this is "nightly business report" with tyler mathisen and sue herera. funded in part by hss. >> our guiding 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. >> banking on it. the nation's biggest banks surged as trading revenue boomed since the election. but is the bank stock rally out

of gap? >> the trump administration may hinge on one specific proposal. >> income property becoming a land lord is now just a click away. but it comes with some risks. those stories and more tonight on "nightly business report" for friday, january 13th. good evening. welcome. the sector was put to the test. today three of the nation's biggest financial institutions reported their earnings on this friday the 13th. jpmorgan and bank of america both beat wall street expectations. wells fargo still reeling from its bank accounts scandal just missed those estimates. the sector had been responsible for they know broader stock market make new highs since the november election. the prospect of higher interest rates and less regulation propelled the group and last quarter's profit was driven in part by securities trading. today investors wanted to see that the bank stock run was

justified. it was all three of those stocks rose in trading today. here's more on this key part of the market. >> the first wave of earnings reports has come and they're good enough with bank of manager, jpmorgan, all beating on the bottom line. not surprisingly, not much was offered in 2017 guidance. the banks typically don't do that. jamie dimon did say the u.s. economy may be building momentum. there's opportunity for good, rational and thoughtful policy decisions to be implemented. on the conference call, dimon characteristically down played saying we don't react that much to the weather. he said he was basing his observations on a broad range of things and growth may have done a bit better in the fourth quarter. dimon said regulatory relief may have helped banks open new

branches and seek out clients they don't have and a lower tax rate would be good for the country in general. here's the bottom line on trumponomics. you have to see the whole picture with you ultimately it is good for our franchise broadly. so cfo marian lakes did say they would provide details real numbers, 2017 guidance at their investor day and that's scheduled for february 28th. the bank of america ceo said while the reason rise in interest rates came too late to impact fourth quarter results, we do expect to see a significant increase in net income in 2017. in other words, they'll make more money. generally positive earnings reports. for "nightly business report" at the new york stock exchange. >> now the take on the rally in the banking sector.

fred, welcome. nice to have you here. >> great to be on. thanks for having me. >> we've sustain financials have quite a run since the election. did the perngs we saw today we saw today from chase and wells fargo support the move that we've seen in stocks? >> generally, yes. we were hook for confirmation and got it. positive guidance which means the earnings estimates will go up. since the election they've only gone up 5 to 8%. stocks are up 30. i think we have enough to make investors feel comfortable. this is a go-to sector for 2017. >> let's talk about one of the trio and that would be wells fargo. take us through investment case pros and cons in this one. i can imagine their mortgage business which is the biggest in the country, if i'm recalling correctly, might face some pressure with rising interest

rates. >> they have a couple challenges. number one is the scandal on the cross sale issues. and one of the disappointing news on wells was they had promised a $2 billion savings from initiatives but none of that is going to the that investors. it is going to the initiatives. secondly, mortgage. they're the second biggest mortgage lender in the country. more competition, more pressure. the reason the stock was up today was the net interest margin and that's what they're looking for. we saw it under pressure. i think it got folks interested in wells fargo. >> one of the bellwethers is considered jpmorgan. partly because of the business and partly because of the ceo. and jamie dimon was on the earnings call this morning and said some pretty positive things about the economy as well as his own business. do you concur? >> they're pretty well set. the financials are a go to sector. higher interest rates is helping

with trading activity. and secondly, if we get some of these reforms investors are working for, tax reform, less regulation, they are geared toward that. and they are the bellwether in the sector. >> how much are you counting on on those two things, tax reform and particularly regulatory relief from the banks to help these companies, or can you even quantify it? >> it is just guesswork at this point. tax reform is very complicated. you can plug in a 10% or 15 or 20% reduction and see what happens. but wait a second. are they really going to let banks benefit that much? some of these are pretty speculative. i wouldn't encourage investors to get too excited yet. >> all right, fred. thank you so much. >> those bank earnings were not

enough to lift the dow which still seems stalled. however, nasdaq managed to close at a new record. investors are waiting for more details. the dow jones industrial average fell 5 points. 19, 885. the s&p 500 ended the day higher by 4. for the week, the nasdaq it was only index to advance by about 1%. fractional losses for the others. >> to the economy, sales at retailers rose in december helped by strong demand for cars and an increase in online holiday shopping. retail sales increased 4.6%. a rise in wages and an increase in consumer confidence helped boost spending. >> increase in confidence was echoed by sentiment being near a 13-year high. americans are stillment on miss if i can economic policies under the new administration will help

advance growth. >> a gauge of inflation also increased. they gained 4.3% in december mostly because of higher fume costs. >> for most of the last eight weeks, the only policies that affected market came from the federal reserve. the gop president has promised lots of tax and spending moves. bottom line, fiscal policy comes front and center in trump's washington. the busy agenda that awaits the new chief a week from today. >> president-elect donald trump ran an unconventional presence campaign and he is going to have an unventional first day in office. under previous presidents, the parade was hours but donald

trump said they'll cut down on the length of the inaugural parade so he can get to work quickly in the oval office. what will he do there in. >> he has promised to which you term limits on all members of congress. a hiring freeze. that all regulations must come with two regulations eliminated. a five-year ban for officials lobbying on government, to withdraw from nafta, labeling china currency ma nip hater, allowing the keystone pipeline, begin removing more than 2 million criminal illegal immigrants, and suspending immigration from what trump calls terror prone regions. a long list for a busy day and that may be why he is only going to have three inaugural walls rather than the ten for barack

obama. part of the plan is something called the border tax adjustment which we told but earlier this week. tonight, steve explains why it is a critical part of team trump's broader economic strategy. >> the border adjustment stax pretty complicated stuff. the main thing investors need to know is this. it raises a lot of money and that may be why it exists at all. it would be a 20% tax on imports. that's critical. it is either the key revenue source to help pay for a lot of other ideas like infrastructure. without the money those other ideas could be watered down. >> if you give up the trillion dollars in revenue, maybe the corporate rate can go down from

5 or 15 or whatever the number is, maybe you have to phase in expensing. you have to give up something. it will be a horse trade. >> it is why the market may be ahead of itself. concerns about the deficit is one reason some major investors are a little more skeptical than the overall market. >> i think the reality of how significant our budget deficit is and our accumulated deficit is, will weigh heavily in terms of the tax plan. unfortunately we'll to have get to growth by deregulation. by saying we won't get there you this way. >> the dow is up more than twice as much since the election. one reason could be that small cap stocks pay higher tax rates. the big company in the s&p 500

have an average tax rate of 26%. the small cams, 32%. it is likely trump will get at least some of what he campaigned on. maybe a lot. 2 campaign is zpaigd the political realities of budgets, deficits and taxes are taking over. for "nightly business report." a top goal of the trump administration is to repeal and replace the affordable care act. today, the house passed a resolution that paves the way for a quick repeal of the law. committees will now be allowed to write formal legislation. no democrats vote in favor of the resolution and some republicans have expressed concern about repealing the law without knowing what will take its place. marilyn said that her company plans to create 1,800 jobs in the u.s. and has a new strategy for its military

program. the president-elect has called too expensive. >> aid great meeting with president-elect. i had an opportunity to talk to him about the program and i certainly share his views that we need to get the best cape fwoilt our men and women in uniform at the lowest possible price. so i'm glad i had the opportunity to tell him that we're close to a feel will bring it down significantly to the previous aircraft. more over it will bring a lot of jobs to the united states. >> this is lockheed martin's second meeting. some new stock selections. he has tripled his performance since his last time on nbr.

the japanese motor maker has settled for a million dollars. yesterday we reported the deal was likely. today it became official. three senior executives were also indicted for their role in covering up the defect that led to 11 deaths in the u.s. and a number of injuries. if you are uncertain about what to expect in the trump administration, try planning a state budget. that process is going on right now in capitols across the country. the biggest budget of all, california. >> this year's state budget process was already going to be

tough with the economy slowing. >> california is growing but less than we expected. >> and now along comes donald trump. >> we will repeal and replace obamacare. >> the biggest question mark, health care. southern california one of 31 states that expanded medicaid under the affordable care act. 6 million people gained coverage in this state alone. if that funding goes away, californrnia will have to decid what to do with people like this who has a chronic inflammatory disorder. >> i'm terrified. this insurance keeps me alive. if i lose my coverage, i feel that i'm threatened to get all of my coverage through a hospital emergency room and that's not how to manage a chronic disease. >> expansion or not, all 50 states have a medicaid program to budget for. and health care is just the start, according to the national association of state budget

officers. >> uncertainty is part and parcel of every transition but this is a bit different. the scope and the scale of some of the changes being discussed are larger than we've seen in recent years. >> like federal tax reform which could have even more havoc. and infrastructure. in california they're bracing themselves. >> if you look at the wide array of very drastic initiatives that are being talked about, by the transition, the commentators or by president trump himself, that's quite a challenge. >> for now in every state capitol, all they can do is plan based on current federal policies with the knowledge they'll to have make adjustments very soon. for "nightly business report" in sacramento, california. >> to read more about the

uncertainty that state budgets are facing, you can head to our website. nbr.com. we begin tonight's market focus, the world's deficit 9% to $2.50 a share after blowing past profit estimates. he said results were driven by solid demand among investors. shares up fractionally. 379.35. game stops, heavy promotions and poor store traffic caused seam store sales during the same period to fall almost 19%. the video game retailer cited weak demand for the call of duty infinite warfare titles. shares were off. the company that makes products for people with diabetes said one of the

products will be, they determined it could be used in doctors' treatment of that disease. the shares the soared. and pandora said late yesterday that it expects to top its earnings guite guidance for the most recent quarter. they cite strong advertising performance. they also said it will cut about 7% of its work force in an effort to lower costs. shares rose 6% to 1276. a list of stocks he says should benefit from riding interest rates. his previous stocks. google, up 12%. alibaba also up. the managing director and partner at rdm, ron, good to

have you with us. congratulations on those stock picks. with that in mind i won't wait. let's get to your picks this time. blackstone, the big private equity company, run by steve schwartzman. >> first off, one of the smartest guys on the planet so you don't want to bet against him. i went looking for something to talk. about everybody is talking about jpmorgan and bank of america. blackstone makes deals. they have hedge funds. they're private equity. they could credit lending. we actually use one of their hedge funds. and they're not cheap. they make money. with interest rates going up, people will be looking at these and blackstone will be right in the middle of it. we have so we like blackstone.

plus it has a 5.5% dividend. if the market is high, we have to get paid. let's move to global x master limit partnership. energy infrastructure. >> you bet. so these are the pipeline, storage people. this is not the drillers or anybody like that. if we have a secretary of energy from texas, and an epa guy from oklahoma. pipelines. you have to get all this new oil. we'll be self-sufficient in 2024. they have to get it to oklahoma or the gulf. and that did i have zenld about 7%. >> and your third choice is a return member of the list.

mike soft. it is 17% higher than what you picked it up last summer. >> you bet. the truthcy could have picked all three of the ones we walked the last year. i think microsoft, the way that they're bowling into the clouds, they're doing a great job of adjusting themselves to just plain, it pays about a 4.4% dividend. so there will be corrections. but the cloud is the way to go. it is the future. so micro soft remains the winner. coming up, looking to collect rent instead of paying it?

well, new companies want to make it as easy as buying stock. ever thought about becoming a landlord? it is easier today than ever. investors need to be aware that it can be a risky business. >> tyler is a software san list in new york city and a land owner of three home. >> i'm not ready for an apartment building. >> he is already in the stock market but wanted to diversify. he couldn't invest in his own

backyard. too expensive. so he turned to a company called home union for help. >> i don't have the time or the expertise to fly cleveland, alabama, and investigate these different markets on my own to find tenants, to do the paperwork, comply with the local regulations. so they provide a one stop shop for me to invest. >> home union is one of a cottage industry of online companies that help individual investors find, buy, lease and manage single family rentals all over the country. >> what we're changing is allowing them on invest. >> he co-founded the company in 2009 at the height of the foreclosure crisis. back then big institutional names like black stone and colony capital were buying thousands of distressed properties and turning them into rentals.

the argument is do i need live in atlanta to buy coke stock? so the purpose of company like home union is how can we make this institutional and trans parent and easy so somebody sitting anywhere in the u.s. can go out and look at the data and have us match that to their financial preference. >> investability is another rental platform that offers deep date on markets across the nation. >> once wall street said this is an asset class we'll pay attention to, companies started developing data, analytics, acquisition tools. >> and started marketing them to individual investors. >> i see servicing is a bigger industry. i think we'll see more and more markets enter the space. >> home unit charges for property and management and it has a leblding armt.

investability. >> all the products and services we've developed, we try keep the pricing model geared toward helping their money work as efficiently as possible. process is easier but not without risk. tenants sometimes don't faye risk and roofs sometimes leak. and as we've learned, home values go up but they also go down. >> do your research about real estate anding in gener to rely on the rental income, not the home value. more about the new ways of becoming a land lord. head to our website. nbr.com. the old ways were very difficult. i did it once and it's hard. >> all right. go to the website and read more. thanks for watching. >> i'm tyler mathisen.

have a great weekend from me as well. we'll see you on monday. >> "nightly business report" has been fund in the part by hss. our guiding principles are patient first. >> the goal of creating and sustaining value is all about putting the patient at the center of the equation. >> the purpose is to help people get back to what they need ask love to do.

[birds chirping] [bluesy guitar music] ♪