Transcript: Wednesday, September 17, 2014

NBR ThumANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and
Susie Gharib.

Dow index finishes after a record after Federal Reserve Chair Janet Yellen
sticks to her script and makes clear the Central Bank will keep super low
interest rates in place for a while.

FedEx (NYSE:FDX) wildly considered a bellwether of economic activity earned
a lot of money last quarter and could be a sign of things to come.

GHARIB: And down to the wire. The battle for independence in
Scotland and why the outcome could mean big changes for business. A report
tonight from Edinburgh.

We have all that and more tonight on NIGHTLY BUSINESS REPORT for
Wednesday, September 17th.

MATHISEN: Good evening, everyone. And welcome.

It was, as Susie just mentioned, another record-setting day on Wall
Street, with the Dow and the Dow Transports finishing at fresh all-time
highs. The reason? Federal Reserve policymakers decided today to keep
interest rates right where they are, near zero for what it calls a, quote,
“considerable time”.

Now, that`s the phrase some Fed watchers thought would be dropped from
its post-meeting communique. And that so the thinking went, would have
opened the door to higher interest rates sooner.

Well, not so fast, said Fed Chair Janet Yellen, the labor market isn`t
ready for higher rates just yet, and low inflation means those rates can
safely stay low for now.

On Wall Street, the major averages all shot higher, but close off the
highs of the decision. The Dow up about 25 points with the high, NASDAQ up
nine, S&P edging back from an historic intraday high this afternoon. It
finished just two points higher on the day.

Prices on 10-year treasuries fell as bond yields jumped to a session
peak above 2.6 percent. They move up in the past couple of weeks. And the
U.S. dollar gained a little bit of ground, too.

Hampton Pearson has more.


Federal Reserve Chair Janet Yellen delivered a shot in the arm to equity
markets, with a message monetary policymakers still plan to keep key short-
term rates at record lows for, quote, “a considerable amount of time” — a
phrase that had become hotly debated in the markets.

The reason: key economic measures remain sub-par, including wage
growth and long-term unemployment.

JANET YELLEN, FEDERAL RESERVE CHAIR: I want to emphasize that there
is no mechanical interpretation of what the term “considerable time” means.
And as I have said repeatedly, the decisions that the committee makes about
what is the appropriate time to begin to raise its target for the federal
funds rate will be data-dependent.

PEARSON: The Fed expects slower economic growth this year and next,
slightly lower unemployment, but little change on inflation. The Central
Bank officially announced it will end its bond-buying program before it
expires after the next meeting in late October, mid-2015 remains the most
likely timetable for monetary policymakers to start raising rates. The
size and pace will depend on what`s happening with the economy.

YELLEN: The federal funds rate will serve as the key rate to
communicate the stands of policy. To begin normalization, the committee
will raise its target range for the federal funds rate. The committee
expects that the effect of federal funds rate may vary within the target
range, and could even move at sight of that range on occasion.

PEARSON (on camera): As far as the time table for shrinking the Fed`s
$4 trillion balance sheet, Fed Chair Yellen says that could take until the
end of the decade.

For NIGHTLY BUSINESS REPORT, I`m Hampton Pearson in Washington.


GHARIB: Josh Feinman joins us now to talk more about all of this. He
is chief economist at Deutsche Asset and Wealth Management.

Josh, it just seems like the message from the Fed today was that it is
in no hurry to change what`s going on with rates. Are policymakers doing
the right from your point of view?

think so. I mean, I think they`ve been singing, you know, from the same
hymn book for a while. They`re not rushing for the exits. I think that`s
appropriate given that while the economy is making progress, we`re better
off than we were a few years ago. And I think that that progress is likely
to continue.

We`re not where we want to be or need to be. Inflation is still
running below target and we`re still shy of full employment. The Fed says
they see considerable slack in the labor market — I agree. I just don`t
see there`s any great sense of urgency to start moving quickly or

MATHISEN: Does the Fed`s transparency make it easier or harder for

FEINMAN: I think it makes it easier, in a sense that, you know, the
Fed is pretty clear about what they`re trying to achieve, they`re trying to
get the economy back to full employment and back to price stability. So,
it`s good to know that. Those are sort of the guideposts.

And they told us, you know, they`re not going to move until they`re
much more confident that we`re going to get there.

So, I think that does help people navigate. It doesn`t mean that we
know for sure what the Fed is going to do because as they say, it`s
conditional, right? It depends on how the economy is going to involve.
Nobody knows for sure what that`s going to be, but I think it`s helpful to
have these guide posts.

GHARIB: I know you`re an economist, and here Tyler and I are asking
you stock market questions, but they`re so connected, that investors are
really looking to see what`s going on in the economy and vice versa. So,
stocks rose a little bit today. Gold was stronger. The dollar was up —
gold was down, the dollar was stronger.

So kind of what`s next for the markets? Is it just going to be — are
they going to go higher from here? Are they going to be going lower? Just
sort of stuck in this same range?

What do you think happens based on what Janet Yellen said today?

FEINMAN: I think, you know, based on what she said and what we have
been talking about along, it depends. It really depends on how the economy
evolves. You know, I think the economy has got a good chance to continue
along its recovery path and actually doing a little bit better.

I think the progress that we have been seeing towards full employment,
towards price stability is likely to continue. But I think it`s going to
be gradual. I think that the Fed is certainly not going to be hurrying.
They`re going to keep policy accommodative still for quite a while.

So, I think on the whole, that creates a pretty favorable back draft
for equity markets. But, of course, there are risks out there. There are
global risks to be sure. You know, the data look a little bit better in
the U.S. and a little soggier in other parts of the world? So, we have to
keep an eye on that.

MATHISEN: There were two dissenters, two dissenters who will be
leaving the voting rolls on the open market next year. Has Janet Yellen
proved that she is in charge of the Fed fully?

FEINMAN: I think so. I mean, you know, of course, it is a consensus-
building institution, and you`re never going to get everybody on the same
page, people have different views of the way the world works. I think
these dissenters, though, are kind of far from the center of gravity, of
the decision making core of the Fed. So, I don`t think they`re really are
reflective of where that core is. And I think that Chair Yellen has done a
pretty good job of guiding and leading that center of gravity.

GHARIB: Josh, always interesting to talk to you and hear what you
have to say. Thank you so much.

FEINMAN: Great to be here.

GHARIB: Josh Feinman from Deutsche Asset and Wealth and Management.


MATHISEN: Well, one of the sticking points for the Federal Reserve
has been the inflation rate that`s been running below the Central Bank`s
long-run forecast. And today, more evidence of low inflation at the cash
register. Consumer prices unexpectedly declined to 2/10th of 1 percent in
August. That`s the first monthly drop in more than a year, with the price
of gas, oil, clothing and airline tickets all dropping last month.

GHARIB: Well, there are no inflation worries when it comes to online
shopping. With more people than ever buying through the web, FedEx
(NYSE:FDX) is doing more ground shipping to their homes and delivering more
profits to investors. FedEx (NYSE:FDX) posted strong quarterly earnings
today, with net income up 24 percent, shares rose more than 3 percent and
they`re up 11 percent so far this year.

So, what`s FedEx (NYSE:FDX) doing right?

Morgan Brennan takes a look.


Profit at the world`s number two shipper jumped 24 percent from last year
as sales increased in all of its major divisions, ground freight and
express. Several factors played a role including cost-cutting programs and
increased ecommerce shipments.

The strong beat is a good sign for the economy for the economy since
FedEx (NYSE:FDX) and its competitors are considered bellwethers of growth.
And it comes on the heels of an announced 5 percent rate hike for all of
the company`s North America`s operations. That will begin right behind the
holiday season, on January 5th, the same day new dimensional rates tie to
box size also take effect.

taking a leadership position from pricing standpoint. Typically, they
don`t increase their ground rates before UPS. But this year, they moved it
up three months and did so before UPS. And I think they`re frankly
becoming a little bit more of a leader in that respect because they did not
have the service problems that UPS had last year.

BRENNAN: The company says the increases are, quote, “appropriate”,
given current market conditions. Analysts expect the rates stick because
the number of packages being shipped is growing, and capacity remains

But before those higher prices kick in, FedEx (NYSE:FDX) has something
else to focus on first, the holidays. The company expects to set another
record for peak-season shipping volumes, and is hiring more than 50,000
temporary workers to do so, more than double last year, although still far
less than the 95,000 workers being brought onboard by competitor UPS.

problems around the holidays, despite the snow, despite the ice, and UPS
did. And I know the weather was a factor, but the bottom line is the
little ice and snow clouds did not fall around the UPS trucks and ignored
the FedEx (NYSE:FDX) trucks. FedEx (NYSE:FDX) got it delivered over the
holiday and I think that`s benefiting them in both volume and pricing power

BRENNAN (on camera): That`s why FedEx (NYSE:FDX) is reiterating and
ambitious earnings forecast, setting up what many analysts believe could be
a turnaround year. But this is all going to come down to several factors.
Fuel prices remaining relatively low, continued economic growth, and, of
course, the weather, especially as children once again make their wish
lists for Santa.

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan in Fort Lee, New


MATHISEN: And FedEx (NYSE:FDX) isn`t the only company announcing that
it is taking on more seasonal hires for the upcoming holidays. Just today,
Kohl`s (NYSE:KSS) announce plans to add 67,000 holiday employees. That`s
up from 50,000 last year.

GHARIB: Turning now to international news. Residents of Scotland
will make an historic decision on independence tomorrow. If they vote yes,
they`ll break away from the United Kingdom after more than 300 years. But
right now, polls show the no`s are in the lead but not by much. And
understandably, a lot of businesses are nervous about what happens next.

Michelle Caruso-Cabrera is in Edinburgh, Scotland, with more.


over): The feelings are intense on both sides of the issue, and so is the
campaigning, the nearly 5 million Scottish voters remained deeply divided
on whether or not to become independent from England.


CARUSO-CABRERA (on camera): You`ll be voting no?

BOYLE: I`m sure there`s lies being told on both sides, but — so if
you can`t make up your mind, you have to go with what you already got.


CARUSO-CABRERA: You`re voting yes. Why?

MCLAUGHLIN: Because I think we`re better when we can control our
politicians, where we can see them. That`s why.

CARUSO-CABRERA: You`re not worried about the pound and all —

MCLAUGHLIN: Absolutely not. It`s our pound, and we can still use it.

CARUSO-CABRERA (voice-over): The yes campaign says that Scots should
have more say on how their tax money is spent, and they`d like to spend
more on social welfare programs. The no campaign say the Scots face
economic risks. They could lose the backing of the English Central Bank,
and perhaps their membership to European Union, that would hurt trade.

One of Scotland`s largest industries is scotch whiskey, and its
members are worried about the potential loss of access to the European
Union trading bloc. Scotch is a huge export for Scotland, $6.5 billion
last year, or 95 million cases.

(on camera): This is the factory floor of the Ian Macleod distillery
in the heart of Scotland. The finance director here tells us that if the
Scots do vote for independence, he thinks it would be very detrimental to
the business. They have, by the way, required by hygiene regulations.

because the results could be quite difficult for business.

CARUSO-CABRERA (voice-over): He fears losing the use of the British
pound and that interest rates may go up.

YOUNGER: So many things at the moment are not clear at all,
particularly in terms of currency and our industry`s access to markets.

CARUSO-CABRERA: Graeme Blackett is an economist and businessman who
supports independence. He knows there are risks, but he says the key
issues can be resolved in the negotiations that will come after the vote.
Ultimately, he thinks it`s better to have a government right in Scotland,
rather than as far away as London.

GRAEME BLACKETT, ECONOMIST: I live close to where a guy called Hugh
MacDiarmid who was a famous Scottish poet used to live. And he said that a
parliament should always be within marching distance of the people.

CARUSO-CABRERA: That way, he says, Scottish businesses can have more
influence on what matters to them.

As for now, it`s the voters who have all the influence.

For NIGHTLY BUSINESS REPORT, Michelle Caruso-Cabrera, Edinburgh,


MATHISEN: Still ahead, what a difference a year makes. Remember the
government shutdown a year ago? Why members of Congress are taking a very
different tack this year.


GHARIB: Higher reward money for Wall Street whistle-blowers. That`s
what U.S. Attorney General Eric Holder is proposing. In a speech today at
New York University, Holder asked Congress to raise the limit on the amount
of money whistle-blowers may receive for providing evidence of financial
fraud or other misconduct, something Holder says is needed more than ever
to combat wrongdoing.


ERIC HOLDER, ATTORNEY GENERAL: But it remains true that at some
institutions that engaged in inappropriate conduct before and may yet
again, the buck still stops nowhere — nowhere. The responsibility remains
so diffuse, top executives so insulated that any misconduct could again be
considered more a symptom of the institution`s culture than a result of the
willful actions of any single individual.


GHARIB: Current laws cap those rewards at $1.5 million which Holder
calls a paltry sum and may not be enough to entice a cooperation of many in
the financial industry.

MATHISEN: We have more out of Washington and this time, it looks like
Democratic and Republican lawmakers may be on the same page with the House
voting on a bill to fund the government in the next fiscal year, hitting
October 1. But there is a lot more than keeping Washington`s lights on in
this congressional revolution.

And here to tell us more about it is John Harwood from the nation`s

John, does the House vote today mean that government will stay open
and next month Congress will avoid a shutdown? And what does the election
have to do with all of this?

will avoid a shutdown at least through December, Tyler. That`s when this
continuing resolution extends government funding. And so — and you`re
right, this was a bipartisan vote overwhelming. The House cast more than
300 votes in favor of this, the majority of both Democrats and Republicans
voting yes.

They want to clear this issue off the table and get back home and
campaign in midterm elections.

GHARIB: John, to what extent does the debate change because of that
amendment of President Obama on his new offensive against ISIS? Is there
any connection between the two?

HARWOOD: Well, that served, Susie, to try to enhance the bipartisan
feeling behind this bill. Republicans already wanted to avoid the
government shutdown. They don`t want to make themselves the issues in the
midterms. They want to make the Democrats and President Obama the issue.
So, it is likely to go anyway.

But the fact that to nation is rallying to some degree behind the
president`s new offensive against ISIS, and Republicans and Democrats on
the Hill are rallying served to add a bipartisan element that made it all
the more certain this was going to go through. Now, the Senate has to
follow suit.

MATHISEN: And the Senate presumably will. Any provisions of special
interest or importance to business in this resolution?

HARWOOD: Yes, there was — the extension of the Import-Export Bank
funding through next June and the authorization for the Import-Export Bank.
Remember, that was in danger because some Tea Party Republicans argued that
this was crony capitalism benefiting large companies like Boeing (NYSE:BA)
with their overseas deals.

Now, you have tremendous support for this and bipartisan support
through this bill to extend that funding into June. It`s still going to be
a challenge to have a long-term extension, but at least for now, the fear
that the Export-Import Bank will go away is off the table.

MATHISEN: All right. John Harwood, thanks very much. John reporting
from Washington.

Well, everyone seems to love a happy home builder and today, we got a
lot of them. Home builder sentiment this month shot up to a fresh nine-
year high since before the collapse as builders continue to sell more newly
build homes at higher prices. That`s a recipe for happiness.

Here are the shares of some of the nation`s biggest homebuilders, how
the end of the day session. KB Homes up more than 4 percent, D.R. Horton
(NYSE:DHI) up 3 percent. Toll Brothers (NYSE:TOL) and Ryland Group
(NYSE:RYL) also in the green.

GHARIB: And the biggest gains of all today went to Lennar (NYSE:LEN).
That`s after the homebuilder said its latest quarterly earnings went
through the roof. Profits surged 47 percent as it sold more homes and
apartment buildings at higher prices. Shares of Lennar (NYSE:LEN) shot up
almost 6 percent to $41.40.

MATHISEN: And Actavis is calling for DuPont to split into two, and
that is where we begin tonight`s “Market Focus”.

Nelson Peltz`s Trian Fund Management says the chemical company should
be broken up. His firm sent a letter to DuPont`s board saying DuPont`s
current structure is destroying shareholder value. It suggests creating
one public company of its faster-growing segments and another with its
operations that generate strong cash flow. Shares popped more than 5
percent to $69.25.

General Mills (NYSE:GIS) posted results that missed on the top and
bottom lines as cheaper store-branded foods are eating its profits. The
Cheerios cereal maker blamed challenging market conditions in the U.S. for
the miss. Also, the company announced $100 million in new cost cuts.
Shares tumbled about 4 1/2 percent to $50.83.

Microsoft (NASDAQ:MSFT) hiked its dividend by 11 percent to 31 cents,
but that`s the smallest percentage increase in the payout since 2009.
Also, the company appointed new directors to replace two board members who
decided not to seek re-election. Shares of Microsoft (NASDAQ:MSFT) down a
little bit to $46.52.

And a warning from Sony (NYSE:SNE) sent its shares lower. The company
says it will report a much larger than expected loss of more than $2
billion for the fiscal year, and it will not pay a dividend for the first
time in more than 50 years. It cited a struggling smartphone business for
the revision. The stock off almost 7 percent to $18.88.

GHARIB: Cracker Barrel saw its fourth quarter profits rise as higher
prices and cost cuts helped the restaurant chain offset lower traffic.
Those results beat estimates, but the profit outlook for the new fiscal
year came below consensus. Shares fell by 2 percent to $101.07.

U.S. Steel said it expects its third-quarter results to top estimates.
Also, the steelmaker`s Canadian unit will apply for protection from
creditors as it looks at restructuring alternatives. U.S. Steel also said
it won`t proceed with planned investments and expansions at its plants in
Minnesota and Indiana. And the stock surged on all that news, 10 percent
to $45.61.

We have another update in that dollar store saga. Family Dollar has
told shareholders to reject an unsolicited $9 billion takeover bid from its
rival, Dollar General (NYSE:DG). Family Dollar is trying to arrange a sale
with the other chain, Dollar Tree (NASDAQ:DLTR). Shares of both store
operators off a bit.

And United Natural Foods (NASDAQ:UNFI) posted strong results after the
bell. The natural and organic food distributor also gave investors
guidance that topped Wall Street estimates. Shares soared initially after-
hours. But during the regular trading day, the stock was up slightly to

MATHISEN: Right now, the National Football League is suffering
through perhaps its biggest crisis ever and big consumer brands that pay
millions to sponsor the league and its (INAUDIBLE) are speaking out about
how officials are handling or mishandling domestic violence issues.

Julia Boorstin has the story.


(NYSE:NKE), suspending their contract with Adrian Peterson after his
indictment for child abuse, saying, quote, “Nike (NYSE:NKE) in no way
condones child abuse or domestic violence of any kind.” This after the
NFL`s response to Peterson and Ray Rice domestic abuse scandal prompted
mega sponsor Budweiser to warn, quote, “We are not yet satisfied with the
league`s handling of behaviors that so clearly go against our own company
culture and moral code. We have shared our concerns and expectations with
the league.”

MIKE PAUL: They`re concerned about their prices. They`re concerned
about their stock price. They`re concerned about a lot of things that are
external to the game of football quite frankly, and those things are

BOORSTIN: Anheuser-Busch spends about $200 million annually on NFL
rights, fees and ads, paying for Bud Lite to be the league`s official beer.

It`s just one of many big brands speaking out. Visa (NYSE:V),
McDonald`s, Pepsi, and Verizon (NYSE:VZ), among many commenting on the
seriousness of the domestic abuse and the importance of the NFL doing the
right thing.

The NFL`s biggest games deliver TV`s highest ratings and the most
expensive advertising. But will brands actually pull the plug on the
chance to reach such a massive audience?

PAUL: There is a very good chance that sponsors will pull the plug on
advertising dollars, not just with individual athletes, not just with
teams, but potentially bigger contracts with the league if things get

BOORSTIN: Now, there is more money on the line than ever.

RICK HORROW: You know, $8 billion a year in television revenues and
why did the TV networks pay those rights fees? Because they know they can
get them back in droves from the corporate sponsors. So, this is a
watershed moment for the NFL.

BOORSTIN: According to YouGov brand index, the NFL`s consumer
perception has dropped to its lowest point since 2012 when former players
filed a class action lawsuit over concussions and brain injuries.

For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin, in Los Angeles.


GHARIB: And coming up, the end of higher education as we know it.
Will half of the country`s colleges and universities no longer exist years
from now?

We have the final part of our series, “The Future of Education”, next.


GHARIB: A warning today about the safety of personal data kept on
file on the Web site. Government watchdog, the General
Accounting Office, says it`s found security and private vulnerabilities on
the federal exchange. And that`s despite steps taken to enhance the
protection of customer data in the past year. There are still weaknesses
in keeping that information safe.

MATHISEN: And finally tonight, what might a college education look
like 25 years from now? What will the student body look like? And what
could be the impact of rising tuition cost and the current student loan

In the final installment of our three-part series on the future of
education, Sharon Epperson gives us a glimpse on the changing landscape of
higher education.


In 25 years, the higher education landscape may be unrecognizable.

NATHAN HARDEN: Half of the colleges and the universities that now
exist in the United States will cease to exist.

EPPERSON: Technology responsible for the shift is already under way.
As some of the nation`s top universities, including Harvard and MIT have
started to open up their classes to the world for free, through massive
online courses known as MOOCs.

education course offered online that anywhere from hundreds to thousands of
students can sign up for.

EPPERSON: The ability to receive a highly coveted elite education for
free will have significant implications.

HARDEN: Your local state university is going to be in direct
competition with the most elite universities in the world.

EPPERSON (on camera): Futurists say big name universities with strong
private endowments should be fine, low cost community colleges will be OK,
too. But those schools largely dependent on tuition may struggle and may
not survive.

HINES: The universities that are in trouble are those that are, if
you will, stuck in the middle. And we`re seeing this hollowing out of the
middle. We`re seeing this in industry after industry. Those who were kind
of caught in between those two will either adapt or face the consequences.

EPPERSON (voice over): When the middle hollows out and the mid-tier
colleges and universities go out of business, many futurists say higher
education will become much more personalized.

HARDEN: You might take, you know, a law class from Harvard. You
might take an engineering class from Perdue. You might take an economics
class from MIT, and you have the option to sort of curate your own

EPPERSON: It`s not all doom and gloom.

HARDEN: It`s a positive story that creates a whole level of access
for students and whole new opportunities for people who couldn`t afford it



MATHISEN: Fascinating changes here. It`s going to change the whole
business model of higher education in my view, the online aspect.

GHARIB: And hopefully, we get a lot smarter students because they`ll
have access to the Harvards and MITs of the world, right?


GHARIB: That`s NIGHTLY BUSINESS REPORT for tonight. I`m Susie
Gharib. Thanks for watching.

MATHISEN: And thanks from me as well. Tyler Mathisen here. Have a
great evening, everybody. We hope to see you right back here tomorrow


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