TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Not as good as it looks. The unemployment rate drops to the lowest level in seven years, but for all the wrong reasons.
SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Historic settlement. BP tries to put the Gulf Oil spill behind it by agreeing to the largest environmental settlement ever.
MATHISEN: Crucial vote. The Greeks head to the polls this weekend to decide the fate of the country. But what exactly are they voting on?
All that and more tonight on NIGHTLY BUSINESS REPORT for Thursday, July 2nd.
HERERA: Good evening, everyone, and welcome.
OK, but not great. That`s how the June employment report is being described. The U.S. economy created 223,000 jobs in June, a decent number, but less than what the economists had been expecting. Wages were stagnant while the unemployment rate fell to 5.3 percent. And therein lies the problem, the unemployment rate did not drop because workers found more jobs but because people stopped looking.
Hampton Pearson has more.
HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: While June headline unemployment is the lowest since the 2008 recession, the jobs report was weaker than expected. Hiring came in below the 233,000 consensus forecasts, wages were flat and job growth for April and May was revised downward by 60,000 — not the kind of jobs report leading economists and Fed watchers say is likely to move monetary policymakers anytime soon.
JAN HATZIUS, GOLDMAN SACHS CHIEF ECONOMIST: They`re not yet sufficiently convinced that the two tests for rate hikes have been met, which is further movement in the labor market and reasonable confidence that it will move back to 2 percent.
PEARSON: The overall labor force part tags rate dropped to 66.2 percent, the lowest since 1977. The primary reason, fewer teens and recent college graduates than usual entering the labor forecast.
THOMAS PEREZ, U.S. SECRETARY OF LABOR: June is the highest month of inflows into the economy. And it`s a function of fact that people, like my 19-year-old daughter, they get a summer job.
PEARSON: The labor secretary has been involved in efforts to increase youth hiring in Baltimore where there`s an added sense of urgency after the riots this spring. This week, we went to Baltimore where Don Fry is coordinating efforts by city government to create 8,000 summer jobs for Baltimore youth through public/private partnerships.
DON FRY, GREATER BALTIMORE COMMITTEE CEO: He`s concerned of Baltimore, and he`s concerned of what we heard from — saw from the unrest that occurred a couple of months ago. I think this report indicates that there is an enhanced focus on young people when opportunities can be presented to young people.
PEARSON: For many of these youths, there`s a lot more at stake than just a summer job for a few weeks. It`s a potential game changer for 18- year-old Tynefa Mason, a single parent headed to college this fall who`s getting an opportunity to learn business skills.
TYNEFA MASON, GREATER BALTIMORE COMMITTEE SUMMER INTERN: If I make it through this and really make something out of it, I will really pat myself on the back for this and I`ll be so grateful to be able to help support my friends.
PEARSON: The challenges of a changing workforce in a slow growth economy are also on the feds radar screen and it ponders raising interest rates from historic lows.
For NIGHTLY BUSINESS REPORT, I`m Hampton Pearson in Washington.
MATHISEN: Our guest tonight says today`s jobs report will not change the timing or pace of the Fed rate hike. He`s William Lee, head of North American Economics at Citi.
Bill, welcome and good to have you with us.
You say this is basically what the Fed needs to do what it wants when it wants, what will it do and when?
WILLIAM LEE, CITI HAD OF NORTH AMERICAN ECONOMICS: We think the Fed can move in September and we think things are right on schedule. My reaction to your notion of ho-hum job growth is we got a ho-hum economy, that is growing at a ho-hum 2 1/2 to 3 percent pace. So, what more would you expect. This is exactly what the Fed is looking for.
HERERA: But, you know, Bill, just to push back on that a little bit, if you look at the Fed funds futures, they are not signaling a rate increase. And a couple of big firms on the street are on the opposite side of where you guys are. They say that, given Greece, the Fed won`t move.
LEE: The impact of Greece is going to be insofar as the U.S.
financial markets and international markets generally. So far, there`s been no sign that that has happened.
So, Greece is off the table as far as the Fed increase is concerned, has no effect whatsoever. What`s more important is what`s going on domestically. And domestically, you`re right, the Fed funds future are pricing in a lot of downside risks and that`s exactly where we stand. We think there`s a lot of downside risk. But the best case is that the September increase is in line and we`re waiting to see if, in fact, the data coming in are going to ratify that or not.
I think the bulk averse are surely to the downside and that`s why we have pricing the way it is.
MATHISEN: What about inflation, Bill? Where do you see that? I mean, it`s really been quiet below what the Fed would like.
LEE: What inflation? That`s exactly issue.
LEE: There is no — (AUDIO GAP) to generate any kind of impetus towards revising prices. And we don`t see inflation hitting the 2 percent targets that the fed has in mind until easily 2017. So, as far as the Fed is concerned, it`s not inflation now that`s the issue. The issue is we have zero rate and that`s absolutely not appropriate for an economy growing at 2 1/2, 3 percent.
HERERA: Are you worried at all about the participation rate?
LEE: Yes, I am. Yes, I am. That`s a real issue because we don`t have enough people coming into the labor force because people are discouraged. Their view of the economy is one where — you know, we`re not possibly going to maintain the 2 1/2 or 3 percent because, after all, potential growth right now is only at 1 1/2 to 2 percent, much lower than what most would have thought.
And that`s the consequence of severe shock that we`ve had and the slow growth that we`ve had post-crisis in 2008.
MATHISEN: Bill Lee with Citi, you can probably see that he`s with Citi. Bill, thank you very much.
LEE: Thanks a lot.
HERERA: Stocks stalled after that so-so jobs report. The major averages closed out the holiday shortened week with losses. Uncertainty over Greece`s referendum this week, also pressured the markets and we`ll have more on that in just a few moments.
At the close, the Dow Jones Industrial Average was down 27 points to 17,030. The NASDAQ was off about 4, and the S&P was down a fraction of a point.
For the week, the major averages were all off at least 1 percent.
MATHISEN: BP enters into an historic settlement. The energy company has agreed to pay a record fine related to damages caused by the oil spill in the Gulf of Mexico five years ago. As a result, BP shares jumped today.
Eamon Javers has more.
EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Across the Gulf States, officials announced the news Thursday, a record-breaking settlement with oil giant BP that would end years of litigation in the wake of the
2010 Deepwater Horizon oil spill. The grand total, $18.7 billion, to be split among the Gulf Coast states, with Louisiana getting the largest share at $6.8 billion.
All of that money will go to environmental restoration and economic recovery. The settlement clears out the majority of pending lawsuits at the state and local level. And much of it will be tax deductible for BP.
Officials said that time had come to cut a deal and get the money flowing.
PAM BONDI, FLORIDA ATTORNEY GENERAL: We think this is going to help our state recover and move on. The last thing that we wanted was to be tied up again in a black hole of litigation that could have gone 15, 20, 30 years that perhaps our grandchildren would have seen the results of.
JAVERS: For its part, BP said the company is happy to put the mess in the past. The company`s chairman said the settlement resolves the company`s largest remaining legal exposures, provides clarity on costs and creates certainty of payment for all parties involved.
This deal will still have to go through a public process and ultimately be approved by a federal judge. But if it does go through, it will be the biggest environmental settlement in the history of the United States.
For NIGHTLY BUSINESS REPORT, I`m Eamon Javers in Washington.
HERERA: Regulators accusing Fiat, Chrysler of not moving fast enough on recalls. The National Highway Traffic Safety Administration says the automaker failed to provide timely and accurate recall information to the agency, which is looking into Chrysler`s handling of 23 recalls involving
11 million vehicles.
HERERA: More now on Greece and the controversial referendum Sunday that could decide whether the country continues to use the euro as its currency. But as Greeks head to the polls, the question on the ballot is anything but clear.
Michelle Caruso-Cabrera has the details from Athens.
MICHELLE CARUSO-CABRERA, NIGHTLY BUSINESS REPORT CORRESPONDENT: The ballots are printed and the metal frames for polling stations being moved into place, as Greece goes into full campaign mode for this Sunday`s referendum, a vote to decide whether or not to accept unpopular economic reforms in exchange for billions more in bailout money.
The streets are filled with posters urging Greeks to vote yes or no.
OXI is pronounced ohi and it means no. NAI is pronounced nay and it means yes.
As for both sides fill the airwaves.
Social media sites like Facebook (NASDAQ:FB) and Twitter are also campaign platforms.
While the choice in answers is clear, the actual question on the ballot is complicated. It reads, “Should the plan of agreement be accepted which was submitted by the European Commission, the European Central Bank, and the International Monetary Fund, in the Eurogroup of June 25th, 2015, and comprise of two parts, which constitute their unified proposal?”
Regardless of what the ballot says, other European leaders have told the Greek people very clearly, they should see this vote as a decision on whether or they want to stay in the euro.
Dutch finance minister Jeroen Dijsselbloem went as far as to say that Greece has no place in the Eurozone if it isn`t willing to reform, and that a no-vote means Greece will be left to its own devices.
The prime minister of the country, Alexis Tsipras, went on television tonight and said that`s not true. He`s telling Greeks to vote against the agreement, arguing a strong no vote will give them a better negotiating position and that he`ll have a deal within 48 hours after Sunday`s vote.
In the meantime, the banks are still closed, except the pensioners, who come day by day based on alphabetical order to collect 120 euros of their monthly stipend.
The European Central Bank won`t decide what to do next about Greek banks until at least Monday after the results of the referendum are known.
With banks closed, Western Union (NYSE:WU) and Moneygram can`t send or receive money. And because Greece is so reliant on imports, business leaders say it`s only a matter of time before there are shortages.
ANASTASIOS ECONOMOUM: If you look at it, at the end of the day, you`re looking at machinery and pharmaceuticals.
CARUSO-CABRERA: Pharmacist George Bacacos says customers are already shifting their buying habits for fear of empty shelves.
GEORGE BACACOS, PHARMACIST: They are buying less cosmetics and more needed products like infant milk, diabetes products like strips, testing strips and insulin.
CARUSO-CABRERA: Regardless of what happens on Sunday, the Greek economy is already suffering dramatically.
For NIGHTLY BUSINESS REPORT, Michelle Caruso-Cabrera, Athens.
HERERA: Still ahead, as the health ca industry undergoes tremendous change, there are some stocks that could see some big gains. Our market monitor is naming names.
HERERA: Whole Foods top executives apologizing today for overcharging in New York City stores. Last week, we told you that the grocer was under investigation by the city for allegedly mislabeling packages with the wrong weight. The company co-CEO has explained how they plan to prevent his from happening again.
WALTER ROBB, WHOLE FOODS CO-CEO: It`s understandable sometimes that mistakes are made. They are inadvertent. They do happen, because it`s a hands-on approach to bringing you fresh food. So, what`s important is what we`re doing now and what we`re committing to, to fix that.
JOHN MACKEY, WHOLE FOODS CO-CEO: We`re doing a number of things.
Most importantly, we`re going to increase our training in our New York stores and around the country because we want to be perfect in this area.
We don`t want there ever to be any mistakes.
While the company apologized, Whole Foods still disputes the department`s claim that it`s systematically overcharges customers.
MATHISEN: Well, as we reported earlier in the program, the economy added 223,000 jobs last month. This, as an increasing number of Americans are turning to freelancing and away from traditional full-time 9:00 to 5:00 jobs. And the jump for the number of freelancers is being driven in part by the sharing economy.
Mary Thompson has our latest installment of where the jobs are.
MARY THOMPSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: For Emily Cherin, a six-month search for a full-time job ended lots of part-time work through Task Rabbit.
EMILY CHERIN, TASK RABBIT: My world just sort of exploded.
THOMPSON: The New Jersey native and former teacher, broadcaster and chef, finding strong demand for her writing, cooking and other skills through the online odd jobs marketplace.
CHERIN: I`ve been hired to write a love letter and deliver a frappuccino.
THOMPSON: Cherin, one of the 33 percent of workers in the U.S. who are freelancers, a number seen growing to 40 percent by 2020 according to a study by Intuit (NASDAQ:INTU).
ARUN SUNDARARAJAN, NYU STERN SCHOOL OF BUSINESS PROFESSOR: These on- demand marketplaces are expanding freelance well into the territory that used to be occupied exclusively by full-time employment.
THOMPSON: Professor Arun Sundrarajan says this sharing-driven shift benefiting high-quality freelancers whose work is noted in online reviews, generating more jobs for these freelancers at higher pay.
SUNDARARAJAN: The wage rate on Task Rabbit across every profession are significantly higher than the Bureau of Labor statistics averages for those same professions.
THOMPSON: Still, Task Rabbit CEO and founder, Leah Busque, says while
10 percent of the firm`s 30,000 taskers make part-time work their full-time job, most tasks to make ends meet.
LEAH BUSQUE, TASKRABBIT FOUNDER & CEO: Ninety percent of the community is actually utilizing this to pay one to three bills every single month.
THOMPSON: Doing two to three tasks a day —
CHERIN: So, I`m on my way to New York City to compete its task, picking up party foods at Party City.
THOMPSON: Sharon grosses about $3,500 a month after Task Rabbit takes its cut.
As much as Sharon loves the ever changing nature of her job —
CHERIN: Nice to meet you.
THOMPSON: — at her age, she wants the stability of a full-time job.
CHERIN: I want to know exactly what I`m making.
THOMPSON: The income uncertainty a problem for many people who work on their own, a problem the founder of the Freelancers Union, Sara Horowitz, believes could be partly solved by a government-run worker funded rainy day reserve.
SARA HOROWITZ, FREELANCE UNION FOUNDER & EXEC. DIR.: You could imagine the people could be able to put away pretax amounts into an account.
THOMPSON: One way of providing protection to a fast-growing sector of the workforce.
For NIGHTLY BUSINESS REPORT, I`m Mary Thompson in New York City.
MATHISEN: To read more about the sharing economy and how it is helping people find freelance work, head to our website, NBR.com.
HERERA: Another multibillion dollar health care merger is where we begin tonight`s “Market Focus”.
The Medicaid insurer Centene (NYSE:CNC) is buying Health Net
(NYSE:HNT) in a deal valued at over $6 billion. This comes as health insurers have been increasingly combining to cut costs. Health Net
(NYSE:HNT) popped 10 percent to $71.57. Centene (NYSE:CNC) fell 8 percent to $74.44.
Shares of Xoom literally zoomed on news PayPal will buy the online money transfer company. The deal worth about $900 million comes just a few weeks before PayPal will spinoff from eBay (NASDAQ:EBAY). The stock climbed 21 percent to $25.05.
MATHISEN: Shares of Yelp saying youch. They tumbled today on a Bloomberg report that the company has stopped its search for a buyer. The online review company had hired Goldman Sachs (NYSE:GS) to help it find a suitor, but it will hold off on the sale for now. The stock dropped 10 percent, closing at $38.18.
Anthem and Cigna are reportedly rekindling their merger talks after the health care insurer rebuffed Anthem`s $47 billion merger proposal last month. Now, the buzz comes as Cigna is reportedly considering a possible acquisition of Humana (NYSE:HUM). Anthem fell 1 percent to $163.14. Cigna off a fraction to $161.29.
HERERA: And now to our market monitor who`s betting big on health care with stocks he says will rise 25 to 40 percent over the next year and a half. He is Michael Mussio, portfolio manager at FBB Capital, a wealth management firm.
Michael, welcome. Nice to have you here.
MICHAEL MUSSIO, FBB CAPITAL PORTFOLIO MANAGER: Thanks for having me.
HERERA: Let`s start with your picks because I`m interested in some of the reasoning behind it.
Danaher (NYSE:DHR) is one of the stocks and you`re looking for a company that is in the first stages of longer term transitions. Tell me about it.
MUSSIO: That`s right. So, Danaher (NYSE:DHR) is a great example.
They announced an acquisition on the health care arena of Pall (NYSE:PLL) Corp about a month ago and the company is going to be splitting. So, the next year and a half, you`re going to have an old line, kind of industrial business, which was Danaher`s core business and you`re going to have a faster growing health care business and we see that as a potential catalyst for shareholders to have two smaller companies, instead of one bigger company that are each going to be leveraged more to do more acquisitions and generate more internal growth. That`s a great example.
MATHISEN: Your second choice on which you have a I think $168 price target, or thereabouts, is United Healthcare. I assume this is because you believe United will be one of the last men standing, one of the winners in the consolidation is going on?
MUSSIO: Yes. That`s right, Tyler. So, you have the biggest of the breed, so to speak, and United actually is the most diversified. So, they have not just health care management part of the business but again, internally, they have a faster growing business in the pharmacy of benefit management part of health care.
And the whole group kind of got a lift here in the last week and a half or so. Some of that overhang from a potential negative decision from the Affordable Care Act. The Supreme Court took that risk away. So, we do see consolidation happening. There is some jockeying on share prices right now.
MATHISEN: Cerner (NASDAQ:CERN) is your last pick. Price target of
$100 over the next 18 to 24 months and this is a digital solution you say to health care efficiencies. And a lot of people feel like the health care industry is not very efficient. So, it`s an interesting pick.
MUSSIO: Yes. Sue, Cerner (NASDAQ:CERN) is the waste fraud and abuse in the health care system. Cerner (NASDAQ:CERN) really addresses that waste aspect and it`s the largest independent IT services company for health care. They`ve got a really impressive growth trajectory over the last 10 years. So, 20 percent plus, and we see that going for the next five years. A little bit of growth there in name not for the faint of heart. It doesn`t have some of the dividend protection that Danaher
(NYSE:DHR) and United do. But we think that the company is on a good track.
HERERA: All right. Michael, thank you very much. Michael Mussio with FBB Capital.
MUSSIO: Thank you.
MATHISEN: And coming up, do you remember when you used to put pennies in a piggy bank to save or invest? Well, now, there`s an app to help you do it.
HERERA: Fifty years ago after the Grateful Dead was formed, the ban will be playing its final show. And this farewell tour isn`t just about the songs, and the fans, but also about the bans financial legacy. Steve Liesman has more from Chicago.
STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Fifty years ago, the Grateful Dead embarked on a long, strange trip that changed the music business. This weekend, the four remaining band members, Bob Weir, Phil Lesh, Mickey Hart and Bill Kreutzmann, joined together for what is their last show together. It promises to be one of the biggest concerts ever with nearly 250,000 tickets sold over three nights.
And then there`s what dead heads call the couch tour, the ability to see the concert on multiple media from anywhere in the world.
PETER SHAPIRO FARE THEE WELL PROMOTIONS: When you`re watching this thing whether at home, on your phone, on TV, you can go to a concert venue.
Concert venues across the country are having screenings, you can hear it on the P.A. systems, you can go to movie theaters, it`s going to be in movie theaters around the world, you can see alone on your couch, in your privacy room, with your friends watching on cable or satellite, we`re just trying to make it available to everywhere.
LIESMAN: The two early shows in Santa Clara, California, the band offered the ability to see the show on the web, and the first ever live paying music stream on YouTube. And estimated 100,000 people paid for it and watched the show.
Shapiro thinks the Chicago shows could be many times that number as the band finds a way to monetize 50 years of goodwill with its bands.
The Grateful Dead`s most commercially successful song was “Touch of Gray”, with fans streaming in from around the world, with airplanes full, with hotels full, the city of Chicago is expecting a touch of green, with an estimated impact of the three shows between $50 million and $100 million.
For NIGHTLY BUSINESS REPORT, I`m Steve Liesman.
MATHISEN: Steve, in case you didn`t guess, is a big Dead fan.
Well, it`s no secret that 20 something millennials have not been in a rush to invest their money. They had issues finding jobs, paying off college loans and may have seen their parents lose money in the stock market over the past 20 years.
And so now, though, there`s an app for that. Apps for investing aren`t brand new but an app aiming to attract millennial investors is our latest bright idea.
MATHISEN (voice-over): Marlon White is one of those millennials you keep reading about. This 25-year-old Washington, D.C. event planner has been hesitant to invest his money.
MARLON WHITE, ACORNS CUSTOMER: I think the traditional stock market you`re supposed to understand or if your parents don`t invest, you don`t really have anyone to tell you how to do it.
MATHISEN: Now, he`s using an investment management and budgeting cell phone app called Acorns. White says its round-up function is even helping him find money to invest, tracking debit and credit card purchases, and then rounding the charges up to the nearest dollar, putting spare change aside for investments.
WHITE: I think it`s going to blow up because with the app it makes it really easy.
MATHISEN: Jeff Cruttenden got the idea for the app when he was a senior in college about six years ago. Now, he`s a fourth generation investment pro in southern California. His dad Walter didn`t need much convincing to help his son start the business.
JEFF CRUTTENDEN, ACORNS CO-FOUNDER & CEO: I could sign for car insurance on my phone at that point, there are multiple other things that I could do but it was difficult to start investing.
WALTER CRUTTENDEN, ACORNS CO-FOUNDER & EXEC. CHAIRMAN: I remember one day, I just had the smartphone and said, dad, this is your brokerage firm, this is your broker. These things are getting so smart.
MATHISEN: What`s really smart is the way the app is attracting customers. About 850,000 in just ten months since it went live. Users contribute and indicate a risk tolerance. The app uses Acorn`s proprietary formulas to come up with an asset mix, typically stocks and bonds in ETFs from big names like Vanguard, Blackrock and PIMCO.
J. CRUTTENDEN: And investing is built up as a very big decision, and if you can reduce it down to an app appropriate decision, something that people can commit to in a few minutes, investing spare change, then it can be quite effective.
MATHISEN: On top of the typical ETF fees, Acorns charges just a buck a month for accounts smaller than $5,000, and one quarter of 1 percent per year for accounts above 5 grand.
W. CRUTTENDEN: It wasn`t too long ago it cost $35 to do a wire transfer and we can now transfer for just a penny or two.
MATHISEN: Users accustomed to doing business on their phones, especially younger ones, appear to be getting hooked.
WHITE: It`s definitely addictive. I check it a couple times a day.
MATHISEN: Of course, that video game-like attraction can also be a concern.
ETHAN MOLICK, UNIVERSITY OF PENNSYLVANIA: Games are good at getting you over and over again. And, of course, in finance, that`s not necessarily a good thing.
MATHISEN: University of Pennsylvania professor Ethan Mollick says constantly trading and checking balances runs counter to the idea of long- term investing, but he also notes these apps are helping to enlighten new investors.
MOLLICK: Thinking about how do you increase your financial literacy, how do you create — increase their sense of empowerment? Those are really where I think it`s exciting frontiers are.
MATHISEN: Exciting, too, for Jeff and Walter Cruttenden who feel like they are helping to blaze a trail with Acorns, that could be lined up with a whole lot of nuts down the road.
W. CRUTTENDEN: I believe that micro investing will be ubiquitous. It will be something that happens in the background.
J. CRUTTENDEN: We`re expanding the pie. We`re bringing new people at a pace that really hasn`t been seen because we`re making it easy and accessible.
MATHISEN: Old business done a new way, 850,000 customers is nothing to sneeze at, right in the ballpark with some of the big brokerage firms that have had apps for several years.
Now, do you use your phone for financials stuff?
HERERA: I don`t.
MATHISEN: Not your phone.
HERERA: Not my phone, no.
MATHISEN: Your computer?
HERERA: I use my computer. I know. I`m a little — still I know, I know. But I`m a little nervous —
MATHISEN: Deposit checks using my app. It`s cool.
HERERA: You`re much more progressive than I am, my dear.
MATHISEN: I know that.
HERERA: That does it for NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera. Thanks for joining us.
MATHISEN: And I`m Tyler Mathisen. Thanks from me as well. We`ll see you back here tomorrow for a special edition of NIGHTLY BUSINESS REPORT.
HERERA: You`re making me feel like a dinosaur.
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) 2015 CNBC, Inc.