commission said the company operated an unfair business model where it entered phone manufacturers into license agreements, and limited who could license its patents. Qualcomm (NASDAQ:QCOM) said it plans to appeal the decision. Qualcomm (NASDAQ:QCOM) shares were off 2 percent, to $65.75.
MATHISEN: As we continue our special week of market monitors, my next guest says you will want to own small and mid cap stocks in your portfolio next year. He`s predicting they will outperform large cap stocks in 2017.
He`s Gary Bradshaw, Terry Bradshaw, Gary Bradshaw, portfolio manager at Hodges Capital Management.
Gary, welcome. Good to have you with us.
Make the case for why small and mid caps should in your view, outperform large caps next year.
GARY BRADSHAW, HODGES CAPITAL MANAGEMENT PORTFOLIO MANAGER: Well, Tyler, thank you for having me.
And at the Hodges Fund, we still are optimistic about this market going forward. But we do think that small and midcaps will outperform for three main reasons. Number one, the strong dollar is certainly going to impact earnings on the large cap multinationals, much more so than small and midcap companies. Also, we think tax reform will be extremely good for small and midcap companies. And then also, usually when you get a U.S. economy that`s accelerating, small and midcaps outperform. So, we`re optimistic in the smaller names going into 2017.
BREWER: So, give us some picks here, Gary, about stocks in 2017 that you think might do particularly well?
BRADSHOW: Well, in the Hodges small midcap fund, we own Callon Petroleum (NYSE:CPE), which is a Permian Basin driller. They have 56,000 acres. They`re running three rigs today. We think by the end of 2017, there are five rigs.
And they`re a low cost producer, meaning that at $45 a barrel, they`re making good money producing oil in the Permian Basin. And we just think their cash flow and earnings will grow. We think production will be up 35 percent in 17 and 45 percent in 18.
MATHISEN: All righty. We`ve got 45 seconds to get you through Fairmount Santrol and Murphy USA. Two more also in the energy field. Quickly.
BRADSHAW: Well, that`s right. Fairmount produces tracking sand and what`s going on -- rig counts are going up, we`re using more sand per well, as much as 6 million to 10 million pounds of sand. We`re getting a lot more production by doing that. And we`re starting to see some green shoots and pricing.
And Murphy USA, Tyler, is a convenient store operator of 1,350 stores located mostly next to Walmart. They`ll earn $4.16, almost $4.17. We think it`s going to be a good stock going-forward as well.
MATHISEN: Next to Walmart is a good place to be.
Gary Bradshaw with Hodges Capital -- thanks so much for being with us.
BRADSHAW: Thanks for having me.
BREWER: Coming up, billions of unclaimed money sits in government coffers, and some of it may be yours. What you need to do to get it back.
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MATHISEN: We told you earlier that spending picked up near the end of the holiday season. Tech toys are usually a must have this time of year. So, how did the competition shake out between the two heavyweights, Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG)?
Deirdre Bosa has the early read.
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DEIRDRE BOSA, NIGHTLY BUSINESS REPORT CORRESPONDENT: Christmas may have come and gone, but there`s one more thing to unwrap. Holiday data. And once again, it was a very good holiday for Apple (NASDAQ:AAPL).
MICHAEL YOSHIKAMI, DESTINATION WEALTH MANAGEMENT FOUNDER & CEO: My view is Apple (NASDAQ:AAPL) won the holiday season by default, not necessarily because they had perhaps the best offering, but it`s the only real offering out there that was competitive, given all the problems that Samsung had with their Note devices.
BOSA: App analytics company MixPanel tracks new smartphone and tablet activations during the three days following Christmas, giving us an early indication of consumer behavior, during a time that many spent with family, friends and handheld devices.
Holiday metrics suggests that iPhones are still the hottest gift in smartphones. Last year, it was all about the 6S. And this year, it was all about Apple`s latest model, the iPhone 7. From December 25th to the 27th, the number of unique active iPhone 7s increased by nearly 13 percent.
By contrast, Android devices, including smartphones and tablets, rose less than 3 percent in the same period of time. But Google`s new pixel smart phone seems to have held up better. According to MixPanel, the number of unique active Google (NASDAQ:GOOG) Pixels increased 8 1/2 percent. The Apple (NASDAQ:AAPL) Watch was still popular, so far less so than last year.
In 2015, activations rose nearly 20 percent in the three days following Christmas. This year, they were up just 9 percent. Analysts say the holiday numbers may be a sign of what`s to come in 2017.
YOSHIKAMI: I think wearables will continue to be a tough space. I think it really -- it`s looking to be more of a fitness market, rather than something that people will be using as a substitute for their cell phones.
BOSA: And amid an industry-wide phone fatigue, holiday sales could be more important than ever.
For NIGHTLY BUSINESS REPORT, I`m Deirdre Bosa, Vancouver, Canada.
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BREWER: Well, how would you like to end this year with some found money? I mean, come on, who wouldn`t? If you`re like millions of Americans, some of your money might be sitting on government books.
Dina Gusovsky tells us how to get it back.
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ANGELA SILVERSTEIN, RETIRED BUSINESS OWNER: New York state unclaimed funds.
DINA GUSOVSKY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Angela Silverstein showed us how she became $13,000 richer in a matter of minutes. The catch, it was her own money that she was getting back.
SILVERSTEIN: A lot of it was small commission checks, utility refund.
GUSOVSKY: Angela who was able to easily complete the process, despite being legally blind is certainly not alone. According to the latest figures from the National Association of Unclaimed Property Administrators, over $40 billion is sitting in state unclaimed property programs nationwide, waiting to be returned to their rightful owners.
Each state has an office where people can search for their money. In New York alone, the state comptroller`s office pays out $1 million per day. And the controller says that`s nothing compared to how much money they still have.
THOMAS DINAPOLI, NEW YORK STAT COMPTROLLER: Now, it`s up to about $14.5 billion.
GUSOVSKY: Billion?
DINAPOLI: Billion with a B. About 35 million accounts with a value of $14.5 billion.
GUSOVSKY: The main source of funds is from banks.
DINAPOLI: Typically, it involves someone who has moved and the bank or the financial institution, the insurance company, the utility where there was a security deposit, does not have the up-to-date contact information.
GUSOVSKY: Banks are not required to keep records over a certain number of years. The exact number depends on the bank, but usually varies from between five to seven years if the account is dormant. The bank is then required under federal law to turn the money over to the state, the state keeps the money, in case someone does claim it one day.
DINAPOLI: The system that will prompt you for the information that`s needed. So that it can verify your connection to the account.
If you apply on line, you can get -- you can get the money really in a matter of days, sometimes a week.
GUSOVSKY: Make sure if you move, you tell all your financial relationships what your new contact information address and phone number will be. And when searching online for missing money, don`t just put your own name.
Put in friends and family and organizations you may have been a part of. That`s another way you could be entitled to the money. One financial adviser tells clients to book mark that website, and make a habit out of checking state offices.
PAUL SCHATZ, HERITAGE CAPITAL PRESIDENT: I think it`s a good exercise. I would say the majority of my clients have found something out there in unclaimed property. Most are in the order of $50 to a couple hundred. Some have found a little more than that.
DINAPOLI: People say thanks, don`t thank us, we`re giving you back something that`s yours. And it`s a few hundred dollars or a couple of thousand dollars, it could actually make a difference in someone`s life.
SILVERSTEIN: I think my grandson`s going to have one great birthday party.
GUSOVSKY: For NIGHTLY BUSINESS REPORT, I`m Dina Gusovsky, in New York City.
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BREWER: $50, that will pay for lunch.
The best way to search is by typing in Office of Unclaimed Funds in your respective state. For more, go to our website, NBR.com.
MATHISEN: And if you are looking for money, the penny might not be the way to go. "The Wall Street Journal" says it now costs the U.S. Mint 1 1/2 cents to make the 1 cent coin. The mint makes money actually on the dime and quarter, but traditionally loses money on the nickel and the penny.
BREWER: So it costs a pretty penny?
MATHISEN: It costs a pretty penny. Not a good return on investment.
BREWER: That`s NIGHTLY BUSINESS REPORT for tonight. I`m Contessa Brewer. Thank you for watching.
MATHISEN: I`m Tyler Mathisen. Thanks from me as well. Have a great evening, everybody. And we will see you right back here tomorrow night.
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Nightly Business Report transcripts and video are available on-line post broadcast at http://nbr.com. The program is transcribed by CQRC Transcriptions, 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 of Nightly Business Report, or CNBC, Inc. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c) 2016 CNBC, Inc.
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