♪ this is "nightly business report" with tyler mathisen and sue herera. funded in part by: hss. our value principles are patient first. and we want to deliver the highest quality care. >> the goal of creating and sustaining value is all about putting the patient at the center of the equation. the purpose of this organization is to help people get back to what they need and love to do. getting hammered. a key housing statistic gets nailed as housing starts drop double digits in november. and now builders and buyers alike must confront rising interest rates.

shifting into reverse. could renegotiating the trade deal called nafta cause the auto industry to lose jobs, not save them. our top ranked market monitor has a list of stocks he says could rise 20% over the next year-and-a-half. those stories and more tonight on "nightly business report" for friday, december 16th. good evening, everyone. and welcome. home building slowed down last month. housing starts, which measure the number of homes that broke ground, tumbled from a nine-year high. according to the latest report from the commerce department, starts dropped by more than 18% in november. that was the largest decline in almost two years. as we have been reporting, the housing market is in need of new homes. inventory has been persistently low, which has helped prop up prices. and some leading economists say that although the housing market remains on solid footing, the data may be the latest sign of slower economic growth in the fourth quarter. and while many do expect the

housing market to remain on that solid footing, it is getting more expensive to finance a home. mortgage rates are now at their highest levels in more than two years, and as diana olick explains, payments are also going up for people with home equity lines of credit. >> reporter: interest rates are rising, and while most homeowners today have fixed rate mortgages, millions of them also have home equity lines of credit, or helocs, suddenly getting more expensive. they are tied to shorter term interest rates and that means the payment changes once a year. higher interest rates mean higher payments. helocs were all the rage during the housing boom when homeowners used their property atms, originations popularity dropped dramatically along with home values by 2010 coring to core

logic. then as home prices mounted and borrowers regained sizeable equity, the originations jumped back in 2014 and '15 and should reach a collective $173 billion worth this year. not all heloc borrowers used all of the line of credit, but for those who used some or all of it, they will see higher monthly payments as interest rates rise. the interest rate could depend on the size of the line. recent surveys show a large share have no financial plan for these changes, and some are unaware their monthly bills are going up. for "nightly business report," i'm diana olick in washington. on wall street, stocks closed slightly lower. the major indexes gave up their opening gains after reuters reported a chinese war ship seized a drone deployed by an american vessel in the south china sea. by close, the dow jones industrial average dropped to

19,843. the nasdaq was off 19. and the s&p 500 fell nearly 4. all of the major averages barely budged for the week. two federal reserve officials speaking about interest rates just days after the central bank raised them for the first time in a year. the st. louis fed president, james bullard, changed his outlook because of the recent rise in bond yields and now says there is a need for an additional hike next year. jeffrey lacker said the central bank will likely need to increase rates at a faster pace than its current outlook would suggest. it was a promise donald trump made on the campaign trail. the u.s. should rip up the north american free trade agreement known as nafta. he also talked about slapping a 35% tax on mexican-made vehicles imported into the u.s. and now as phil lebeau reports, we're getting some fresh analysis on how much that would drive up auto costs and possibly hurt the auto economy.

>> reporter: mexican auto plants are running at a record pace. since 2009, the number of cars and trucks built south of the border has soared, and will soon top 4 million. with almost half of those being shipped up to the u.s. that bothers donald trump. and he wants automakers to build more in the u.s. even threatening to slap a 35% tax on mexican-made vehicles. what would happen if the president-elect did that? the center for automotive research estimates the cost of the average vehicle built in mexico would jump almost $6500, which would lead to almost a half million fewer vehicles being sold in the u.s., and potentially the loss of 6700 auto industry jobs. >> once donald trump takes a look at the numbers, he will find a way out of -- to wiggle

out of this unfortunate campaign promise. >> reporter: with u.s. assembly lines already running close to capacity, automakers are unlikely to put up new plants in the u.s. instead, they would likely build some models, like small cars, in other low-cost countries, like china. that's where the buick envision is built. india is another option. ford will import its new small crossover, the echo sport, from a plant in that country. >> if we close off mexico, it becomes a game of whac-a-mole, where else do you close off next? because they're going to move from other places. >> reporter: for now, automakers are still manufacturing and expanding in mexico, including ford, which is moving small car production south of the border. that will free up assembly lines in michigan to build more trucks and suvs. but all of that could change if donald trump plays hard ball once he becomes president. and follows through on threats to put a tax on all vehicles made in mexico.

phil lebeau, "nightly business report," chicago. and to read more about the potential impact of renegotiating nafta, you could head to our website, nbr.com. american voters were clearly comfortable electing an active billionaire businessman as president. and in turn, the president-elect has nominated numerous business people for cabinet positions. now comes the uncomfortable part, making sure that the new administration's personal business interests don't interfere or compromise with the people's business. here to discuss how the trump administration might intelligently avoid possible conflicts of interest is meredith mcgahee, strategic adviser with the campaign legal center. glad you're with us. we have never been in a situation quite like this before. let's separate now the question of the president and the cabinet. is there a way for us to come up with some way that both deals with the president-elect and his

business and his family interests fairly at the same time as it quarantines those business interests so that he is free to do the people's business in an uncompromised way? >> yes, actually. i think in some ways, even though he does have a very complex enterprise, the steps are fairly clear. what he should do and what has been done in the past for the last 40 years has been for the white house council designee to sit down with the office of government ethics to look at the portfolio and at that point they say, okay, here are some interests that you need to divest. here are some interests that should go into a qualified blind trust, which is run by a totally independent trustee. and that trustee will then be able to make decisions unbeknownst to the president of other assets that over time need

to be sold off, there are some where he needs to recuse himself. are there some he could hold on to. but this step, this initial step, is very important. both in terms of protecting the president, if your owner and you're not managing it, you're still legally responsible. >> absolutely. you know, there was some talk that perhaps he would turn over his businesses and his business interests to his children. but now we have seen his children attend some of the cabinet level meetings which compromises that particular solution. what's your read on that? >> well, they have to -- you know, they're kind of having their cake and eat it too, at the moment, saying, oh are we going to have the business independent and yet at the same time participating in the transition team. obviously, that's not the clear line that is needed here. but i want to make clear that this is also the kind of stuff he is talking about. also raises all kinds of serious questions for the

president-elect himself. >> he does not want to be in the position of being legally responsible for any violations that the company he owns may incur, even if he's not managing them. and, of course, the last thing i think he wants is to be in violation of the constitution and the emoluments clause, benefits for the foreign state. this isn't good for him, it's not good for the country. >> is there, quickly, any level of conflict of interest that we could acceptably live with? >> well, i think really you have to address this right straight on. you know, it's really hard when you're the president, the most powerful position in the world, to kind of say, oh, we can live with a little bit of conflict of interest. there is no need to. the answers and steps are quite easily taken when you decide that this is the job that you want to take. he made that decision, and so now i think it's just a matter -- i'm glad to see he

said this is visually important. he has recognized that. >> meredith, thank you very much. meredith mcgahee with the campaign legal center. still ahead, looking for some names that could see big returns over the next year. our top-rated market monitor has some of those names. ♪ customers are not opening new accounts at wells fargo like they used to. following the fake account scandal, checking account openings plunged about 40% in november compared with last year. that decline can also be attributed to the scrapping of unrealistic sales goals that former workers say led to the creation of those fake accounts. the head of wells fargo's community bank said the

company's top priority is rebuilding trust. 'tis the season for giving, and returning those gifts. but dealing with unwanted used, damaged goods, very costly for retailers. courtney reagan is in mt. julia, tennessee, where one company is looking to corner the market on returned goods. measures returned $260 billion in merchandise to retailers last year. or 8% of total purchases. even higher around the holiday season. according to gartner research, less than half is resold. leaving retailers booking big losses, in some cases as much as 10% of total sales. unwanted and damaged goods either get tossed out or sent through a lengthy chain of liquidators and whole solers paying phenomenon pennies on the dollar. add in the surge of online

shopping and the problem gets even bigger. return rates from online sales can be 30% or more, and that has research from gartner warning retailers the old way of dealing with returns is a ticking time bomb. >> retailers are not very good at managing returns right now. unless they invest in their ability to manage returns, the volume of returns coming back will cause problems in their overall supply chain. >> reporter: best buy is working on ways, adding open box merchandise to its store and web inventory, increasing the chances of selling those items at a discount, while decreasing losses. but now there is a new option for retailers. toro is one company looking to disrupt the traditional model for dealing with returns. its technology finds the best resale price for retailers the moment the return is scanned at the store. >> currently many retailers are getting 15 cents to 30 cents on the dollar for these returns,

because they're having such trouble economically processing them, and getting them to the next best markets. we're able to get them to double and triple the recovery. >> reporter: after merchandise is returned, it ends up here at the warehouse in tennessee. the bulk of the items are electronics, but there is also health and wellness, home and garden, baby items, and, of course, clothing. the goods are tested and inspected and once they're given a clean bill of health, they're ready for resale on the site, blink.com, amazon and ebay. home depot, bj's whole sell, jet.com and seven other u.s. retailers and u.s. manufacturers use the technology. it can be a win-win-win. retailers recoup more on returned goods, waste is reduced, and consumers get another discount shopping option. for "nightly business report," i'm courtney reagan in mt. juliet, tennessee. jan joins us now to tell us who will the winners and losers

be this holiday season. he is ceo of jay rodgers worldwide enterprises. nice to have you. happy holidays. >> great to be here. i'm wearing my holiday tie. we're into it already. >> excellent. perfect. who do you think is going to come out on top this holiday season? >> well, the bad news is, if you're a brick and mortar retailer, the person coming out on top is amazon. that's not going to change. it was true last year, it's been true since 2006. they're the number one place for gifts right now for anybody getting a gift and the number two place is walmart. >> how is walmart's online business doing, jan? >> well, since they bought jet, i'm sure it's doing a lot better. jet was running at a rate of about 1 billion 4 after 14 months of operation. now they're 16 months old. they were adding 500,000 customers a month. so walmart's online was really trailing the growth that amazon by a lot, even though their online business is smaller than

amazon. now that they've got jet, at least the growth rate will look the same. i think they can grow this business online at 20 to even 30% a year for a while. it's off a fairly small base, and jet is a really good operator. >> you know, i notice on your list of winners, you have penny's, and they tend to be mall-ba mall-based. why did they make the winners category? >> okay, it contradicts everything i said. >> right. >> that the malls aren't doing well. interiors even worse. the anchors are struggling, because business isn't going to the mall, it's going offprice or online. however, some retailers are kind of in control of their own fate. if you're doing things better than you used to, and penny's is doing better than they used to, you start getting business back. they're also taking share from sears, and actually the -- the offering they're doing now in appliances is working. and you know, that's brand-new for them. and their home business is getting better. that doesn't mean that the mall

is not struggling. it just means that they had been pretty low down on the totem pole, as you know. and they had given up a lot of sales. and now they're building that business back. >> you also like some of those stores that you say are not in the malls but across the street from the malls. name them. >> i love things across the street from the malls. if you're tj maxx, ross, if you're ulta, even in order straps rack. you can go 100 feet from the ball across the road, and it's pretty busy over there. you return to the mall, and it's kind of like being gosh, i don't want to say at a funeral, but very, very slow. >> you know, jan, just very quickly before we let you go, nordstr nordstrom, you mentioned were downgraded today. the stock lost about 8%. what's your opinion of nordstrom this holiday season? >> i think if you're an anchor at the mall, which nordstroms is, you're struggling a little more than other people -- other companies. so if you're nordstroms, if

you're macy's, other than penny's, sears, you're struggling at the mall. and that's going across the board. so do i like what nordstroms did with rack? yes. do i like the fact that nordstroms is one of the best in the country? yes. and i like the fact they're good at customer service. but they're trapped at the mall, just like everybody else. those businesses are not doing well. >> on that note, jan, thank you. worldwide enterprises. red stone to step down at via com. red stone will resign in february, still remain on the board at cbs. but still control the majority of voting shares through the national amusements holding companies. shares up better than 1% on the day at 39.50. mylan said its generic version of its epipen available next week. the allergy treatment offered at $300 for a pack of two, less than half of the full cost of the brand name variety. mylan up a fraction at $37.82.

honeywell said earnings for the current quarter would come in at the low end of its forecast. the industrial con glomt says 2017 earnings largely below expectations. honeywell shares up 4 cents at $116.38. omni come suspended as pardon of an investigation of possible price fixes in video add production. justice is looking into whether ad ageses rigged contracts to favor in-house production units. a practice which could violate trust. shares off 2% to $86.18. and tri vaguo, a majority owned by expedia priced $26 million at $11 each. below the expected range of 13 to $15. shares ended up nearly 8% to $11.85. and now to our market monitor as names of stocks he says could grow 20% over the next 12 to 18 months.

got to love that. the first time on the program, brian smallook portfolio manager of the hood river south cap growth fund up 15%. you got to like that, brian. welcome. good to have you with us. banks have been doing very, very well as interest rates have been going up. your first pick is bank. ozarks. why that particular one? >> there is a lot of reasons why i like bank of the ozark. i think they can grow loans. i think in 2017 they could probably grow by about 20% or so. they're really good at handling complex commercial real estate transactions, so they can get better margins there. also, as tax rates go down, they're a big beneficiary, pay 35% tax rate currently, so could get a nice benefit, rates go down. also with deregulation, they could potentially be more aggressive on the m & a front. recently closed big acquisitions. now they're through that. you mentioned rates. they can benefit from the

steeping of the yield curve with libor rates. moving up on margins, as well. >> western alliance, wal next on the list. we have been inquisitive. you think they might do more of that. >> i think that's reasonable. they could do that. if there are cuts in corporate tax rates like we talked about, that gives them more capital. like you said, they have done deals lately that have been accretive. over the last eight years, diversified away from being solo focused in arizona. become more of a national bank. they can grow their loans in a 10 to 12% range. and both ozarks and wl trading at discount on earnings for -- to the group on 2016 and 2017. >> moving opposite direction from banking and finance to mass tech. mtz is the ticker. kind of an oil and gas infrastructure play. >> yeah, they do lots of

infrastructure all over the united states. they do oil and gas, and they also do wireless, wire line, transmission, and energy. electrical work, as well. i do think that since deregulation is happening, in those industries, they can benefit from higher spending there. the street is anticipating around 6% revenue growth and over 15% cash flow growth in 2017. i think those numbers can be exceeded and more importantly in 2018, the street only has flat revenue growth. can -- >> very quick reaction to the fact this stock is already up 1 money% -- 115% this year. has it gotten too far ahead of itself? >> i don't think so. because as i mentioned, i think earnings estimates have to move up. the reason why it's been good so far this year is because the company has gone from missing earnings to beating them, and that happened over the q1, q2 time frame so this stock had catching up to do. and the stocks at the high end of its normal cash flow

valuation range, but it's not extreme, and, again, i think you're on a four-year cycle. >> hood river capital management, thanks gotten. coming up, will the force be with disney in its next installment of "star wars"? ♪ "star wars" "the force awakawak awaken" set records and reinvigorate's dis. now investors want to know just how big the next installment of "star wars" will be. julia boorstin takes us to the movies. >> reporter: "rogue one" a "star wars" story off to a huge start, grossing $29 million in north american theaters, the biggest thursday night preview of the

year, and the seventh largest of all-time and grossed an additional $33 million overseas. >> congratulations. you are being rescued. please do not resist. >> reporter: the film is expected to gross at least $300 million worldwide this weekend. and it could generate more than $1 billion in total revenue for disney. so it's not expected to rake in as much as last year's "the force awakens," a key test of lucasfilm outside the core narrative with a totally new cast of characters. >> i think this is crucial for disney. it's not just, you know, does this movie do well, but the argument that "star wars" can be an annuity business rather than a flash in the pan couple successful movies. >> reporter: all part of a push to turn "star wars" into an annual event. it will demand for consumer products. the two "star wars" lands in orlando and anaheim. with pressure on concerns about the health of espn, analysts

looking more closely at the success of the studio, which dominated one quarter of the u.s. box office this year with five of the top ten films, putting "finding doer" and "captain america" and "rogue one" could top them all. >> it also encourages them when they come, they want to have concessions and that drives sales here at the theatre. and also drives sales for other movies, as well. when people come see the movies, it tends to breed more movie-going. >> and more movie "going is a good thing as disney heads into tough comparisons from last year. disney will top $7 billion at the box toss this year, a record and. for "nightly business report," i'm julia boorstin in los angeles. that is "nightly business report" for tonight. i'm sue herera. thanks for joining us. >> tim tyler mathisen. have a great weekend, everybody. get your shopping done. we'll see you monday.

"nightly business report" funded in part by hss. our value principles are patient first and we want to deliver the highest quality care. >> the goal of creating and sustaining value is all about putting the patient at the center of the equation. the purpose of this organization is to help people get back to what they need and love to do.

>> president obama says he's ready to strike back against russia for meddling in the election but donald trump says the crime of russia is post-election sour grapes have. i'm pete williams. we look at what's at stake tonight on "washington week." >> what i can tell you is the intelligence that i've seen gives me great confidence in their assessment that the russians carried out this hack. pete: the president vows to take some kind of action against russia after intelligence directly links putin to cyber attacks on the d.n.c. nald trump says only the accusations occurred after hillary clinton lost. but some are calling for an investigation into russia's