♪ >> announcer: this is "nightly business report" with bill iffeth and sue herera. brorage blockbuster. to buy td ameritrade.ed in talks further consolidating an industry undergoing massive change. >> macy's mess. sales slip at the department store. and the retailer blames warm weather and weak are mall gaffic. >> d discovery how artificial intelligence is used to drive the next medroal breakthh. the stories and more ton on "nightly business report" for thuray, november 21st. and we it do b you good evening, everybody, and welcome a reported megadeal on the brokerage industry caught wall street off guard. charles schwab in talks to buy

e of the big rivals. td ameritrade creating a massive firm with$5 trillion in assets. it's been up ended by zero fee commission a trend started by schwab that killed a key source of ren for the sector. sent td amerd trade up 17%, schwab up 7%. mike santoli looks at why the two companies may want to become one. >>ology continues to drive down the cost of investing. and it reflects the push for greater scale in an investing industry dominated by low cost index funds, zero commission trading and a multitude of digital start-ups vying for the investment dollars of younger consumers. schwab was a pioneer of low cost broke ramble from the down of the 70s. and it's bnd has been to make investing accessible abaffordable. the ameritrad the product of

numerous mermgers had become a sizable competitor. gether they would house about $5 trillion in assets stocks, bonds and bk accounts. in recent months. charles schwab led the way to zero commissions, a move hurting shares of amerd trade more due to greater emphasize on trading volumes. t gettinher would possible position the companies better in a lowe interest r world. relying on collecting customer cash balances. investigative through a mobile app or allowing a software model toetermineortfolio allocation mean the companies must upgrade zolg offerings and advertise robinhood and automated investment advisers have won the backing of silicon valley investors to capture aer you digitally atuned cohort. schwab has been a asset manager and welt manager. where amer could eliminate half

the operating expenses according to analysts which helps explain why the stock mankato a applauded the deal. while mergers reduce industry competition i thisase a combined schwab ameritrade would fight larger the competitors be van guard and fidelity for larger investors. the individual investor could benefit from the raceak to investing ever cheaper, faster and easiergh for "y business report" mike santoli. and let's turn now to michael wong to turning about the potential deal dween schwab anamerd trade would mean for the online brokerage industry. welcome, michael nice to have you here. >> thanks for having me. >> what do you make of the potential deal? does it make sense to you? >> yeah, of all the potential mergers with the publicly traded online brokerages, in was probably the leastiky. the market was betting likely that e-trade would merge wh e td ameritrade or e-traed

with charles schwab. i think the nearly 70% pop in td ain mere trade and drop in e-trade are about proof this was unexpected. >> e-trade was down sharply today. you might have thought it would fwoet are go up in sympathy but it had gone higher anticipating maybe a deal like this. does this take e-trad out of the story? or do you think there are other mergers coming? >> i think that e-trade is still in play. besides just t regular industry consolidation of them merging with let's say a schwab or amerdtrade, we think that they could potentially merge with a regiol ban or wealth management firm. there are plenty of players out there that would find a l of value in e-trade reta trader base and the employee stock plan business. >> mike santoli in in our report the outline if the deal did happen some of the positives for the companies involved. but are there negives ifhe deal does happen?

l>> there could betle bit of a culture clash. td ameritrade has been well-known for large kind of open architecture platform whereas charles schwab has had a more verticallypl integrated form with more of their own products on there. and, you know, definitely a big potentially is toronto dominion ownership stake in td ameritrade. having to yschwab think tangle that relationship between toronto and td ameritrade. >> if the deal happens they end up with $5 trillion. where fidelit has 2.6 trillion. do the other giants need to step up in the industry. >> fidelity can definitely be a player that can challenge this charles schwab td ameritrade merger. that said, i think that there are many other players that may bet considered a little less traditional. like bank of america merrilit

lynch the mere edge platform. jp morgan with the you invatt rm or even robinhood. there are still many players out there goingd head to h with a potentially combid charles schwab td ameritrade. >> quicklyeeo you regulatory hurdles at all. >> definitely you could see some anti-competition hurdles coming up. they are some of the most well-known brokerages. they doave a really good hold on the investment adviser spacea fos. there is definitely sop industry concentration that i think some regulators will lo at. >> morning star, michael wong, thank you. and a bit later in the program we look at how the merger could potentially impact knows using discount brokers to invest. o wall street now the dow and s&p posted declines the thirdobay in a the longest string inon new reports on trade negotiations between the u.s. appearna continue to pressure stocks. we'll have more on that in a

moment. but firsthe closing numbers for in day t with industrial average down 54 points still belo 28,000. nasdaq down 20 today. and to the duffee and the housing market. sales of previouslyom owned rose 1.9% last month. it's the latest reportho to the impact of loerj mortgage rates. the report sho that the median sales price of a home up more than 6% to a little bit more than rn 270,000 d this reflects a trend we've been telling you about, that the supply of homess falling well short of demand and that is driving up prices.nd >> to retail now it's been a big we can for earnings as you know.t and todays macy's turn to report. the department store reported better nan eected earnings which is a good thing of course. expected.ales week weaker than nding the stock down more than 2%. courtney reagan has details. >> the magic wasn't with macy's in the third quarter.

sales fell worse than expected, the first decline in two years leading the department store to slash full-ier outlooko reflect acquiesce weakness. arile digital sales quarter. the store salesked a quarter of slump in online growth. it made in s harder tol cold weather items with warmer weather. weak are than anticipat performance in quote lower tier malls. an w there were brief issue the website as it made changes ahead of the holiday season. ceo jeff gennette told mehe u.s. skmurm is haemt. they set the bar high for retailers.we have to earn trust business every day. and added, quote we know macy's fits into the consumern consideratio set. but analyst aren't sure. >> what we worry aboutll is r women's apparel. that's been a tough category. also it's a highly promotional quarter with other retailers competing fordollar. the consumer wants value.

oi they want brands. and they're to places like tjx, target, they're going to other places other than macy's. >> one thing macy's did differently than competitor kohl's this quarter decided not to discount more than planned to chase ses whichrotected margins and led in art to stronger earnings. >> there areigger picture issues here specifically the future of the mall. as you know mobile is t new mall. as you ow, the female shoppers o different now with the real instagramable generation interested in speed and trend and value. >> on itsonference call chief financial officer paul la price says m expects to kblof in the holiday quarter and the department store remains confidt in the holiday plans. there is a lot riding on next week for macy's, the most important several days of the year for the the retailer and the thanksgiving parade is a huge marketing event and hours ter the stores open for black friday and the holiday season under way.

for "nightly business repor i'manourtney re >> it's time to look at some of today's upgrades and downgrades. amd ground graded to out perform to market form. they expect profit taking in 20. the price target is 36. the stock fell 3.5% to 39.50. the but the stouk doubled so far thistear making it the b performer in the s&p 500. carnival cruise line was downgraded citing recently analysis of booking and price. cu the price tart is $47. the shares fell ac fredehun to 43.02 sfloot rh formerly known as restoration hardware downgraded to hold at luke capitaarkets the analyst citing the values. it's had a big run. pricearget new $190. the stock continued higher to 195.08. and duke energy was upgraded to overth from w equalght at

barclays. citing the valuation following pennsylvania 10% decline over the past month. price target now $98. the stock down a fraction to 86.66. >> stilling ahead, the next major medical breakthrough and how to pay for it. ♪ ♪ ♪ ♪ in washington, house speaker nancy pelosi cast doubtn the possibility of passing the new nafta trade deal, known as t usmca. she had previously characterized an agrment as imminent. but today she said she is not sure there is enough time to finish before t end of year time line many hoped for.

>> well it's also unclear whether the u.s. and china will be able to finish phase one of and whether a reported end invitation to meet face-to-face will be accepted. here is eunice yuan with more. >> the commerce ministry said day that china wants a phase one trade deal but one where the two sides work out core issues equals with mual spb. le "wall street journal" reports that the china chiefhb nonder has invited hits counterpart to beijing for another right now ofo- faceface talks possibly before thanksgiving but add that the u.s. team isn't keen to come unless they have firm commitments from c on issues like agricultural purchases. meanwhile mc's top diplomat warns the relationship between the u.s. and china could suffer because of theassing of e hopping cong bill in congress. the foreign ministry said the u.s. should stop before its too late and the paper the says the china could take revenge if

the bill turns to law. for "nightly business report" eunice yuan, beiging. >> the senate passe a short-minnesota term spending bill keeping the government open. the measure funds the goverecent throughber 20th. the house aeady passed the bill elier in the weekth legislation gives lawmakers time toork through some issues. like the funding level for the white house's border wall. and tonight, the presidentt signed t bill. a new report concludes what ave all suspected ayan that health care premiums and deductables outstrippedgrage th over the past decade. it was prepared by theth commonwe found. in 42 states employee premium and deductable exceed 1 of the ample income up seven states in 2008. >> the future of medicine was discussed on the campus of many considerace the heart of biotech. drers executives and investors

converged for the stat summit to find ways to push the limits of what's possible in health ce. our meg trell washere. >> artificial intelligence was a key focus. stafne kohler said the technology can enae things humans can't do. >> it turns out that computers are much better are eat seeing the subtle signals in cells than people. and less bias. they don't come in with a preconception of what makes for good or bad have intervention or sick or healthy cell. therefore they finds pattern people will never see. >> her company works with gilead to find new medicining for the liveease. they weighed op cancer alzheimer's diseases and depression sfl we completed pivot alpractice programs in major depresse disorder and e post partum depression. both showed rapid and durable response even though we used the drug two weeks.

>> but as the iustry pursues theegulation the industry says it need to be better at self-policing. for "nightly business report, meg tyrrell. >> xerox is not taking the hp rejection lightly. that's where we begin the market focus. rlier in the week we reported that xerox turned down the bid say going undervalued the company. xerox sent a letter to the board. threatening to take the bid to the shareholders if the printer maker doesn'tsider by monday. xerox rose 1.5% while hp down a fraction to 19.65. will tiffany say yes to lvmh proposal, the french luckry company owning louis vuitton and christian dior. reuters says the new down a fraction to 16.22 also after the bell nordstrom posted better than expected earnings and revenue l was ine

with estimates. the retailer saw a decline in departme store salesut growth in online revenue. nordstrom also raisedda ge. shares initially rose following the ns closing the regular session up 1% to 34.32. william sonoma reported after the bell. the parapet company of pottery barn and west e had sales come in slightly above estimates while profits in line with forecasts. the retailer saw increase in same store sales and raised the lower end of the full-carrier outlack. shares fell in after hoursft trading closing the regular session up a fraction to 68.75. and finally roth stores topped analyst expectations. there was a speak in retail sales and rsed the full-ier outlook. shares rose after hours. closing the regular session up more than 1% to 111.79. >> back to the stop story tonight, that charl haub is reportedly in talks to buy td

ameritrade in a deal creating a massive brorage and asset management company. what wouldhe deal mean to either of the companies?s with and what happens when your broker is gobbled up by anoer company? we join now reedra to get some answers welcome back. >> good to see you, bill, sue thank you for having me. >> the deal hasn't happened. >> right. >> but even ifnnounced tomorrow, let's say customers wouldn't see changes for quite , whright. >> that's right it takes quite a while. full disclosure, we're an advisory firm. we work with both of them. >> okay. >> it affects the institutional and retail side. so, yeah, this is probablyo likely happen. and we think it would be a very strong fit forhe two companies. they both have strengths in both areas. so for the average investor,ba what's py going to happen is similar to what we saw happen about two years ago when td

ameritrade bought scott trade. >> right. >> the lawyers get together they have to lack through regulations and legalities and eventuly close a deal and then you have the back offices working on technology inte iation. >> iave an account with either one of those two firmif whatrences might i see? what changes might i see? >> so schwab we believe is buying tdad ameri primarily for technology and assets. zero commissions procer pef li th to find other ways to make money. >> right. >> basically theompanies make money off cash accounts. so it's in their best interests to make theretail and institutional customers very happy through t process. as an -- as a retail investor you probably deal with local branches for your consistent. td ameritrade when they bought scott t they have increased by about three times the number of offices.

they have one of the largest networks of offices now. so the average person is probably not going to see too much cnge until after that point when all the technology -- because you have a lot of data that has to be integrated, tax, transactions has to be ated in the back office first and eventually they will throw a switch and who ever is dominant technologyplayer, you will just log in one morning and you'll have a new log-in. >> very quickly, td ameritradeo tends use products that are made by other companies. >> yes. ts schwab has own products, mutual funds, etfs. >> rit. >> who wins in that one, do you think. >> that goes back to how they make money. so, you know, they both took a big hit on revenue when they stopped crarging onaction fees. for mutual fund trees you still pay. but make money on spreads on bonds. the cash is where they make most of their money. when they consolidate, they'll have probably aboutch --b

will have a 40% increase in assets. if interest rates go up again, they have a big windfall. they're in a great patition. the ghing with investors with the additional revenue it's likely free trades remain. >> well we certainly hope that's the cas for sure. always good to see you reed faras with highlainancial advisers. coming up a missed opportunity a federal initiatives meant to help poor neighborhoods may be benefitting the rich. ♪ ♪ ♪ here a look at tofohat watch tomorrow. president trump is scheduled to meet with the vaping industry as he considers a ban on flavored e-cigarettes. on the economi calendar we'll

get fresh reads on manufacturing and consument senti and one more retail earnings report, this from footha lockers what to watch for friday. >> in the meantime, facebook ise reportedly conng making changes to its political ad policy. according to the "wall street journal," some of the changes would include preventing campaigns from targeting a small to er of people, the goal curb the spread of misinformation. weworks laying off 2,400 employees. the beleaguered office sharing start-up is working to cut costs and create a more efficient organization. the job reduces 19% of the total workforce and the jer cuts widely expected. opportunity zones billed as a way to redevelop low income neighborhoodco around the try. thedea was received and -- received bipartisan but now some are calling the zones a missedpp otunity.

ylan mui plains. >> opportunity zones were billeb poorpartisan way to help neighborhoods attract billions of dlrs into investments. and sen cory booker told cnbc this summere was onboard. >> we have to make sure this i econom working for the ideals that we taught. that's why iassed thatat legislion with cross the aisle for opportunity zones >> so were several ofel thelow candidates. mayor pete buttigieg championed the program as aay to drive growth. andrew yang was part of the think tankoming up with the idea but now political winds shifting what was once only the eipartisan provisions of tax law has cnder attack as a handout for wealthy. >> take this opportunity zone fund founded by anthony scaramci. >> the first project in a trendy neighborhood in norms. the new vir hotel is an

experiencing lifestyle property with a premium room product. the minimum investment, 00 00. >> we've got to have some limits on the type of investments. >> investors get to defer taxes on any capital gains they put zone.n opportunity they also become eligible to discaint those by up to 15%. and any money they make on the investmentszone it's tax free. >> the pl of unraeltzedga capitas, the source of capital for investment opportunity zones is about $6 trillion. you really only need 1% ess of the capital to have a program that creates a major new mautetplace. >>hat's a major new problem for another presidential candidate, bernie sanders. tweeted, we're going to end in taxcam and invest in working class communities that have been fleeced. as for booker, he is now soding the alarm. writing a letter to the treasur department warning that reports of abuse would be a perverse

violation of public it trust. for "nightly business report," i'm ylan mui in washington. and that is "nightly si report" for tonight i'm sue herera. thanks for joining us. >> i'm bill griffeth. have a great evening. see you tomorrow. ♪ ♪ ♪ ♪

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