TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Crude crushed.
Energy stocks slammed. The industry rattled by OPEC`s decision not to
change output. And that sent the sector into bear market territory.
And Black Friday frenzy. Bargain hunters hit the malls. But are they
putting their money where their feet are?
All that and more tonight on NIGHTLY BUSINESS REPORT for Friday,
And good evening, everyone, and welcome. Susie Gharib is off today.
I hope you all had a very pleasant Thanksgiving holiday.
Well, the Dow was able to squeeze out just enough of a game to notch a
fresh record close on a holiday shortened day on Wall Street. But, the big
story of the day was another tumble. And I do mean a tumble in the price
of oil. Rattling the energy sector and keeping equities from making even
more gains today.
Today`s big drop in crude prices comes after OPEC ministers voted on
Thursday not to cut production levels, despite lower demand and an
oversupply on the market. Some analysts expected the cartel to cut
production to help end a month-long free-fall in oil prices. They are down
about 40 percent just since June. But no cuts came, and oil prices spilled
like they had sprung a leak.
Domestic crude off 10 percent today, tanking at $7.54 to close at a 4
1/2 year low of $66.15 a barrel. The international bench mark Brent fell
another $2 to a fresh multiyear low of $70.15 a barrel.
Now, with the price of oil plunging, how bad could it get in the
Bertha Coombs has more.
BERTHA COOMBS, NIGHTLY BUSINESS REPORT CORRESPONDENT: OPEC`s decision
to leave its production levels unchanged at 30 million barrels a day is
certain to unleash volatility in this market until somebody blinks.
Analysts say at this point, OPEC is already producing more than what the
market needs and more than its own production level of 30 million barrels a
A number of traders say if we start to see any kind of pickup in
demand because of low prices that might help bring in some stability. But
overall, a number of players say expect a lot of volatility in this market.
OPEC`s job in the past has been to help bring stability to the market by
cutting prices. But at this point, they brought prices down to a five-year
low and for a number of players, whether it`s investors, or producers,
that`s going to mean an awful lot of uncertainty and a lot more pain to the
FRANCISCO BLANCH, BANK OF AMERICA MERRILL LYNCH GLOBAL RESEARCH: Now,
we`re seeing a totally different market where the swing in prices could be
$50, $60 a barrel intra year on a forward basis. So, this is going to lead
to a rethinking of the way people operate in industry.
COOMBS: For now, consumers and the economy certainly benefiting from
lower oil prices because it results in lower prices at the gas pump.
But longer-term analysts say, it could also pose a problem for the
economy, if producers in areas in the country where they employ a lot of
people just can`t produce oil profitably anymore. They`ll have to cut
back. And that could mean a loss of jobs.
Bertha Coombs, NIGHTLY BUSINESS REPORT, New York.
MATHISEN: And here`s a look at how some of the biggest energy plays
ended today after that 10 percent drop in crude. The oil majors among the
biggest decliners: Chevron (NYSE:CVX) the biggest single loser in the Dow,
down nearly 5.5 percent, ExxonMobil (NYSE:XOM) off 4 percent, BP and
ConocoPhillips (NYSE:COP) also moving decidedly lower. Some are the
hardest-hit shale oil producers like Sanchez and Clayton Williams fell more
than 25 percent today. And look at Laredo, down 32.25 percent.
The selling didn`t stop there. Producers of oil, oil field services
companies, they fell hard. Continental, Marathon, Transocean (NYSE:RIG),
seeing sharp declines along with Schlumberger (NYSE:SLB).
But with jet fuel and airlines` biggest expense shares of the big
carriers, you know what they did. They moved higher with United,
Continental and American up 8 percent, Delta up more than 5 percent,
JetBlue up 7 2/3 percent.
And shippers, UPS and FedEx (NYSE:FDX), also seeing some very nice
So, should investors expect more near-term volatility in the oil
market? Our guest tonight says you can bet on it.
Janelle Nelson is portfolio analyst with RBC Wealth Management.
Janelle, welcome and happy day after Thanksgiving.
Let me — I want to talk to you broadly about the market. But let`s
begin with oil. How close does your spidey sense tell you we are to that
point at which oil company shares are a buy, and the oil price might turn
JANELLE NELSON, RBC WEALTH MANAGEMENT PORTFOLIO ANALYST: Well, I
think what we need to see, Ty, is we need to see a response to the outlook
for 2015 by the exploration and production companies. I just attended a
conference down south and my sense at that conference was there was a lot
of complacency. Nothing gets a company`s attention more than when the
commodity price falls 10 percent in one day.
MATHISEN: Let`s go to a broader question about where the markets you
think are headed. My notes tell me that you think we`re in the middle or
the early innings, I should say, of a secular bull market that you think
began in 2012 and `13. What does that look like? And does that mean
necessarily that we won`t have 10 percent, 15 percent declines within that
NELSON: Well, exactly. When we say a secular bull market, what we
mean is that the markets get substantially better over time. Bull markets
start when everyone is still crying in their beer at the end of the day.
What we believe is happening is that the trend toward energy self-
sufficiency, the valuation of the markets, and the fact that most people
are still skeptical of equities means that we`re on a trend after 15, 16
years in a bear market on a secular basis, towards better underlying
markets over time.
MATHISEN: Let`s go to a couple of your choices, if we might. And I
guess your framework here is, if oil prices start to turn up, if oil prices
remain relatively stable, or if oil prices decline.
So, let`s start with EOG Resources (NYSE:EOG), which is the assumption
that oil prices are at or near a bottom and start too move back. Why do
you like that one? And what`s your price target on it?
NELSON: Fundamentally, what we like about EOG Resources (NYSE:EOG) is
their free cash flow positive so they`re self-funding. They`re able to
grow acreage, without make being acquisitions. Thirdly, they`re in a
position where they have a footprint in the major core acreage in the
Bakken and the Eagle Ford, and even at $40 a barrel oil, we see them still
getting a 10 percent overall return.
At present, they`re getting 100 percent return on their core wells.
We think the stock can trade well above where it trades currently, perhaps
as much as $20 per share higher. Bottom line, we think the company is
quality. You want to buy quality because quality gets thrown out in the
bathwater, with the stuff that isn`t so quality.
MATHISEN: Yes, I`ve heard a lot of people talk about the capital
structures and the level of debt that some of the shale places have. This
one you believe has a very strong and stable capital structure.
MATHISEN: Oil prices continue to decline. Your second pick would be
Walmart. It`s had some nice runs here lately.
NELSON: Well, you know, as a girl from Minneapolis, it`s not often
that I would recommend Walmart. But here`s what Walmart is doing. One,
they`re getting great opportunity from e-commerce. Their investments are
working. Secondly, they`re opening smaller stores in the most recent
quarter, comp store sales were up 5.6 percent, versus just one half of 1
percent for the whole.
And perhaps most importantly, the demographic for people who make
$40,000 a year or less, low gas prices at the pump means more money spent
MATHISEN: And trading range pick is Lennar (NYSE:LEN), the housing
company. Quick thought on that one, Janelle.
NELSON: Bottom line: we believe that the housing sector is still in
recovery, tepid recovery, but in recovery. Lennar (NYSE:LEN) has one of
the best returns on invested capital in the space. Secondly, over the past
six years, when most of its peers were selling land, they were acquiring
land. And we think that they are a key company in what our industry
analysts have termed the Golden Horseshoe — California, Oklahoma, Texas,
Arizona, Florida, Georgia, segments of the market that got hurt the most.
NELSON: They have done a great job picking up acreage.
MATHISEN: All right. Janelle, we`ve got to leave it there. Now, you
get busy and go to Mall of America there in Minneapolis right now. OK,
NELSON: I will do that.
MATHISEN: All right.
MATHISEN: Janelle Nelson with RBC Capital Management.
And let`s take a look at Wall Street. Stock exchanges closed early
this Friday after Thanksgiving, ending the session mixed, little change
generally. But again, the Dow gained just enough to finish at a new all-
time high. You never get tired of saying that. The Dow up just a fraction
but it was enough. The NASDAQ added four points and the S&P on this mixed
day lower by five.
That translates, though, into six straight weeks of gains for all
three dust indexes and for the just completed month of November. The blue
chip Dow and the S&P were each up about 2.5 percent. The NASDAQ fared even
better up 3.5 percent. And that index is now just 5 percent or so below an
all-time high of its own.
Some of the big winners on Wall Street today were retailers, many
attributing it to the fall in oil prices. But the move coincides with the
other big story today, of course, and that`s Black Friday — the unofficial
start to the holiday shopping season, and with the major stock averages at
or near all-time highs, gas prices at four-year lows and a bright-ish labor
market. Chief executives at some of the nation`s biggest retailers are
looking for strong sales.
(BEGIN VIDEO CLIP)
BRIAN CORNELL, TARGET CHAIRMAN & CEO: I think the combination of
rising consumer confidence, the change that`s taking place from an
employment standpoint, and the fact of the matter is gas does cost a lot
less than it did a year ago. So I think the combination of those factors
is certainly boding well for the retail environment as we enter this
important holiday season.
TERRY LUNDGREN, MACY`S CHAIRMAN & CEO: It`s very value driven. You
know, whether it be a $10, you know, coaster, or a $20 sheet set, that`s
what people are gravitating toward. They`re clearly gravitating toward the
HANK MULLANY, TOYS `R` US U.S. PRESIDENT: Over the next few weeks,
our sales will grow every single week, right up to the week before
(END VIDEO CLIP)
MATHISEN: Macy`s (NYSE:M), Target (NYSE:TGT), along with Walmart and
JCPenney, just a few of the retailers that finished the day higher. And
not by just a little bit. The National Retail Federation forecast 140
million Americans will do some kind of shopping over this long holiday
weekend, and it looked like most of them got things started last night and
continued into today as people rushed to take advantage of some Black
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: The crowd today were not as too bad like every
other year. (INAUDIBLE) bigger than this.
UNIDENTIFIED MALE: It`s all about the deals.
UNIDENTIFIED FEMALE: I`m not finding as big of deals.
UNIDENTIFIED MALE: After today, I plan on doing more shopping.
UNIDENTIFIED FEMALE: After tonight, I think I`m done. I think I`m
(END VIDEO CLIP)
And Courtney Reagan joins us from The Mall at Fairfield Commons in
Courtney, how busy is it today?
COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: You know, I
have to tell you, Tyler, as the day has worn on, the crowds have actually
gotten a little bigger. I think overnight, and in the late Thanksgiving
Day hours is when the crowds hit up the big box stores. That`s the
Walmarts, Targets, Best Buys of the world for those door buster specials,
some of those electronic deals.
And then there was a lull in the crowd overnight, and as the morning
and afternoon has worn on here, at The Mall at Fairfield Commons, we`ve
seen the traffic pick up, about at the level that I saw last year on this
day when I was here at this very place.
But I do think the traffic levels at the big box retailers was a
little bit higher than what I saw particularly at the one Walmart location
that I visited, lots of full carts. I counted 112 carts in line at one
point. I actually lost count. I couldn`t get to the total end of the
line, so there were more than 112. I just couldn`t get to all of them.
MATHISEN: Wow, 112 carts in line. That is my idea of a disaster. I
would hate to be number 113 or 112.
Tell me what times are these malls opening and closing? Are they —
was it open real early today?
REAGAN: This mall actually opened up at 6:00 yesterday. It`s been
open all night long, and so that`s why we saw all these dips and valleys
and peaks, and the different crowds. Folks know when the stores are open,
when they`re offering different deals at different times. So, there`s
reason for different crowds of people to come at different times.
We saw a lot of the millennial shoppers here overnight and in the
later Thanksgiving hours. As the day`s worn on you`ve seen more families
and the kids coming out, too. These malls have been open and running for
MATHISEN: All right. Courtney, thanks very much. Courtney Reagan in
REAGAN: Thank you.
MATHISEN: All right. Electronics always seem to be bigger sellers
during the holiday season. So, will this year be any different?
Josh Lipton takes a look.
JOSH LIPTON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Americans lined
up coast to coast to buy as many gadgets, and electronics, as they could
So, what were the most popular tech products on this Black Friday?
Analysts say as always, televisions were red hot. And this year, the
ultrahigh def 4K TV attracted a lot of attention.
STEPHEN BAKER, NPD ANALYST: If you want to sell TVs to the American
public, you need two things. They need to be as big as they can afford and
fit in the house. And they need to have the best picture that they want.
And 4K really addresses the, this is a state-of-the-art of the picture.
LIPTON: If 4k was a hit, and that`s good news for Samsung, which
controls about 50 percent of the market. Samsung now sells several 4K
models for less than $2,000.
Gamers were also out in force on Black Friday, looking for deals.
They shopped for games, as well as consoles.
And finally, analysts say Americans were buying a lot of GoPros, which
now start at $130, and go up to as much as $500.
BAKER: They dominate the categories that they`re in. And you know,
we`ve seen promotions on some of their older models for this holiday, we
think they`ll have another big holiday just like they did last year.
LIPTON (on camera): And it`s not just television, games and GoPros
that likely sold like hotcakes. Smartphones were also expected to be very
popular. Sam`s Club sold the iPhone 6 for $99 with a two-year contract.
For NIGHTLY BUSINESS REPORT, I`m Josh Lipton in Silicon Valley.
MATHISEN: But not everyone was out shopping and looking for deals
this Black Friday. Some were protesting, about Walmart, and the wages the
world`s largest retail pays its employees.
Eamon Javers was there.
EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
It`s become the new Black Friday tradition. Union organized protests at
Walmarts across the country, to spur the giant retailer to boost pay for
(on camera): These protesters are walking from Capitol Hill over to
the brand-new Walmart here in Washington, D.C. What they say they want are
$15 an hour wages for the workers at Walmart. And they want more
flexibility for the ability of the workers there to get a full 40-hour
workweek. A lot of the workers there, these guys say, aren`t able to get
enough hours in the week to have a real sustainable job and provide for
(voice-over): We met up with Melinda Gaino, a D.C. resident who says
her $9.90 hourly wage is not enough to keep her from being forced to
collect federal food benefits to feed her family.
MELINDA GAINO, WALMART CASHIER, WASHINGTON, D.C.: I do depend on the
government. I still receive Medicaid and I also receive SNAP.
JAVERS: But inside the store, other Walmart workers were getting on
with the annual Black Friday sales and Walmart arranged for us to speak
with the store manager, Ernest Reid.
ERNEST REID, WALMART SUPERVISOR, WASHINGTON, D.C.: I make a pretty
good wage as far as I`m concerned, I make a livable wage. Walmart has
afforded me the opportunity to make a livable wage. There are so many
benefits for Walmart.
JAVERS: In a statement, Walmart dismissed today`s protests saying
perception is never reality with labor unions. The crowds are made up of
paid union demonstrators and they are not representative of our 1.3 million
associates across the country.
Union organizers today targeted the Walton family, which owns Walmart,
saying the family is padding its $150 billion fortune on the backs of the
majority of Walmart workers who make less than $25,000 a year.
For NIGHTLY BUSINESS REPORT, I`m Eamon Javers in Washington.
MATHISEN: And still ahead, there are deals to be found at stores
today, and a potential deal being reported in the telecom industry. We
have the details, next.
MATHISEN: Is Europe trying to force Google (NASDAQ:GOOG) to split up?
Not exactly, but European Union lawmakers are coming down hard on Google
(NASDAQ:GOOG). Looking to force the search giant to unbundle or break up
its search engine from other services it offers, because Google
(NASDAQ:GOOG) says the E.U. has just become too powerful.
Well, Vodafone and Liberty Global (NASDAQ:LBTYA) rise on takeover buzz
and that is where we begin tonight`s “Market Focus”.
Vodafone reportedly exploring a combination with Liberty in a deal
that would create Europe`s largest phone, Internet and TV company. The
company is trying to determine the financial and regulatory hurdles it
would face if it goes ahead with the merger. No formal negotiations are
under way yet.
Shares of Vodafone rose 3 percent to $36.80. Liberty popped at 8
percent. It finished at $52.25.
Procter & Gamble (NYSE:PG) apparently working now with Goldman Sachs
(NYSE:GS) to sell one of its units and a big one, this according to
reports. Today, the company is exploring the sale now of its Wella hair
care unit which could fetch $7 billion. This as the consumer products
giant looks to streamline its portfolio. Shares of P&G almost 2 percent
higher. They finished at $90.58.
Twitter`s co-founder has sold some of its company stock for the first
time. According to a filing, he divested more than 700,000 shares. That
amounts to roughly more than $28 million. Shares of the social media
company up 1 percent today. They finished at $41.63.
Black Friday sure isn`t the day you want your Web site to crash, folks
— especially if you`re Best Buy (NYSE:BBY). The electronics retailer`s
Web site did go down for more than an hour today as shoppers, it was a good
reason, flooded the Internet looking for deals. Company says it was caused
by a concentrated spike in traffic. I guess that`s in the category of good
problems to share.
Shares of Best Buy (NYSE:BBY) up almost 2 percent. They finished at
Coming up, the big stores may be packed this Black Friday but mom and
pop shops are getting ready for their big day, Small Business Saturday.
MATHISEN: As the holiday shopping season officially under way, a lot
of consumers are finding that toys are going Hollywood this year.
Julia Boorstin looks at the big entertainment brands in the spotlight
at toy stores.
JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
This holiday season, the most popular toy they`re going straight from the
big screen to under the tree, as Hollywood brands take the toy store
JIM SILVER, TTPM CEO: The boys action category, which is about a $2
billion category, licensed brands account for about 99 percent of that
aisle. You walk down that aisle, it is Teenage Mutant Ninja Turtles, it`s
Star Wars, it`s Transformers, it`s Spider-Man, it`s Batman. It`s all
Another aisle that is heavily licensed is the preschool aisle. Where
you have Jake, you have Doc McStuffins, you have Minnie Mouse, and account
for about 30 percent to 40 percent of all toy sales.
BOORSTIN: The hottest of all the licensed brands, Disney`s “Frozen”.
UNIDENTIFIED GIRL: Elsa hair.
UNIDENTIFIED FEMALE: Elsa hair? Oh, you want Elsa dress? What else
UNIDENTIFIED FEMALE: Elsa tiara.
UNIDENTIFIED FEMALE: My nieces are obsessed with “Frozen.” They were
all Elsa, for Halloween so they can get them absolutely anything frozen
related and they would be thrilled.
BOORSTIN: Toy industry expert says frozen licensees, primarily Mattel
(NASDAQ:MAT), JAKKS Specific, as well as Hasbro (NYSE:HAS) half a billion
dollars in wholesale revenue this holiday season.
(on camera): Frozen success as holiday bodes well for Hasbro
(NYSE:HAS), which is already benefiting from licensing Disney`s Marvel
brand. The toymaker secured the licensing rights to Disney`s “Frozen” and
princesses starting in 2016.
SEAN MCGOWAN, NEEDHAM & COMPANY: Frozen is actually going to wind up
being the number one movie property for the toy industry this year even
though it will be more than a year after it came out. That`s very unusual.
It`s kind of like what happened with toy story. It`s what happened with
cars, but it`s not typically what happens with these things.
BOORSTIN: But when it comes to competition for consumers dollars,
toys based on familiar characters have an advantage.
UNIDENTIFIED FEMALE: They watch the shows and then any time they see
a commercial for the Disney (NYSE:DIS) anything they want that toy. So,
that`s — that goes on the list. Anything Disney (NYSE:DIS), yes. So,
most of the toys that we own are Disney (NYSE:DIS) based.
BOORSTIN: Mega holiday toy sales aren`t just great for generating
revenue. They also keep brands alive, and fans poised for sequels.
For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Los Angeles.
MATHISEN: And finally tonight, with so many people focused on Black
Friday shopping at the nation`s biggest retailers, mom and pop stores are
gearing up for their big day. It`s tomorrow, Small Business Saturday.
Kate Rogers (NYSE:ROG) has more.
KATE ROGERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Sandwiched
between two of the year`s biggest shopping days. Black Friday, and Cyber
Monday, on Small Business Saturday, local shops get their chance to strike
holiday gold. For owners like Guy Rozenstrich who runs New York City
Jewelry store Phoenix Rose, it`s the official kickoff for retail madness.
GUY ROZENSTRICH, PHOENIX ROSE OWNER: So, for the past year seeing
increasing sales on Small Business Saturday. We make everything by hand,
and everything is done here. And you know, everything`s made in basically
the West Village, and the people like that.
ROGERS: Anthony Cirone, owner of Lilac Chocolates, is also feeling
the community love. He says the American Express (NYSE:EXPR) (NYSE:AXP)-
sponsored promotion brings added foot traffic for the 91-year-old Manhattan
based store, which does about 20 percent of its annual sales between
Thanksgiving and New Year`s.
ANTHONY CIRONE, LILAC CHOCOLATE OWNER: It`s one of our busiest
Saturdays of the year, and it really kicks off our holiday season.
ROGERS (on camera): And the holiday is certainly gaining traction.
Last year, Small Business Saturday saw nationwide sales up $5.7 billion.
(voice-over): But for Ron and Joan Fisch, owners of Hampton House
Furniture Store in Mont Claire, New Jersey, it`s not so easy bringing in
shoppers for big ticket items on small business Saturday.
RON & JOAN FISCH, HAMPTON HOUSE CHOICE FURNITURE OWNERS:
Unfortunately, we can`t drive the customer into the store anymore. When
they`re ready to shop, they come in. So, hard for us to, you know, bring
them in with any type of promotion.
ROGERS: Promotions, however, are working for Phoenix Rrose.
Customers are finding out about the business on Instagram, where the store
has more than 24,000 followers who will see the small biz Saturday deal
ROZENSTRICH: Promotion 10 percent off everything in the store.
ROGERS: And while not every business will see a big boost, the good
news is that according to the National Retail Federation, nearly 75 percent
of Americans plan to shop this Small Business Saturday.
For NIGHTLY BUSINESS REPORT, I`m Kate Rogers (NYSE:ROG).
MATHISEN: And that will do it for this edition of NIGHTLY BUSINESS
REPORT. I`m Tyler Mathisen. Thanks so much for watching.
And continue to have a great holiday weekend, everybody. We`ll hope
to see you right back here on Monday evening.
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) 2014 CNBC, Inc.