TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Hard assets. As stocks
slump, gold shines, leaving some investors to wonder if this is the year that heavy metal finds it luster again.
SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Road to a rate hike. Why
March is not off the table just yet for the Federal Reserve despite all
this market volatility.
MATHISEN: And one way ticket. Why this lunar New Year is different for
some of China`s migrant workers.
All that and more tonight on NIGHTLY BUSINESS REPORT for Monday, February
HERERA: Good evening, everyone, and hold on tight.
It was another breathless start to the week. The Dow plunged 400 points
midday as investors rushed out of stocks and other risky assets. And just
when it looked like things could get a lot worse, they didn`t. The buyers
came out of hiding. And by the closing bell, the Dow Jones Industrial
Average was off only 177 points to 16,027, the NASDAQ fell 79, the S&P 500
So, what should investor make of the late-day buying?
Bob Pisani helps breaks things down from the New York Stock Exchange.
BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: It was another ugly day
and it didn`t end as bad. But along way, there was a lot of anxiety in the
usual hand-wringing. Now, a lot of the problems started in Europe, where
else, with bank stocks like Deutsche Bank down 9 percent. It`s off 35
percent this year. There`s concern there about declining revenue revenues
and asset writedowns, OK.
Our banks are in much better shape. That didn`t stop the big U.S. banks
from hitting 52-week lows, for Bank of America (NYSE:BAC), Citigroup
(NYSE:C) for example, both down more than 5 percen. Stocks did turn around
midday, led by a rally in energy. Conoco, Chevron (NYSE:CVX), ExxonMobil
(NYSE:XOM) and Hess (NYSE:HES) all ended the day in positive territory.
So, are we at the bear market or not? The S&P 500 is only about 14 percent
off its high. But large parts of the market are down already more than 20
percent. Transports, banks, energy, material names, for example, close to
60 percent of the S&P 500 are down 20 percent or more.
So, let`s not quibble. The markets way off the highs. The question is,
when is the bottom?
Unfortunately, we`re still seeing a lot of stock for sale. Almost 7
billion shares changed hands at the NYSE today. That`s twice normal.
We`re not seeing a lot of buyers coming in to pick up bargains. That`s not
good. That did happen toward the close today. OK, but there`s been no
follow throughs on days like today. They just come and sell the following
We need a lot more late-day rallies like today before anyone believes that
real bottom is in.
For NIGHTLY BUSINESS REPORT, I`m Bob at the New York Stock Exchange.
MATHISEN: And as Bob just reported, the energy sector turned at the end of
the day. But for most of it, the group saw very, very heavy selling. One
of the hardest hit companies was Chesapeake. It lost half its value at one
point and was faulted multiple times. Bankruptcy rumors forcefully denied,
swirled around the company for much of the day, and it ended 33 percent
As Morgan Brennan reports, Chesapeake wasn`t only energy company to come
under pressure today.
MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: The pain is
spreading and the latest to feel the effect is Chesapeake Energy
(NYSE:CHK). Following reports that it retained Kirkland and Ellis to help
restructure the debt load, Chesapeake issuing a statement saying the law
firm has served as one of its counsel since 2010 and the national gas
producer has no plans to pursue bankruptcy. Still, investors jumped ship
on the stock, even if some analysts maintain that Chesapeake can hang on,
even if gas prices stay depress.
TIM REZVAN, STERNE AGEE CRT: It`s important to remember, they have a $4
billion undrawn credit facility today. We expect that to get a big haircut
to $3 billion or maybe even below, but it is undrawn today. It can take
their nearest debt maturities and put them on their credit facility and
hope for a better gas prices and asset sales to give them a chance to
BRENNAN: Shares of pipeline operators, Energy Transfer Equity (NYSE:ETE)
and Williams Company also fell. In addition to a surprise (INAUDIBLE)
change at ET that`s drawing the company`s merger into question, Williams is
a major partner of Chesapeake.
Another name that tumbled today, Linn Energy (NASDAQ:LINE), which has said
about 70 percent in just the past week. The oil and gas producer recently
said it`s reviewing strategic alternatives to sure up the balance sheet.
All this as ratings agency cut their outlook, with Standard & Poor`s
downgrading 13 oil companies and Moody`s (NYSE:MCO) placing 120 energy
firms under downgrade consideration. In general, fears of widespread
bankruptcy are growing. Law firm Haynes and Boons has 42 North American
oil gas companies filed for bankruptcy last year, including Samson
Resources, Quicksilver Resources (NYSE:KWK) and Swift Energy (NYSE:SFY).
And Wolfe Research winds up to a third of U.S. producers could end up
structuring by mid-2017 if prices continue to stay this low. Other names
they are watching is Sand Ridge Energy which was delisted from the New York
Stock Exchange, and Halcon Resources, which in response to rumors, put out
a press release this morning saying it has no formal plan but continues to
review all options related to restructuring.
For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan.
HERERA: Meantime, gold is starting to shine. After being shone by
investors for years, the heavy metal is seeing some gains. Today, prices
were up nearly 3.5 percent. Its best trading day since the end of 2014.
For the year, gold is up 12 percent, making it the best performing asset of
2016 so far.
Jackie DeAngelis tells us what`s behind gold`s move and if the trend higher
JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Gold prices have
gotten off to a good start in 2016, more than 10 percent pop due to
volatility in the global equity market. The year to date move, a departure
from losses in gold for the last three years. The mixture between a return
to safety and optimism, that the Fed won`t be as aggressive as raising
rates as predicted last year.
ANTHONY GRISANTI, GRZ ENERGY PRESIDENT: Since the beginning of the year,
gold has been the darling for investors. If you look at most commodities,
they are down on the year. Equity markets are very volatile. So,
investors are looking at gold.
DEANGELIS: Today`s action, a great example. Lower equities, lower oil,
giving gold a nearly $40 lift. While moves like that were common place in
just a few years ago, they become increasingly rare.
So, while the gold vaults have their moment in 2016, many are forecasting
that bullion could continue to run — some of the estimates as high as
GRISANTI: I would expect because of the volatility in the stock market and
I think it will continue at least for the first half of year, then
investors are going to look at good even more so.
DEANGELIS: There are risks, though, that equities will settle down and
Feds finds enough to stay the course in its tightening. If those events
play out, gold could lose the glitter that it gained early on.
For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis.
MATHISEN: And joining us now to talk more about gold and whether it
belongs in your portfolio is Jan Van Eck, he`s the CEO of Van Eck Global.
Jan, welcome. Good as always to see you. Is it as simple as people are
going into gold now because they are afraid of everything else?
JAN VAN ECK, VAN ECK GLOBAL CEO: Actually, I think what`s driving the
rally in gold this year is you have to take a step back and look at what`s
been happening since the global financial crisis. And central banks around
the world have been cutting interest rates. Gold really competes with
interest rates because gold doesn`t pay any coupon or dividends. So — but
when interest rates are negative around the world which they started being
in Europe last year, started in Japan just a couple of weeks ago, then,
gold looks more attractive.
MATHISEN: So, what is the best way to add it to your portfolio and how
much of a, quote/unquote, “typical portfolio”, what kind of exposure should
VAN ECK: Yes. So, generally, we don`t invest — we don`t advise a very
large investment in gold, something like 5 percent or so. It`s really
meant to be a hedge to an overall portfolio over the long term.
But you do have these risks to the financial sector now and the risk of can
the Fed get the economy going? Does it have to go back to a QE4 kind of
We think this is really great time to be buying the gold and for those
nervous about the recent run up — again, just take a look back at the last
five years. You`ve seen what`s happened year to date is a slight
MATTHEWS: Yes, that`s right. I mean, one can buy a gold fund, which
invest in gold miner. You can buy the miners directly, and gold miners are
up 8 percent in the past two days. One can also buy the bullion.
Which do you suggest?
VAN ECK: Well, because I`m leaning a little more bullish after this
horrible bear market, I favor the shares over bullion right now. The gold
shares were down almost 90 percent from their peaks in 2011. So, they`ve
gone through a lot of pain, a lot of restructuring, and what you`re the
energy companies being forced to do today, gold companies have been doing
for the last two years. So, I think they`re ahead of curve so to speak.
That`s why I love the companies right now.
HERERA: All right. You`ve given us two names. I hope I pronounce this
correct, Agnico-Eagle Mines. The symbol is AEM and RandGold Resources.
The symbol is GOLD.
VAN ECK: Right, those are the top holdings and they`re actively managed
gold fund. We also have an ETF GDX. Why we like those companies is we
like a little growth to go with our gold portfolios. Agnico-Eagle is based
in Canada, and RandGold has more African properties. What we like about
gold companies in general is true for these companies, which is their costs
are decreasing, partially because the currencies, the Canadian dollar and
an emerging market decreasing. But also, other raw materials inputs and
the cost of labor as well.
So, that`s expanding, the profitability of the shares at this time in the
MATHISEN: Jan, thank you very much. Jan Van Eck with Van Eck Global.
VAN ECK: Happy to be here.
HERERA: Despite the distress in the financial markets, some maintain that
the Federal Reserve could raise interest rates at its next meeting in
March. But a number of things all have to fall into line for that to
Steve Liesman maps out the road to a rate hike.
STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: To many, the market
deep down declines make it claim that the Federal Reserve may not be hiking
interest rates in March or even this year for that matter.
But some economists continue to insist, especially after Friday`s job
report that a Fed rate hike remains a possibility in March, maybe in June,
but almost certainly this year.
MICHAEL HANSON, BOFA MERRILL LYNCH: I still think that given the dynamics
we`re seeing in the labor market, the fact that I think you`re seeing
inflation in the U.S. bottom after core level, headline could still come
down a bit because of oil. That puts the Fed I think in play not for
March, but perhaps. And so, there`s still definitely some risks that the
market is well behind the curve on where the Feds is going to end up.
LIESMAN: Most agree a lot has to go right with markets on the economy for
the Fed to hike. Among them, a February payroll report on March 4th that
shows a low unemployment rate and strong wage gains, just like it did last
month. The economy needs to be on firm footing, bouncing back at least
somewhat from the weak fourth quarter. Inflation needs to be unchanged or
rising. Most importantly, by the time the Fed meets, markets need to
stabilize from the current roller coaster volatility.
STEPHEN STANLEY, AMHERST PIERPONT CHIEF ECONOMIST: I think it`s a little
too soon to say they are out of play. Obviously, the odds of a move in
March are a lot lower today than they were in December when the fed lifted
off. I think they are still waiting to see if the dust clears with
financial conditions and if financial conditions were to normalize between
now and the March meeting and the focus could return to the economic
fundamentals, I think there`s a decent chance they could still go.
LIESMAN: On Wednesday, we`ll get the first clue of what Janet Yellen
thinks of the mess that`s now the stock market this year. She hasn`t
spoken since December 16th when the Dow was near 17,800. She`s more likely
to strike a more balanced tone explaining that hikes are still on the table
but unlikely if the economy, as opposed to the market, weakens further.
For NIGHTLY BUSINESS REPORT, I`m Steve Liesman.
MATHISEN: Still ahead, the long journey home. Why the slowing Chinese
economy is making this Lunar New Year`s journey particularly painful for
HERERA: China saw its foreign reserve levels fall to the lowest since May
of 2012. China`s central bank used nearly $100 billion in January to
defend its currency, and that lowered the country`s reserve to a little
lower than $3 trillion.
MATHISEN: Today marks the first of the China Lunar New Year. Millions of
workers travel home to be with their family. But this year, with China`s
slowing, things are a bit different.
Eunice Yoon reports tonight from Beijing.
EUNICE YOON, NIGHTLY BUSINESS REPORT CORRESPONDENT: China is a society on
the move. At no time is that more true than during Lunar New Year.
Every year, hundreds of millions of Chinese hop on trains, planes and buses
to return home for the holiday, in the largest migration of people on the
Already in the year of monkey, millions of migrant workers have gone home
because of the slowing economy.
Migrants Du Lijuan and Song Yadguo say they can no longer afford to live in
a big city like Beijing. Both lost their jobs working at a restaurant when
it ran into financial problems last September. They`re waiting to receive
their unpaid salary of about $1,000 each before heading back home.
“We have no money to buy tickets to buy gifts for our family or children.
Normally, we spend $650 every lunar New Year”, she says. “I am not coming
Du and Song are far from alone. Many migrants are considering finding a
new life in the countryside, fearing jobs won`t be available to them if
they return to the big city.
For years, migrant workers have been in backbone of China`s economic
growth, working in factories and constructing buildings. But in 2015, the
migrant population fell by 5.7 million, its first drop in about three
But with the economy growing at its weakest rate in a quarter of a century,
many workers are questioning their future whether they are in traditionally
powerful industries like manufacturing or new industries that depend on
“It`s not easy to get a job in restaurant industry,” she says. “When I
first game to Beijing ten years ago I was excited with new hope. I thought
I could do well in a big city. But now, I`m so sad and disappointed.”
Disappointed that her Chinese dream could disappear in the unpredictable
year of the monkey.
For NIGHTLY BUSINESS REPORT, I`m Eunice Yoon in Beijing.
HERERA: India is growing faster than China. India`s economy expanded by
7.3 percent in the last three months of 2015, making India the world`s
fastest growing major economy, thanks to a strong manufacturing sector.
China`s economy grew at 6.8 percent during the same period.
MATHISEN: Hasbro (NYSE:HAS) reports its biggest jump in quarterly revenue
in almost five years and that is where we begin tonight`s “Market Focus”.
The toymaker reported better than expected earnings for its fourth quarter
and raised its dividends 11 percent. The company attributed the results to
strong sales of “Star Wars” and “Jurassic World”. Toy shares of Hasbro
(NYSE:HAS) up more than 1 percent to $75.11.
Meantime, shares of Apollo Education soared after they agreed to be taken
private by a group of investors. The deal is valued at more than a billion
dollars. Apollo Education is the parent of the University of Phoenix.
It`s had shrinking enrollment and revenue in recent years. Shares of the
company up 24 percent to $8.62.
Cognizant Technology solutions saw its shares fall after the company issued
weak earnings and revenue guidance for 2016. The IT services provider said
clients worldwide were cutting back on routine tech services spending.
Shares of Cognizant Tech fell more than 7.5 percent to $54.05.
HERERA: Chipotle temporarily closed all 2,000 of its stores for four hours
today to hold a schedule a company-wide employee meeting on the topic of
food safety. The company said it planned to set aside up to $10 million to
help local growers meet the new food safety standards. The Centers for
Disease Control announced last week that the E. coli outbreak of the chain
was over. Shares were down more than 3 percent to $445.
Commercial property and casualty insurance company Loews (NYSE:L) misses
forecast on both its top and bottom lines. The company blamed charges from
two of its holdings. Shares of Loews (NYSE:L) were up to $36.33.
Online review website Yelp posted better than expected fourth quarter
earnings. The company also announced that its CFO Rob Krolik would be
stepping down. Yelp was slated to report after the closing bell, but the
results were released early due do a vendor error. Despite Yelp beating
estimates, the stock fell more than 11 percent to $16.06.
MATHISEN: A suburban investment fund manager caught running a $17 million
Ponzi scheme is now finally headed to prison. His deception lasts more
than nine years.
Andrea Day has this story of crime and punishment.
ANDREA DAY, NIGHTLY BUSINESS REPORT CORRESPONDENT: When it comes to
telling lie, prosecutors say this next guy mastered the art of deception.
We caught up with him on his way in to meet the judge. Take a look.
You told so many lies for so long, do you have anything honest to say to
your investors now.
JAMES PEISTER, CONVICTED FUND MANAGER: I have nothing to say to you or
DAY: Meet James Peister.
KELLY CURRIE, FORMER ACTING U.S. ATTY, NY: He was an incorrigible liar.
DAY: Apparently still fabricated stories when we found him heading into
court, to be sentenced for securities fraud.
When you swindle $17 million, how do you sleep at night?
PIESTER: I didn`t swindle anything.
DAY: He told us he didn`t swindle anything. Is that true?
CURRIE: It`s not true. And if he believes that, then he`s deluding
DAY: Former acting attorney of Eastern District of New York, Kelly Currie.
CURRIE: I don`t think there`s much genuine about him at all other than his
DAY: Greed, he says, that had James Peister living large. In this fancy
Long Island estate, his tale beginning right here, where he spent almost
two decade fixing cars and managing a repair shop. But according to
Currie, Piester decided to switch gears from cars to forming a hedge fund,
luring in people he knew to invest.
CURRIE: Telling them that he had years and years in investment experience.
None of that was true. He told at least some of them that he used to be an
FBI agent. That was a lie. He told other investors that he worked on the
floor of the Chicago Commodities Exchange. That was also a lie.
DAY: The reality, investigators say armed with his experience under the
hood, Piester rented office space in this building, forming North American
Globex. The funds promising to invest in a mix of securities. He demanded
at least 250 grand to buy in, netting more than $17 million from some 74
CURRIE: He`s lost a ton of money on terrible investments that he did make,
because it turns out he didn`t know what he was doing.
DAY: He says the rest of the cash went to fund Peister`s lifestyle and to
pay off early investors. And to keep the Ponzi under wraps, prosecutors
say he sent out phony account statements.
CURRIE: He lied to everything about the performance of the funds. He lied
to everybody about how much money was in the funds.
DAY: According to Currie, Peister even brought investors over to see his
house, to make them he was a huge success.
Should investors have trusted James Peister with their cash?
CURRIE: Absolutely not.
DAY: Almost a decade after Peister left the body shop, the economy
CURRIE: Ultimately, the game ran out. And investors and his auditor
actually filed reports and complaints with the FBI, with the SEC and with
the CFTC, and that`s really when things unraveled.
DAY: Well, you must have something you want to tell your investors now.
Many of them are very hurt.
PEISTER: My investors already heard from me.
DAY: They did? What do you want to say to them?
PEISTER: I`m sorry. I have no comment.
CURRIE: He lied from the beginning to the end.
DAY: Has he made his victims whole?
CURRIE: No, not all.
You know, in total, Mr. Peister paid back only about $220,000.
PEISTER: I didn`t steal anything.
DAY: He said these words, “I didn`t steal anything.”
CURRIE: Well, that`s just not true based on the record. It`s not true
based on his guilty plea and it`s not true based on what he told the judge
at the sentencing.
DAY: And just days ago, James Peister walked into prison to begin serving
his six year sentence behind bars.
I`m Andrea Day for NIGHTLY BUSINESS REPORT.
MATHISEN: Coming up, the controversy being caused by a classic Ferrari and
MATHISEN: Here`s a look at what to watch tomorrow:
Two Dow components Coke and Disney (NYSE:DIS) out with earnings.
First primary of the 2016 presidential election. Have you heard about it?
Takes place in New Hampshire. And the White House releases its federal
budget for fiscal 2017. And that`s what to watch tomorrow.
HERERA: Classic cars, they command staggering price tags and one 1957
Ferrari is certainly no different. But was it the most expensive car sold
at auction or not?
Robert Frank explains why that question is hard one to answer.
ROBERT FRANK, NIGHTLY BUSINESS REPORT CORRESPONDENT: A bright red vintage
Ferrari took to the stage in Paris Friday and sold for over $35 million,
making it one of the most expensive cars ever auctioned.
MATTHIEU LAMOURE, ARTCURIAL MOTORCARS ACUTION HOUSE: This car has been
driven by all the best pilots of history.
FRANK: Yet, the famous racer also stirred up a little controversy. The
1957 Ferrari 335S is considered one of the masterpieces of the motor world,
with a timeless design and successful racing career. Many of the richest
Ferrari collectors in the world came to bid, pushing the total past 32
million euros or $35 million U.S.
In euro term, this was the most expensive car ever auctioned. And
Artcurial motors which auction the car said it marked a new world record.
But in dollar terms, it falls short of the 1962 Ferrari GTO that sold in
2014 for $38 million. So, car aficionados are now sharply divided on which
car should hold the poll position.
Whatever its rank, the sale comes as a welcome relief to the collectible
car market which has been slowing in recent months on worries about
financial marks and slowing global growth.
Artcural Motors declined to identify the buyer but sources tell me the
winning bidder was Bryan Ross, a developer and Ferrari collector in Ohio.
Mr. Ross declined comment.
Much more is known about the seller. The car was owned by Pierre Bardinon,
the wealthy heir to a French fur making dynasty, who loved red wine and red
After his death, his collection of 20 cars passed to this children who told
French tax authorities said they were worth 70 million euros, but experts
say they are actually worth over 200 million. Now, the family is battling
each other and the French government over the collection which could result
in even more Ferraris coming to the auction block.
For NIGHTLY BUSINESS REPORT, I`m Robert Frank.
MATHISEN: Fans tuned in near record numbers. Nearly 112 million people
watched the Denver Broncos beat the Carolina Panthers in Super Bowl 50.
That made it the third most watched television event in U.S. history.
And as Julia Boorstin reports, some advertisers scored big as well.
JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Hyundai`s first
date ad was the top rated ad in “USA Today`s” ad meter, which surveyed
19,000 viewers from across the country. It was followed by the Heinz`s
And then the Doritos ultrasound ad. This comedic spot the most shared ad
of the Super Bowl, according to ad tech company Unruly.
These ads were the biggest winners of the year dominated by predictable mix
of celebrities, animals and comedy, and a few big surprises.
JAMES COOPER, ADWEEK EXECUTIVE EDITOR: I don`t think there was a winner
this year. It was pretty safe. In general, it was fairly vanilla.
I would say that if there was a winner, it would probably be one the Jeep
ads. They sort of really reach for that sentimental touchdown. And I
think they scored with it.
BOORSTIN: He`s talking about this series take on the powerful history of
UNIDENTIFIED MALE: How did he get in here?
BOORSTIN: The pharmaceutical advertisers, in particular, Jublia, and a
constipation drug commercial that scored at the bottom of “USA Today`s” ad
meter. And perhaps the biggest was Anheuser-Busch, not because of the four
ads it bought for its brand, but for the unpaid promotion it got from
Peyton Manning, giving two shout-outs to Budweiser in interviews after the
game. According to Apex MG Analytics, those shout-outs were worth $3.2
For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Los Angeles.
HERERA: And before we go, here`s another look at the selloff on Wall
Street. It was a wild ride today. The Dow Jones Industrial Average was
off 177 points to 16,027, after falling 400 points midday. The NASDAQ fell
79 and the S&P 500 dropped 26.
That does it for us on NIGHTLY BUSINESS REPORT, I`m Sue Herera.
MATHISEN: And I`m Tyler Mathisen. Thanks for watching. Have a great
evening, everybody. And we`ll see you here tomorrow night.