SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Hiring slows. Fewer jobs were
created last month than many had predicted. And that has some wondering whether the economy has lost its momentum.
TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Crude realities. Why the
prolonged downturn in oil prices is rippling well beyond the Louisiana
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: People treat us like we`re magicians.
(END VIDEO CLIP)
HERERA: The magic of fixing an iPhone screen. Meet the guys who had a
bright idea and turned their fix-it hobby into big business.
Those stories and more tonight on NIGHTLY BUSINESS REPORT for Friday, May
MATHISEN: Good evening, everyone, and welcome.
The interests of Wall Street and Washington and Main Street converged
today. The common bond? Jobs. Today`s April jobs report wasn`t very
strong but it wasn`t terrible either.
The not so good part was that hiring slowed significantly. In fact, job
growth was the slowest since last September. The U.S. economy did add jobs
but just 160,000 of them, far fewer than the 205,000 expected and below the
average of the past three months.
The unemployment rate remained steady at 5 percent. The good news was that
worker wages picked up. Average hourly earnings rose 0.3 percent.
Hampton Pearson has more on the American jobs picture.
HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Job growth in
April was the weakest in seven months. Nearly all the gains came from
three sectors — professional and business services, health care, and
finance — which produced a combined 129,000 new jobs.
JAN HATZIUS, GOLDMAN SACHS CHIEF ECONOMIST: I think overall, the signal
from the data has been that things are a little weaker than we thought. I
don`t think it`s dramatic. I think we`re still improving, just at a
somewhat slower pace.
PEARSON: President Obama pointed out the U.S. job market continues to
outperform most other major countries.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We`ve got to do everything
we can to strengthen the good trends and to guard against some dangerous
trend in the global economy.
PEARSON: The state of Maryland is answering the challenge. In March, it
led the nation in job growth. Employers generating 19,300 new jobs with
high-tech employers leading the way.
At the top of the list, Ciena, a global leader in network commuting,
headquarters outside Baltimore. With 5,000 employees worldwide and a
market cap in compels of $2 billion, one of its biggest challenges is the
increasing competition for skilled workers.
CLIVE BUNYAN, CIENA (NASDAQ:CIEN) GLOBAL TALENT COORDINATOR: We can pick
and choose to a certain extent and we`re seeing more candidates coming to
us, not just talking to Ciena, but clearly talking to others. So, we have
to get harder to get them to choose us over the other offers they may have
or be pursuing.
PEARSON: Christine Keck is a recent hire. It`s her job to tell the Ciena
story to the analyst community. She says her years of experience have now
paid off in the best job of her career.
CHRISTINE KECK, CIENA (NASDAQ:CIEN) ANALYST RELATIONS LEADER: Ciena makes,
I simplify this, but the gray becomes with the blinky lights that make the
Internet work. And that`s never been more important than now. We have
Internet economies. We have cell phones that are driving people`s
businesses and their livelihoods. And, you know, the teenage kids who
can`t get themselves off of Snapchat.
PEARSON: Increases in workers` pay over the last 12 months was one of the
few positives in the April jobs report. But if the slow-down in job growth
continues, it reduces the likelihood of rate hikes by the Fed before the
In Washington, I`m Hampton Pearson for NIGHTLY BUSINESS REPORT.
HERERA: And today, the president of the Federal Reserve Bank of New York
said it is reasonable to expect that the central bank will raise interest
rates twice this year. In an interview with the “New York Times
(NYSE:NYT),” Bill Dudley conceded that the jobs report was weaker than
expected but that it doesn`t necessarily change his economic outlook.
MATHISEN: John Silvia joins us now to talk more about the state of the
labor market, he`s chief economist at Wells Fargo (NYSE:WFC) Securities.
How much of this fall-off in hiring is attributable perhaps to a slowing
economy and how much may be seasonal factors?
JOHN SILVIA, WELLS FARGO SECURITIES CHIEF ECONOMIST: There may be some
seasonal factors in the retail trade numbers, but also perhaps in the
construction number. But I`d go back to your earlier point, Tyler. The
wage gains were pretty significant. And combined with even modest job
gains, you`re talking about personal income gains that will sustain
consumer spending going forward.
HERERA: So, do you expect, John, that that trend in wages will continue?
Because we`ve been waiting for a long time to see significant improvement
or at least noticeable improvement in wages.
SILVIA: Well, Sue, I`d go back to your Ciena story. That just ties in
that when you`re looking for skilled workers, and we increasingly are
looking for skilled workers, in a somewhat tight labor market with a 5
percent unemployment rate, I do expect that wages will continue to rise.
And both wages and broader compensation, Sue, I think is on the rising
MATHISEN: So, all in all, then, do you think that interest rate hikes are
on the table for as early as June? Or what are you thinking there
SILVIA: You know, Tyler, I think, you know, June is still possible. But I
would be very cautious here. Don`t forget, we`re still going to have
second quarter GDP, gross domestic product, growth at below 2 percent, most
likely. That`s going to be a very tough environment to the Fed raise in
June. They may raise in September and December, so that would give you
your two rate hikes. June is iffy with such below 2 percent growth.
HERERA: You know, the participation rate is something that I watch and it
came in at 62.8 percent, down about 0.2 percent. Not a significant fall-
off. But does that worry you at all?
SILVIA: Oh, absolutely, Sue. It`s just not picking up.
You know, one of the great things that happened in the 1980s and 1990s is
we brought in a lot of people at the margin to participate in the labor
market developing skills that would help them over time. That`s just not
happening right now. So, it does worry me that you`ve got an improving
labor market but it`s a very thin improvement.
MATHISEN: Productivity earlier this week. The numbers were a little
soggy. What`s the problem?
SILVIA: One, how do we measure productivity in an economy that`s
increasingly service-oriented? Tyler, we used to be able to look at
manufacturing, measure output pretty easily, the number of workers pretty
easily. Now in a service economy it`s much more difficult to measure those
MATHISEN: All right. John, thank you very much, have a great weekend.
John Silvia with Wells —
SILVIA: Thank you, Tyler.
MATHISEN: You bet. Wells Fargo (NYSE:WFC) Securities.
HERERA: Stocks finished the week to the upside, shrugging off weaker than
expected job growth last month. The Dow Jones Industrial Average gained
nearly 80 points to 17,740. The NASDAQ added 19, and the S&P 500 rose 6.
For the week, all of the major indexes were lower. For the Dow and S&P,
this is their second straight week of losses. And for the NASDAQ, its
MATHISEN: An update now on those Canadian wildfires we told you about
yesterday, it is spreading, the big one. And according to officials, it is
threatening two oil sands sites just south of Fort McMurray, Alberta. The
fire has already prompted precautionary production cuts and shutdowns.
That along with a drop in the number of U.S. oil rigs sent prices higher
today to more than $44 a barrel.
HERERA: And Louisiana is one of the most important oil-producing states in
our nation. A gateway to the Gulf of Mexico. The state is home to both
drillers and other energy-related industries. And the long decline in oil
prices hasn`t gone unnoticed.
Brian Sullivan reports tonight on the economic squeeze from Larose,
BRIAN SULLIVAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: The crude oil
prices are more than $20 a barrel off their lows. Don`t tell anyone here
in Louisiana that there is a recovery in the oil and gas business. The
industry is still being hit hard.
The industry here is different than most other states because much of it
takes place in the water which is more complex and means higher costs —
costs oil companies don`t want to or simply can`t pay, which means many of
the ships and barges that support the industry aren`t working.
Gulf of Mexico oil production is actually up and projected to hit a record
over the next two years. But that output is from existing wells. New
projects need to be started to get people working again.
But as the owner of an oil rig repair and maintenance business tells us,
$45 or $50 per barrel oil won`t restart the industry.
MATT MONCLA, CO-OWNER MONCLA COMPANIES: I was hoping that magic would be
$45 for the inland water rigs and it`s just not. I think we might need
$60, $65 for operators to pick the inland bargers back up.
SULLIVAN: All these idle ships mean workers had to be laid off and
unemployment is up across the state.
Crude`s downturn is not just an oil story. It`s also being felt in
industries like fishing and shrimping. Captain James Blanchard of the
Waymaker down here in Louisiana tells us he recently had a couple of guys
who had been laid off in the oil business looking for work on his boat.
CAPTAIN JAMES BLANCHARD, LOUISIANA SHRIMP FISHERMAN: Over the last year,
I`ve gotten more phone calls from people that`s been laid off looking for
jobs. I mean, I have a crew of two. You know, only so much I could do.
SULLIVAN: But there are not enough jobs on the water to go around.
Another shrimper we spoke with said he`s had more than 20 calls recently
but laid off oil and gas employees looking for work. Work he simply
For NIGHTLY BUSINESS REPORT, I`m Brian Sullivan, Larose, Louisiana.
HERERA: And to read more about the Louisiana oil industry, head to our
MATHISEN: Still ahead, courtroom drama. The dramatic start to a trial,
expletives and all, that centered on a 92-year-old media mogul.
MATHISEN: It`s the trial that`s captivating Wall Street and Hollywood. At
stake, money, of course, but also who gets to make health care and other
personal decisions for media mogul Sumner Redstone of Viacom (NYSE:VIA) and
CBS (NYSE:CBS) fame if he`s unable to do so himself. The frail 92-year-old
is both companies` largest shareholder. The trial today began in dramatic
Julia Boorstin tells us how we got here, who the players are, and what
exactly is at stake.
JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Tears, F-bombs, and
a $150 million counter suit. A dramatic first day in court in the Sumner
There are two key questions in this lawsuit. Was Sumner Redstone mentally
competent when he removed his companion and ex-girlfriend Manuela Herzer as
his healthcare proxy and kicked her out of his mansion? And two, was he
unduly influenced by those in his inner circle when he did so?
Herzer`s allegations that Redstone was incompetent and a living ghost have
already had ripple effects on the companies he controls, sparking
shareholder lawsuits. And Redstone stepping down as chairman of both CBS
(NYSE:CBS) and Viacom (NYSE:VIA).
Now, if Redstone is deemed mentally incompetent, that will shift control of
his 80 percent voting stakes in CBS (NYSE:CBS) and Viacom (NYSE:VIA) to
seven trustees, including his daughter Shari and Philippe Dauman. And
there will surely be questions asked about who knew what and when.
The court had its first glimpse of Redstone today in a videotaped testimony
played for the judge. A transcript was then released to the public in
which Redstone made ample use of F-word and another derogatory term to
describe Herzer, saying she stole money from him and doesn`t want her in
When asked if he loved her, he said no, he hated her. He says he`s happy
with his daughter Shari in charge of his care.
Judge Cowan told Herzer`s attorney Pierce O`Donnell that the burden is high
for Herzer`s camp to show why Redstone`s testimony and his desires should
not be respected. Stressing that Redstone`s welfare is the most important
Dr. Steven Reid who examined Redstone on behalf of Manuela Herzer
testifying Redstone`s mental status was severely compromised and he didn`t
understand the consequences of his actions.
An additional twist, Sumner Redstone plans to sue his ex-girlfriends and
former companions, Manuel Herzer and Sydney Holland, to recover the $150
million he gave them. The suit will also accuse Herzer and Holland of
For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Los Angeles.
HERERA: Cigna raises its yearly earnings guidance and that`s where we begin
tonight`s “Market Focus.”
An increase in membership in the health insurer`s commercial and government
businesses helped to lift profit higher and top street estimates. Revenue
also rose but fell short of targets. Shares of Cigna fell 3 percent to
Madison Square Garden (NASDAQ:MSG) saw its loss widen in the latest
quarter, but the entertainment company reported a jump in revenue as higher
broadcast fees helped to lift its results. Shares were down just a
fraction to $161.60.
Weyerhaeuser (NYSE:WY) which owns more than 13 million acres of timber land
in the U.S. reported a decline in profits but saw an uptick in sales.
Earlier this week the company unveiled its plans to sell its pulp business
to paper and packaging distributor International Paper (NYSE:IP) in a cash
deal worth $2.2 billion. Shares of Weyerhaeuser (NYSE:WY) up a tick to
MATHISEN: Marriott International raised its quarterly dividend to 30 cents
a share, that is up from 25 cents. The yield on the stock is now 1.73
percent. Shares though down fractionally at $69.16.
Profit grew more than 15 percent at Cognizant Technology but the I.T.
services provider saw slower revenue growth as clients spent less on
services. The company also issued a downbeat forecast for the current
quarter, citing softness in the health care and financial services sectors.
Despite the news, investors were pleased with results. Shares up 5 percent
Operating profit fell 12 percent at Berkshire Hathaway (NYSE:BRK.A). That
missed estimates as the conglomerate owned by Warren Buffett cited weakened
demand in its railroad operations. Despite that decline, overall profit
rose 8 percent. Shares remained unchanged in after-hours trading but they
did finish the day up a fraction to — OK, get ready for this —
$216,999.98. So, 98 cents really matters, Sue.
HERERA: Exactly. All right, Ty.
And now to this week`s market monitor who has stock picks he says will rise
10 percent to 14 percent over the next year. He is Kevin Caron, and he`s
portfolio manager with Washington Crossing Advisers firm. Last time he was
on in October, he recommended T.J.Maxx, which is up 6.7 percent, General
Mills (NYSE:GIS), which is up 6.4 percent, and Microsoft (NASDAQ:MSFT)
which is down 4.7 percent.
Welcome back, Kevin. Nice to have you here.
KEVIN CARON, WASHINGTON CROSSING ADVISORS: Good to be here. Thanks.
HERERA: Let`s start first of all how you feel about the market overall.
We`ve had some increased volatility, now a bit of weakness in terms of
economic stats. How do you feel about the equities situation?
CARON: Yes, the global fundamentals are challenging when we look at
earnings, we`re seeing four quarters of down earnings. So, overall, we`re
working through a difficult patch for the overall global economy and
consequently focusing more intently than we have in a long time on
emphasizing quality, even if it means having to pay up a little bit for it.
So, we`re a bit more cautious with portfolios and trying to position them
for whatever comes, whether it`s a rebound in the second quarter, second
half of the year, or whether or not we have some more tough-slogging ahead.
MATHISEN: You`ve got a couple of beverage makers on your buy list. One
very big, and alcoholic. One smaller.
Let`s start with the bigger one.
CARON: OK, so we`re looking at Budweiser as a company that is going
through a transition. They`re looking to make a very substantive
acquisition in terms of their purchase or looking to acquire Miller. And
this is going to create a very large global consumer-based franchise, has a
lot of market power, assuming it gets to regulatory approval.
We think that ultimately down the road, this has a lot of — this is going
to have a lot of value creation globally, and tied to a very consistent
performance from the global consumer, with an added bonus in the emerging
market consumers should we begin to see some improvement in those markets
in the long-term also. So, we think that stock can go to $138 and rising
dividend to boot.
HERERA: OK. Dr. Pepper Snapple, price target $102, you say a well-run
company with really good brands?
CARON: Yes. And this is a company whose market cap is one-tenth the size
of the one that we just talked about. So, it`s smaller, it`s got better
ability to grow from the smaller base. But if you look at it, they`ve done
a very good job getting ahead of consumer trends, moving away from sugary,
carbonated beverages, focusing more on low sugar, not as carbonated
And they`ve found a sweet spot. Schweppes Ginger Ale is there, and teas,
and all of those kind of things. And they`ve been growing nicely. A
boring company but not boring for the dividend industry who`s looking for a
rising stream of income, because that dividend is growing nicely, we think
that can continue.
MATHISEN: Quick thought on your final one, Honeywell?
CARON: Yes. Honeywell is a well-managed company. It`s a global
conglomerate. Most people know them, if you look at your wall, if you look
at the thermostat that`s on the wall, those kind of things in the home.
But it`s a much bigger company and it`s been very well managed from an
operational point of view, done some very good acquisitions in the past.
We think that`s a top-tier company that can go to $129, maybe $130 a share
in the next 12 months.
HERERA: All right. Thanks for staying late for us, Kevin. We appreciate
it. Have a great weekend.
Kevin Caron with Washington Crossing Advisers.
Coming up, shattered glass. The big business opportunity a few guys saw
when others could only see a broken iPhone.
MATHISEN: This weekend is the 142nd running of the Kentucky Derby. The
derby is one of the most heavily wagered events of the year. About $130
million in bets were made last year. More if you count wagers that weren`t
on the books.
The overwhelming favorite to win tomorrow`s race is Nyquist, odds at 3-1.
The purse likely $1.6 million for the winning horse. Last year, of course,
American Pharoah won the Kentucky Derby, and then went on to capture the
HERERA: America`s Cup, it is the most prestigious trophy in sailing. This
weekend, boats like you`ve never seen before will begin competing for that
And as Courtney Reagan explains from New York, this year, it`s all about
technology on the water.
COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: The battle for the
oldest trophy in sports returns to New York City for the first time in
nearly a century.
This weekend, six teams will compete for points in the America`s Cup World
Series that count towards the final event in Bermuda next year.
Oracle (NASDAQ:ORCL) Team (NASDAQ:TISI) USA is the current defending
America`s Cup champion but Emirates Team (NASDAQ:TISI) New Zealand is
leading the current series. The boats have come a long way in the 165-year
history of the sport. Today, technology plays a big role.
JIMMY SPITHILL, ORACLE TEAM USA SKIPPER: What makes the boat so special is
the fact that it literally flies above the water. It hydrofoils above the
water. It`s very, very powerful. Everything has to be human powered. You
know, doing speeds up to 50, 60 miles an hour.
Like auto racing, the harder you push it, the faster you go. You cross
that line, you`re going to feel the consequences.
REAGAN: The AC45s twin-hulled carbon fiber catamaran is the Lamborghini of
sailboats, traveling most of than two and a half times of the speed of the
wind, up to 50 miles per hour. The 45-foot-long vessel with 84-foot sails
literally flies or hydrofoils six feet or so out of the water. I got to
experience it all firsthand.
I`m holding on!
Billionaire Oracle (NASDAQ:ORCL) founder Larry Ellison is an expert sailor
himself and founder of Oracle (NASDAQ:ORCL) Team (NASDAQ:TISI) USA.
Ellison has also helped revive interest in the sport on both a fan and
RUSSELL COUTTS, AMERICAN CUP CEO: Larry`s obviously a very passionate
fellow. Very passionate about the America`s Cup, and was very much
instrumental in creating the concept behind the modern America`s Cup
REAGAN: TV licensing for the America`s cup has increased more than 300
percent, and that`s drawn the attention of big sponsors including title
sponsor Louis Vuitton. BMW, Fremont, Sperry are among the others.
For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan in New York City.
MATHISEN: Well, there are about 2 billion smartphones in the world today.
A number expected to triple by 2020. Cell phone repair has turned into a
$4 billion a year industry.
And that`s why three young men in Orlando, Florida, had a feeling that
something good might happen back in 2009 when they got the bright idea to
MATHISEN: It happened to Justin Wetherill in 2008. He dropped a new
iPhone 3G. The screen, an ugly web of glass shards. Wetherill was only 21
but he`d already built computers and tried to sell them.
So, it was no surprise really when he took things into his own hands.
JUSTIN WETHERILL, UBREAKIFIX PRESIDENT: I ended up trying to fix it
myself, and failed miserably.
MATHISEN: His friend David Reiff, a mechanical engineer, warned him not to
do it himself.
DAVID REIFF, UBREAKIFIX VICE PRESIDENT: I said, that sounds nuts, buy a
MATHISEN: Instead Wetherill ordered more parts and a bunch of broken
phones. He figured out what kind of glass to use, began sourcing proper
screws and tools. In weeks, he and his buddy learned to fix Apple`s still-
new and still-mysterious iPhone touch screens.
REIFF: I started to realize these things weren`t as mystical. I mean,
once you got inside them, they were an understandable device.
MATHISEN: They began fishing for customers on eBay (NASDAQ:EBAY), later on
their own website, for about 80 bucks a pop.
REIFF: It was almost overnight that we started getting some clicks.
MATHISEN: One of Wetherill`s co-workers suggested a name for the side
business, uBreakiFix. By night, they fixed phones at Wetherill`s house.
On his lunch hour, Wetherill met locals in person at restaurants.
WETHERILL: People treated us like magicians. When I went to Panera and
fixed somebody`s phone while they drank their ice tea, like, you know,
you`d have thought I pulled a bunny out of the head.
MATHISEN: Wetherill`s friend Eddie Trujillo was intrigued, too, but he
thought they could do better.
EDDIE TRUJILLO, UBREAKFIX VICE PRESIDENT: Sort of mailing their phones and
being without them that long, that`s crazy.
MATHISEN: Trujillo wanted to open a uBreakiFix store. So, he made
Wetherill and Reiff an offer they couldn`t refuse.
TRUJILLO: I was like, I put up the money, if it works, great. If it
doesn`t, you guys still have your Internet business.
MATHISEN: In late summer 2009, the first uBreakiFix store opened in
Orlando. In just two months, store sales outpaced the website. Three
months in, a second store opened. Three years later, they owned 47 stores
coast to coast, fixing not only screens but water damage, replacing
batteries, retrieving data in phones, tablets and PCs.
To grow faster, they decided in 2013 to begin selling the uBreakiFix name
to franchise owners. Now, there are more than 190 uBreakiFix stores across
the U.S. and Canada.
DANIEL LEW, UBREAKIFIX FRANCHISE OWNER: I just thought, it`s a phenomenal
MATHISEN: Daniel Lew ought to know a good growth story, he worked on Wall
Street for 30 years. Lu just opened Connecticut`s first uBreakiFix in
Norwalk. He and two of his employees went through the six-week training
LEW: There`s one that breaks every two seconds. And as I learned a long
time ago, you can make extremely healthy returns by being first in a
MATHISEN: Healthy? You bet. Store sales hit $62 million in 2015.
Wetherill can still fix a phone when he needs to because the campaign to
make devices great again isn`t ending any time so.
REIFF: To have grown to 190 stores is incredible. But what blows my mind
is that we`ve barely scratched the surface of what`s possible here.
MATHISEN: Scratched the surface. Well, intentionally said. The
uBreakiFix guys expect to have 275 stores opened by the end of the year.
In case, you`re wondering, they say it can take about $125,000 all in for
new owners to get a store opened up. Of course, costs vary, Sue, depending
on where you`re happened to open.
HERERA: That actually is not all that big a price tag.
MATHISEN: Compared with other franchises, a fast food place.
HERERA: Maybe you and I —
MATHISEN: I am so non-mechanical.
HERERA: That does it for NIGHTLY BUSINESS REPORT for tonight, I`m Sue
Herera. Thanks for watching.
MATHISEN: And thanks for me as well. I`m Tyler Mathisen. Have a great
weekend. And Happy Mothers Day.
HERERA: Thank you, and to Joan as well.
MATHISEN: Thank you. And to all mothers out there, have a good weekend.
See you, Monday.
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) 2016 CNBC, Inc.