Transcript: Nightly Business Report – September 10, 2015

NBR-ThumANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and
Sue Herera.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: The goal here is not
to shut down the government.

(END VIDEO CLIP)

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: But just talking about it
is starting to make some investors nervous, as the deadline to get a budget
deal done fast approaches.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Rise of the renter.
A fundamental shift in the way people pay for their homes is creating a new
frontier for investors and builders.

HERERA: Heating up. Why an industry known for being boring is
suddenly getting hot.

All of that and more on NIGHTLY BUSINESS REPORT for Thursday,
September 10th.

MATHISEN: Good evening, everybody, and welcome.

One short week from today, the world will watch Washington and the
meeting of the Federal Reserve. But today, our nation`s capital grabbed
the attention of Wall Street for a different reason.

First, rumblings over a possible government shut down on October 1st
are increasing, White House Press Secretary Josh earnest addressed
directly.

(BEGIN VIDEO CLIP)

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: If the Republican leaders
maintain their insistence on trying to pass a budget along party lines,
then we are going to be headed for a shutdown because it`s clear, to
anybody who has been paying attention of the last several months that they
don`t have the votes to pass the budget and that will result in the
government shutdown.

(END VIDEO CLIP)

MATHISEN: Second, the Department of Justice is cracking down on Wall
Street executives, issuing new policies that target individuals, not just
companies.

(BEGIN VIDEO CLIP)

SALLY YATES, DEPUTY ATTORNEY GENERAL: And we`re not going to let
companies plead ignorance either. If they don`t know who is responsible,
they`ll need to find out. If they want any cooperation credit, they`ll
need to investigate, and to identify the responsible parties and then
provide all no non-privileged evidence implicating those individuals.

(END VIDEO CLIP)

MATHISEN: And finally, “The Wall Street Journal” reports that the
Department of Justice and New York Department of Financial Services are
investigating allegations of manipulation in the U.S. treasury market,
considered the most liquid and deepest market in the world.

Eamon Javers has been following these developments for us.

Eamon, what`s the big budget fight about now and what`s the likelihood
we see a shutdown?

EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Yes, Tyler, the
Congress has until the end of the month now to figure this one out. They
want to pass a continuing resolution or an overall budget — likely a
continuing resolution to keep the government open by the end of the month.
The big sticking point, though, is going to be funding for Planned
Parenthood. Republicans in particular concerned about Planned Parenthood
support of abortion rights. That one is an issue that we know in American
politics, there`s not a whole lot of give on either side on.

The challenge for leaders in both parties now is going to be figure
out a way to make this vote not about Planned Parenthood.

And one thing that sources on the Hill tell me today that`s going to
be key is whether the pro-life groups decide to score that vote on the
budget as a vote on pro-life issues. If they don`t, that will give a lot
of Republican lawmakers the leeway to vote to continue the government.

If not, we could be in a situation where we are heading for a
government shutdown now.

HERERA: To crime now. Is the Justice Department basically
fundamentally changing the way it prosecutes white collar crime?

JAVERS: They are changing the way they begin their investigations.
What Deputy Attorney General Sally Yates said today in New York, was that
for too long, corporations have been able to write a check and cop some
civil charges but not face, for their individual executives, any criminal
charges, are going to throw anybody in jail. She said that`s going to
change and part of the way they are going to change that over the
Department of Justice is by beginning these investigations, going after
individuals from the get-go as opposed to going after a major settlement
number.

So often they are going after the big check and not going after the
executives. This way they say if the companies want to get any credit for
cooperating at all, they are going to have to turn over the actual names of
the actual human beings who committed the fraud inside these companies.

MATHISEN: Let`s turn now to that reported investigation into the
treasury market. How concerned should investors be?

JAVERS: Well, look, the treasury market is vital, both to global
finance and to the United States` ability to fund itself. Remember, we run
into a huge deficit and the way we finance that deficit in this country is
by selling treasuries. So, there`s a lot to be concerned about in this
market.

I think this one has the potential at least to be as big as the LIBOR
scandal that we saw. The question is whether or not there is actual
manipulation that the government can prove here, if there are those smoking
gun text messages and the like, then it could be a big one to watch.

MATHISEN: All right. Eamon, thank you very much.

JAVERS: You bet.

HERERA: On Wall Street, a pause from the volatility. Investors had a
chance to breathe and digest comments from David Tepper, an influential
hedge fund manager, who said he was concerned about earnings and was not
overly bullish on stocks next year.

By the close of trading, the Dow Jones Industrial Average rose 76
points to 16,330. The NASDAQ climbed 39. The S&P 500 gained 10.

And overseas, investors paid attention to China and comments from the
premier who said his country`s economy is in good hands.

Geoff Cutmore reports from the World Economic Forum in Dalian, China.

(BEGIN VIDEOTAPE)

GEOFF CUTMORE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Chinese Premier
Li Keqiang used the opportunity at the keynote address here at the World
Economic Forum in Dalian to address two key international investor
concerns.

One, the direction of the Chinese currency and, two, the state of
growth. We`ve had a continuing slew of weaker economic data. The premier
wanted to reassure investors that China will hit somewhere close to the 7
percent GDP target growth rate this year. He said there will be no hard
landing for this economy.

On the currency, he also said there will be stability and no policy
trying to devalue the Chinese (INAUDIBLE) to get competitive advantage.

Both of these messages should go down quite well with international
investors and they will probably be positively received by the U.S.
administration just weeks before President Xi Jinping is expected to arrive
on a state visit.

This is Geoff Cutmore at the World Economic Forum in Dalian for
NIGHTLY BUSINESS REPORT.

(END VIDEOTAPE)

MATHISEN: And a multibillion dollar deal in the logistics industry to
talk about. It`s not an area that we do talk about every day but it is one
that keeps the economy moving since it gets products from point A to the
place where consumers, like you and I, can buy them.

As we first reported last night, XPO is acquiring the trucking company
Con-Way for $3 billion and that sent shares of Con-Way soaring, as you see
there. And those of XPO — well, they went the other way, down 11 percent.

Morgan Brennan explains why this once boring sector has suddenly got
investors` attention.

(BEGIN VIDEOTAPE)

MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: The
acquisition of Con-Way draws attention to the massive transformation taking
place at freight transportation provider XPO Logistics.

DONALD BROUGHTON, AVONDALE: Oh, for XPO, this takes them from being a
global logistics truck brokerage freight player to being really a leader in
the North America theater, being able to offer full service, any and all
kinds of trucking services you might need.

BRENNAN: Con-Way is the latest in a long line of acquisitions for
XPO. Since 2011, the company has made more than a dozen deals, including
the $3.5 billion purchase of French trucker Norbert Dentressangle in June.

It has all resulted in gangbuster growth from a company with less $200
million in revenue in 2011 to one that will tout $15 billion annually once
this merger is complete. But it`s not just XPO either. UPS recently
acquired Coyote Logistics and FedEx`s bid for Dutch company T&T Express
(NYSE:EXPR) is awaiting regulatory approval.

PricewaterhouseCoopers says M&A activity in logistics totaled $14.5
billion in the first half of 2015. Already more than the $12 billion for
all of 2014. Experts expect the deal-making to continue as the economy
picks up and fuel prices remain low and financing stays cheap.

BROUGHTON: We`ve seen this trend where companies are not only
expanding their presence in a particular sector that they compete in, but
they are expanding the fleet of services that they can offer. So that when
they go to customers, they can say, whatever it is you need, hum us a few
bars and we can sing you a tune, whatever it is you need picked up from
point A to point B delivered via whatever mode, we have a way of
accomplishing that for you.

BRENNAN: Satish Jindel, president of the SJ Consulting Group, a
transportation consulting firm, agreed. He expects to see more acquisition
as companies expand in search of more efficiency. For that reason, he
thinks future potential takeover targets could include hub group and
universal truck road services, two stocks that also popped on today`s M&A
news.

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan.

(END VIDEOTAPE)

HERERA: And now to another pillar of the economy, housing. Average
long-term U.S. mortgage rates inched up this week. Freddie Mac says the
rate on a 30-year fix rate is now 3.9 percent.

MATHISEN: Mortgage rates are watched closely by people who are
looking to buy or refinance a house. But a growing number could careless
because a big change is taking place, one where many people don`t dream of
buying a home but instead want to rent and it`s creating a new frontier for
investors in single-family rentals and a new revenue stream for builders.

Diana Olick explains.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: At a brand-new
community just outside Atlanta —

You have no reason to sell any of your homes?

DOUG BRIEN, CEO, OF STARWOOD WAYPOINT RESIDENTIAL TRUST: No, I
actually think that we`re coming into the most compelling three or four
years that I have seen since I`ve been in the business.

OLICK: Doug Brien is shopping for more homes to buy for his company –
– a single-family rental REIT, new homes to turn into rentals.

BRIEN: We`re starting to talk to more and more builders and starting
to get more and more interest in not just selling us a couple of homes in a
development but talking to bigger builders who want to set up a buying
program with us.

OLICK: Starwood Waypoint, along with other large-scale investors,
bought thousands of foreclosed homes during the housing crisis and turned
them into lucrative rentals. The expectation was they would sell once home
prices recovered but now they say no. Rental demand is just too strong.

JIM SULLIVAN: I think the institutional capital is still looking at
this very carefully because there is a belief and I support that belief
that is a long-term hold and there`s yield and there`s appreciation to be
had.

OLICK: There are just over 44 million rental homes in the U.S., 27
million apartments and 15.5 million single-family homes or condos. Single-
family rentals jumped by over 2 million since the crash, thanks to
investors. Not only is demand rising, but more renters are willing to pay
a premium for new homes.

BRIEN: If you look at the people who are renting the homes, and you
look at their credit profile and their income profile, these are not like
wildly different people than the people that are buying the homes.

OLICK: Miami-based home builder Lennar (NYSE:LEN) is experiencing
with the idea, opening its first single family rental community in Nevada
this year and planning more.

This new investor demand could be what the big builders need to build
volume and price. For investors, it`s a long-term bet that the shift away
from home ownership is here to stay.

For NIGHTLY BUSINESS REPORT, I`m Diana Olick in New York.

(END VIDEOTAPE)

HERERA: And I guess that`s the key question.

Here to talk more about the shift from home buying to renting and what
it means for the housing market is Susan Wachter. She`s the professor of
real estate and finance at the University of Pennsylvania`s Wharton School
of Business.

Susan, good to see you again. Welcome back.

SUSAN WACHTER, UNIVERSITY OF PENNSYLVANIA`S WHARTOIN SCHOOL OF
BUSINESS: Pleasure.

HERERA: Let`s start, first of all, with that key question. Do you
view this as a trend that is here to stay?

WACHTER: It is a trend that`s here to stay. This renter demand is
strong and is going to get stronger.

MATHISEN: We seem to think there`s a lot of hand wringing that we`re
turning from a nation of homeowners to a nation of renters. Do you see it
that way or does that overstate the trend?

WACHTER: That overstates it. However, let`s note that 63.4 percent
is a new low, an historic low in home ownership, and is down to 1967
levels. That`s really quite a shift from 69 percent in 2004. Many, many
millions up to 6 million, 7 million new renter households, depending on how
you count, net no new homeowners and now, renter households are looking for
on the high end new constructed single-family homes.

MATHISEN: You know, we`ve heard a lot of reasons for why this is
going on, but if you had to pinpoint it, what do you think is the biggest
contributor to people wanting to rent rather than taking the plunge and
buying?

WACHTER: Well, there`s always, of course, a desire to rent when
you`re short-term. But I think this is a bigger issue than that right now
in terms of the surge in renting, and that is people are locked out of the
home ownership market. It`s difficult to have the pristine credit levels
that you need, and housing prices rising and wages not, down payments are
hard to come by, and pristine credit levels requirements are really has
high as they have been, although they are coming down to some degree.

But pretty much, it`s difficult to get that down payment and the
credit together, especially if you`re just coming on to a job. You`re a
newly formed household with a new job getting that savings in place is
hard.

MATHISEN: Very quickly, with this move toward more renters, what does
it mean for the values of homes and for people like us baby boomer who are
looking maybe at some point to sell and downsize? What`s it going to mean
to the prices, quickly?

WACHTER: It`s all good, it`s all good because these houses are going
to be rented. This is part of this phenomenon. The investors are
transforming the single-family homes and now newly constructed single-
family homes for the rental market.

HERERA: Susan, thank you so much. Appreciate it.

Susan with the University of Pennsylvania`s Wharton School of
Business.

MATHISEN: And still ahead, the most powerful women in business. Who
is in, who`s out, who is up and who is down, who topped “Fortune`s” list
this year.

(MUSIC)

MATHISEN: General Electric (NYSE:GE) may shed more assets and that is
where we begin tonight`s “Market Focus”.

GE says it is considering selling its asset management arm. Published
reports say the probable buyer will be an established, but as yet unnamed,
asset manager. Now, this as GE looks to focus more on its industrial
products. Shares of the Blue Chip stock rose slightly to $24.68.

3M (NYSE:MMM) is also exploring a spinoff of its health care data and
software business. This as the Dow component is explores its portfolio,
expanding some businesses while shedding others. Shares were off just
slightly, $140.78 was the close there.

And Lululemon posted earnings and revenue that topped estimates. The
athletic apparel retailer also saw same-store sales rise. But the company
did announce a full-year earnings forecast that was slightly below
estimates. Shares did tumble more than 16 percent to $53.54.

HERERA: Duke Energy (NYSE:DUK) agreed to pay nearly $1 million and do
environmental work to settle a case over coal-fired plants. That move
settles a 15-year-old case against the company for allegedly violating the
federal Clean Air Act. Shares fell slightly to $67.74.

And late earnings from Restoration Hardware better than expected. But
the high-end furniture retailer`s outlook for the current quarter
disappointed. Shares were off slightly in initial after-hours trading
before popping during the regular session. The stock fell 1.5 percent to
$91.06.

Positive news for Puma Biotech. The breast cancer treatment was
positively reviewed in a publication. Shares soared in initial after-hours
trading. The stock was up 3 percent during the regular session to $96.69.

MATHISEN: The most powerful women in business. “Fortune” out with
its eagerly awaited annual list. It includes 27 CEOs who together control
a trillion dollars worth of stock market value. The top three include
IBM`s Ginni Rometty, Pepsi`s Indra Nooyi, and in the number one spot this
year, the CEO of General Motors (NYSE:GM), Mary Barra.

Here with more on the list is a familiar face and good friend, Susie
Gharib, special correspondent at “Fortune”, and an NBR contributor.

So, why did Mary Barra knock Ginni Rometty out of the top spot? Is
this as simple as she had a better year than Rometty?

SUSIE GHARIB, NIGHTLY BUSINESS REPORT CONTRIBUTOR: She`s just overall
been doing terrific things. You remember when Mary Barra became CEO of
General Motors (NYSE:GM), she was faced with this huge crisis. That
massive recall of the ignition switches that you guys reported so much on.

But she acted swiftly. She responded very quickly, calmly and with
authority and while there are bumps at GM compared to IBM, which has had 13
straight quarters of revenue decline, you know, the whole theme of this
list, Tyler and Sue, is guts and grips. All of these women leaders are
tough.

You look at Du Pont, Mondelez, and Pepsi, these three women had to
fight off against activist investor Nelson Peltz and survive. So, they are
tough and so is Mary Barra.

HERERA: There were also some new names on the list.

GHARIB: Lots of them.

HERERA: Lots of them, which is so encouraging, and some of them were
a lot younger than perhaps traditionally that would make that list. So,
tell us about that.

GHARIB: There are 11 newbies. I`m just going to talk about two of
them. Ruth Porat is getting a lot of attention, because she was a surprise
hire at Google (NASDAQ:GOOG). Here`s a woman who worked at Morgan Stanley
(NYSE:MS) her whole career, 30 years. She`s the new CFO at Google
(NASDAQ:GOOG).

So, now, she`s not in the, you know, CEO or anything but investors
really like having her. She`s also going to be part of the new Alphabet
Holding Company, the CFO of that. And when she did her first earnings
call, Sue, the stock went up so that Google`s market value went up by $65
billion.

HERERA: Wow.

GHARIB: A powerful woman.

Another woman, on completely different industry, Kathleen Kennedy, who
is the president of Lucasfilms. She was the secretary to Steven Spielberg
and George Lucas. Now, she`s kind of running the show and she`s the
producer of the latest chapter of the “Star Wars” saga.

HERERA: Which is going to be huge.

GHARIB: It`s supposed to be a blockbuster movie.

MATHISEN: Risers and fallers, Angela Ahrendts at Apple (NASDAQ:AAPL),
why did she come up as much, and CEO of Avon went down a lot. We know
about Avon`s well-chronicled troubles, including word today that they may
be target of a private equity buy.

GHARIB: There have been so many rumors about that. Sheri McCoy down,
she`s number 49, down from 27. So, yes, big issue. What`s the business
model of Avon ladies calling.

Over at Apple (NASDAQ:AAPL), Angela has, you know, the retail savvy.
She`s been there less than a year. She`s supposed to be creating new roles
for those very successful Apple (NASDAQ:AAPL) Stores. We`ll see. She was
behind the launch for Apple (NASDAQ:AAPL) Watch.

HERERA: Susie, it`s great to see you. Taylor Swift made the list,
too.

MATHISEN: Taylor Swift at number 51.

GHARIB: We never had a 51.

MATHISEN: Good for her.

GHARIB: But she`s becoming a powerful force in business and she`s
only 25.

HERERA: Yes, which is fantastic.

My girls will be so happy to hear that.

MATHISEN: No bad blood.

HERERA: That`s right.

MATHISEN: Susie, great to see as you always.

GHARIB: Great to see both of you.

MATHISEN: Special correspondent for “Fortune” and our contributor.

HERERA: Coming up, a kickoff to a new season, my favorite, where
football`s growth is coming from and it`s not on the field.

(MUSIC)

MATHISEN: Here is what is to watch for tomorrow. The Producer Price
Index is out. It`s a tracker of inflation at the wholesale level. And a
read on consumer sentiment. Consumer sentiment is a key one there. Don`t
be surprised if it slides a little bit after that swoon in the market.

HERERA: The U.S. apparel market is the largest in the world and now
there`s a new player, one with an established track record overseas that`s
setting up shop in Boston and wants to take on some of America`s biggest
retailers.

As Courtney Reagan reports, it comes as the retail industry undergoes
rapid change.

(BEGIN VIDEOTAPE)

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: As if U.S.
retail didn`t have enough battles to fight, now it has to contend with the
luck of the Irish.

Today, Dublin, Ireland-based retailer fast fashion retailer Primark
opened its first U.S. store with a ribbon-cutting ceremony, creating nearly
600 new jobs. Here at the 77,000 square-foot four-floor store in Boston`s
iconic Burnham building, the former Filene`s location.

Primark began in 1969. Today, there are 292 stores in nine European
countries. Now, one in the U.S.

Primark is owned by the U.K.`s publicly traded Associated British
Foods. The retailer`s hallmark is its low prices, fashionable design and
decent quality for clothing, accessories and home goods for less than the
price of a pizza — $15 jeans, $14 sweaters, $3 towels.

According to a Sanford Bernstein analysis, U.S. Primark prices on
similar merchandise are 20 percent below Forever 21, 30 percent below Old
Navy, and 40 percent below H&M.

UNIDENTIFIED MALE: It`s different and it`s fresh and new and modern.

UNIDENTIFIED FEMALE: I think the price point is really going to amaze
people and I think it`s going to be an amazing shopping experience.

REAGAN: Primark manufacturers its own merchandise and says its
technology and efficient distribution and volume buying enable every day
low prices, setting up stiff competition for U.S. retailers.

JAN ROGERS KNIFFEN: It`s going to be difficult for both the Gap
(NYSE:GPS) division and Old Navy division of Gap (NYSE:GPS) because they
sell very similar products at even lower prices. They`ll put a lot of
prices on the teen retailers. That`s Aeropostale (NYSE:ARO), American
Eagle, Abercrombie & Fitch (NYSE:ANF), because they`ll really a lot of
following from young customers who really like to buy something out of
bargain. They`ll put pressure on the Penney`s, the Kohl`s (NYSE:KSS) and
people like that as well.

REAGAN: SW Retailer Advisors president Stacy Widlitz says store
locations are key. Widlitz says that several of Primark`s London locations
have among the highest traffic in sales conversion of any retailer she
tracks in Europe.

But there are challenges. Most U.S. shoppers don`t know what Primark
is and this is the first of just eight U.S. store openings by 2016. It
will take hundreds to really take U.S. market share and you can`t buy
online.

Plus, other successfully U.K. retailers have failed in the U.S. though
many analysts think Primark will be different.

For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan in Boston.

(END VIDEOTAPE)

MATHISEN: And just a few miles outside Boston where Courtney was,
football season returns with Tom Brady (NYSE:BRC) and the New England
Patriots taking on the Pittsburgh Steelers. And the kickoff follows a
tumultuous season.

Eric Chemi in Foxborough, Massachusetts, has more on the big business
of the NFL and where the game`s biggest growth is coming from.

(BEGIN VIDEOTAPE)

ERIC CHEMI, NIGHTLY BUSINESS REPORT CORRESPONDENT: Despite the on
field issues, the business behind the NFL is still strong.

More than 200 million viewers tuned in last season. That`s an average
of 19 million per game. With so much decline across television, NFL
ratings are bucking the trend and continuing to climb, up 25 percent over
the past decade, according to Nielsen. This audience is what networks are
paying billions for. League revenues are $10 billion per year.

Big TV deals mean bigger team valuations. The 32 teams have an
estimated value of $46 billion, according to “Forbes.” That`s a 23 percent
jump in one year.

REED BERGMAN: The National Football League will continue to thrive
and the sheer volume and economics prove that it is a — it is a
juggernaut.

CHEMI: The Patriots and quarterback Tom Brady (NYSE:BRC) faced
negative attention this offseason, yet even their merchandise sales have
seen huge spikes. Brady (NYSE:BRC) gear selling at nearly triple the rate
since his suspension was lifted, while the team numbers are up 63 percent.

Ticket prices are continuing to climb, up another 3 percent this year,
according to TiqIQ. That`s big relative to an economy seeing very little
growth.

But the biggest growth is coming from daily fantasy games. Companies
like Draft Kings and Fan Duel are spending hundreds of millions of dollars
trying to get new customers. In fact, Draft King is currently the number
one spender on TV advertising in the country, more than household names
AT&T (NYSE:T), Ford, GEICO and Warner Brothers.

BERGMAN: This business of fantasy will be mentioned in the same
breath and at least from an advertising perspective, in the same way that
the beer and the automotive and the fast food quick service, those genres
are now being mentioned.

CHEMI: If the NFL can manage its way through the off-field issues,
there are a lot fans out there and money to be had.

For NIGHTLY BUSINESS REPORT, I`m Eric Chemi in Foxborough,
Massachusetts.

(END VIDEOTAPE)

HERERA: It`s the most wonderful time of year.

MATHISEN: Who do you like, the Pack?

HERERA: I`m a Packer fan. I`m a cheese head from way back.

MATHISEN: All right.

HERERA: That does it for us. Have a great evening, everybody.

MATHISEN: And for me as well. Have a great evening. We`ll see you
back here tomorrow night.

END

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.

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