SHARON EPPERSON, NIGHTLY BUSINESS REPORT ANCHOR: Buckle (NYSE:BKE) up. Janet Yellen heads to Capitol Hill. Britons head to the polls. And investors fasten their seat belts for what may be a rocky week.
TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Difficult to crack. Walmart has had a hard time growing its business in China. So, today, it made a move to help change that.
EPPERSON: Cooling off? Are companies starting to cut back on once hot wellness benefits?
Those stories and more tonight on NIGHTLY BUSINESS REPORT for Monday, June 20th.
Good evening, everyone. I’m Sharon Epperson, in tonight for Sue Herera.
MATHISEN: And I’m Tyler Mathisen. Welcome, everyone.
Well, it was a strong start to the week for stocks. Federal Reserve chair Janet Yellen heads to Capitol Hill tomorrow for two straight days testimony. The focus, the economy, which as you probably know has experienced an unexpected dip of late. One issue sure to come up is the U.K. referendum later this week on whether that country should leave the European Union.
That vote happens Thursday, ending a bitter campaign between the leave and the remain camps. But today, U.S. investors voted to stay in stocks, that is. The Dow Jones Industrial Average rose 129 points to 17,804. NASDAQ added 36. And the S&P 500 was up 12.
Bob Pisani has more on the big week ahead.
BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: It’s going to be a busy week capped off by the Brexit vote in the U.K. This Brexit thing has traders utterly confused. It’s gotten a lot more complicated than just, should we stay in or stay out of the European Union?
So, last week, the markets seemed to move toward the idea that the U.K. would exit the European Union and stocks were down. So, the greatest surprise then would have been if the vote was to stay in the E.U., the markets would have rallied big. But now, that’s reversed somewhat. The market has now rallied on the belief that the U.K. is now likely to remain in the E.U. and it’s likely that at least part of the rally we would have had this Friday had the U.K. stayed in the European Union has happened today.
So, now, it’s the opposite, the risk to the market is to downside. That is the greatest market move will come if there is a vote to leave. So, the markets gyrated so much traders aren’t sure how much the market might move if there is a vote to stay in or stay out. Do you get it?
OK. Then, we have Fed Chair Janet Yellen. She’ll be testifying on Capitol Hill for the next two days. Investors will be looking for any major clues about the pace of future rate hikes and whether if British votes to leave the European Union could derail the Fed’s plans to raise rates later this year.
For NIGHTLY BUSINESS REPORT, I’m Bob Pisani at the New York Stock Exchange.
EPPERSON: With just a few days do go before Britain’s vote on the future of the U.K., polls show there are some deep divisions.
Wilfred Frost reports from London.
WILFRED FROST, NIGHTLY BUSINESS REPORT CORRESPONDENT: Markets around the world have rallied as fears that Britain might vote to leave the European Union this Thursday have eased. “The Financial Times” poll of polls before the weekend gave a 5-point lead to the leave camp, that poll now at 44 percent for both sides.
The main reason for the shift is a growing sense of unity amongst those who wish to vote remain. That follows the tragic shooting of lawmaker Jo Cox last week who backed the remain camp.
It comes at the same time as there is disunity in the leave camp. Nigel Farage, leader of the U.K. Independence Party, releasing a particularly divisive poster on immigration.
The market certainly is responding to those polls. However, I spoke to one political consultant and asked him whether the move in the polls this weekend have been exaggerated.
ALASTAIR CAMPBELL, FORMER DIRECTOR OF COMMUNICATIONS & STRATEGY: I do think it’s exaggerated, I do. I think there are millions of people still making their minds up. So, people say the bookies always get it right. They don’t.
FROST: Either way, with just three days until Britons goes to the polls, markets are certainly dancing the tune of the latest Brexit news float.
For NIGHTLY BUSINESS REPORT, in London, I’m Wilford Frost.
MATHISEN: The world’s biggest automaker supports Britain remaining in the E.U. Toyota (NYSE:TM) warns a leave vote may lead to levies of as much as 10 percent on the cars it builds in the U.K. That would make the cars more expensive and potentially hurt sales. The automaker exports almost 90 percent of the vehicles it builds in the U.K.
EPPERSON: So, how by all of this big news from this week from the vote to Europe to Janet Yellen’s congressional testimony impact the financial markets?
Michael Farr, president of the money management firm Farr, Miller and Washington, joins us right now.
Michael, good to talk to you.
MICHAEL FARR, PRESIDENT, FARR, MILLER & WASHINGTON: Hi, Sharon.
EPPERSON: Listen, there is so much concern over Brexit. But, first, we have to deal with Janet Yellen’s testimony and what we’re going to hear there. Likely, she is going to talk about what she does all the time, which is economic uncertainty, and that is heightened with this Brexit referendum vote coming up.
What do you think will be most important to hear from her as she heads to Capitol Hill?
FARR: Well, certainly, Sharon, tomorrow, she’s going to talk about her data dependency. I think she’s probably going to do her very best not to give any clue as to direction. But it seems to me that a rate hike certainly before the election is clearly off the table.
And I think this is Brexit is just another excuse, and it’s starting to drive me crazy. I’m sick of excuse after excuse. The Fed has been there with money and easing monetary policy and keeping rates artificially low now for seven years. They’ve got to get out of the way. It’s time for them to go. And they’ll never run out of excuses.
MATHISEN: So, you think they’re afraid of their shadow, I guess, would be my way of putting it. Let’s talk about where you see stock prices right now.
FARR: But, Tyler, it seems that they’re not only afraid of their shadow, it seems they’ve taken on the weight of economic and political stability around the world. That’s not our job and there’s always going to be another Greece. There’s always going to be another Brexit. Stick to our monetary policy, there’s plenty of cash out there, and rates are very low.
MATHISEN: And last fall, in September, when you and I were together down there, it was China worries that sort of froze them in place. You’ve got rates which ultimately at some point are going to start to rise. A lot of the cost cuts that companies could make have already been taken. Profit margins are coming down. Wages are going up. Prices are pretty close to record highs.
FARR: Record highs.
MATHISEN: That doesn’t argue for much more room to move up for stocks.
FARR: Well, it doesn’t argue for much room — or room to move up for stocks, but with everything you mentioned, low rates and markets near all-time highs, and the employment rate dropping, however you want to measure it, our economic data are not bad, and therefore, the Fed should choose this as an excuse I think to get out of the way.
But stocks are near all-time highs. As the old rule is to buy low and to sell high, this ain’t low. So, you need to be really cautious about the dollars that you commit. You’ve got to understand balance sheets because sooner or later, when the Fed gets out of the way, we’re going to return to a real market economy where buyers pay what they’re willing to pay and sellers will accept a price, then you’re going to need to know that you’ve got value.
EPPERSON: Michael, quickly, what do you see as a buy right now? You’re interested in defensive names?
FARR: I like defensive names. I like some of the names that haven’t really been in favor.
I think you have to take a look at some of the banks at sort of one times — 1.1 times book was a call I made on your show a month or two ago. It’s worked out very well, I think that continues to work. Look at some of the pharmaceuticals.
And then, a name I’ve been liking recently is Ross Stores (NASDAQ:ROST). That’s one that I’ve been interested in nibbling away at. I own it personally, my firm owns it. It’s not a recommendation to buy or sell but some very interesting things out there if you can get them for the right price.
MATHISEN: All right. Michael, got to leave it there. Good to see you as always.
FARR: Nice to see you. Thanks for having me.
MATHISEN: Michael Farr in Washington with Farr, Miller and Washington.
To U.S. politics now, where a new survey shows a large portion of the voting public remains undecided on the presidential election.
Steve Liesman has the details.
STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: A typical poll headline would be this. The CNBC All America Economic survey shows Clinton leads Trump by five points, 40 percent to 35 percent.
But the bigger story could be this: 25 percent of the public says they’re undecided, including 14 percent who say they would vote for neither candidate. Such a big group of uncommitted voters is the result, pollsters say, of a contest between two of the most unliked contenders in presidential history.
MICAH ROBERTS, PUBLIC OPINION STRATEGIES: These candidates are very flawed. And this high number of people that are undecided is a hallmark of a election where we have two candidates with very high unfavorable ratings.
LIESMAN: The poll of 801 Americans around the nation had a margin of error of 3.5 percent. It found that Clinton holds leads on who is best for health care, trade, immigration, and the lower and middle classes.
Trump leads on who would be best for stocks, regulating Wall Street and banks, dealing with the budget deficit, large companies, and the wealthy.
The pollsters suggest the survey could understate Clinton’s strength. For example, Clinton and Trump are tied on the issue of who’s best for the economy and dealing with terrorism — an area where Republicans typically enjoy strong double-digit support. And a large part of the undecided are Sanders supporters who should eventually break for Clinton.
JAY CAMPBELL, HART RESEARCH ASSOCIATES: We have two conventions to go through. And two campaigns and two major national parties that are going to do everything they can to get voters out the door. You can be sure that the DNC and the Hillary Clinton campaign are going to target those Bernie Sanders supporters very, very hard in the coming months.
LIESMAN: In other findings, survey shows 62 percent of the public, including 41 percent of Republicans, think Trump should release his tax returns. And 44 percent say a Trump presidency would make America’s standing in the world not just worse, but a lot worse. That’s more than double the results for Clinton.
For NIGHTLY BUSINESS REPORT, I’m Steve Liesman.
EPPERSON: Continues to be a fascinating political season. John Harwood joins us right now to discuss it all.
John, how unusual is it to have such a large number of uncommitted voters at this point in the cycle?
JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, as we heard from Michael Roberts, our pollster for the NBC/”Wall Street Journal” and the CNBC survey as well, when you have candidates who are as unpopular as Hillary Clinton and Donald Trump, you’re going to have people who are at sea a little bit about how they’re going to come down. We do need to note that as Steve did in the piece, Hillary Clinton leads by five points in that survey. She leads by similar margins or slightly more in others.
So, Clinton, clearly, has the upper hand. But she’s battling the same negatives that Donald Trump is. It’s just that Trump’s are higher right now.
MATHISEN: Donald Trump today fired his campaign manager, Corey Lewandowski. Why, John, and did it have anything to do with concerns over fund-raising?
HARWOOD: It had to do with concerns over fund-raising, also had to do with those poll ratings that we just talked about. Corey Lewandowski is somebody who had not run a national campaign before. You have to give him credit for guiding Trump to the Republican nomination.
But the general election is an entirely different ball game. We’ve seen Trump going backwards in recent weeks and Donald Trump had brought on Paul Manafort as an experienced Republican consultant to try to guide the general election. He clashed with Corey Lewandowski, one of them had to go and it was Lewandowski.
EPPERSON: Speaking about funding, what about reports over the weekend that Apple (NASDAQ:AAPL) has decided not to help fund the Republican convention?
HARWOOD: In some ways, it’s not surprising because Donald Trump has been critical of apple during the campaign. But it is notable for a giant American corporation to not try to assist both sides in the way that big corporations tend to do. It shows that when you have a candidate as controversial as Donald Trump, you’re going to see some big corporate players step away.
We’ve seen other corporations say they’re going to donate less than they have in the past. Maybe not tying it explicitly to Trump but that’s one thing to watch, Republican fund raising.
Hillary Clinton has got a large fund-raising apparatus. Donald Trump has sort of done it with publicity, with media interviews, some of his own money. He’s going to have to scale up big-time to fund not only the convention but the fall campaign.
EPPERSON: We’ll be watching that very carefully.
John Harwood in Washington, thank you.
HARWOOD: You bet.
MATHISEN: And still ahead, striking a deal. Did Walmart just find a way to crack the ultra-competitive Chinese retail market?
EPPERSON: Walmart has struck a deal to help build its business in China. The Dow component is teaming up with JD.com, China’s number two e-commerce company, to potentially get a bigger piece of a very competitive retail industry in that country. Shares of the world’s largest retailer rose fractionally, while JD.com was up more than 4 percent.
Susan Li has more on Walmart’s move.
SUSAN LI, NIGHTLY BUSINESS REPORT CORRESPONDENT: This is Walmart’s way of muscling up in China’s online business. Walmart is selling its Chinese online seller, Yihaodian, to China’s second-largest e-commerce company, JD.com, in all share deal worth roughly $1.5 billion.
What this deal means is that Walmart recognizes the future of China is online and they need a local partner who knows a thing or two about selling online in China. So, why not partner up with the fastest-growing Chinese e-commerce player, JD.com, whose revenue growth has now exceeded Alibaba’s for seven straight quarters.
BUDD BUGATCH, RAYMOND JAMES: Well, it looks like it’s going to help them a fair amount. There’s going to be a lot of new eyeballs to the site. They’ll have a store of sams.com on the site as well. That will be something new. So, it probably brings a lot more traffic to Walmart. We’ll have to see if that’s the way it develops.
LI: China is a tough retail market with slim margins and competitive local players like Suning or Sun Art, both are ahead of Walmart when it comes to market share in China. International names like Tesco (NASDAQ:TESO) and Best Buy (NYSE:BBY) have also been squeezed out.
And Walmart has been criticized for not understanding local tastes and thinking that big box retailing works the same way anywhere in the world. But either with falling same store sales in China, Walmart’s CEO Doug McMillon still believes that China remains a strategic market and the fourth largest international one when it comes to sales.
Now, the surprising part of this deal is that Walmart is offloading an asset that they just paid three-quarters of a billion for to take full control of last year. But I guess in Walmart’s view, the benefits of this alliance will probably outweigh the costs if it gets in more foot traffic in their stores and also more new customers rolling in.
For NIGHTLY BUSINESS REPORT, I’m Susan Li.
MATHISEN: Inovio Pharmaceuticals gets approval to test its Zika vaccine on humans and that is where we begin tonight’s “Market Focus”.
The drugmaker along with its partner Gene One Life Sciences was given the green light by the Food and Drug Administration to conduct the first experimental drug trial to fight the virus as a vaccine. The tests will begin within the next few weeks and test results were expected to be reported by the end of the year. The news sent shares of Inovio up nearly 7 percent to $11.20.
Marathon Oil (NYSE:MRO) will buy pay rock energy for nearly $900 million. The deal will give Marathon access to prime shale reserves in Oklahoma. The merger expected to be finalized in the third quarter of the year. Marathon shares up 10 percent on the day to $14.48.
EPPERSON: And, Tyler, shares of Lending Club took off today after regulatory filings showed that Chinese investment firm Shanda Group increased its stake in the peer to peer lender again. Shanda, which raised its stake in the company just last month, now owns more than 15 percent of Lending Club. Shares of Lending Club rose more 2.5 percent to $5 even.
And it was a successful weekend at the box office for Walt Disney (NYSE:DIS). “Finding Dory,” which was the sequel to the hit movie “Finding Nemo,” made its debut taking in over an estimated $136 million. Setting a record for animated films and Disney’s ABC Network pulled in big numbers for last night’s NBA finals game seven between Cleveland and Golden State. It was the most-watched NBA game ever on the network, slightly more than 25 million viewers. Share of Disney (NYSE:DIS) up a fraction to $99.57.
MATHISEN: Facebook (NASDAQ:FB) shareholders today approved a new class of shares that would leave CEO Mark Zuckerberg in control of the company he founded.
Julia Boorstin has more.
JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Mark Zuckerberg was about 60 percent of voting shares of Facebook (NASDAQ:FB) got all his proposal adopted at today’s shareholder meeting. The company’s board re-elected a proposal to solidify his control of the company approved. Zuckerberg laying out his vision for the company in a roadmap to grow revenue.
MARK ZUCKERBERG, FACEBOOK FOUNDER & CEO: Over a five year period, some newer initiatives that we’re working on I think will start to become not only very large communities of their own right and some already are, but, you know, some of these new initiatives will also start to contribute meaningfully to our overall business.
So, I’m thinking about new apps that we’re working on like messenger and WhatsApp, which I think you can say are pretty meaningful communities at this point, with WhatsApp more than 1 billion people, messenger around 900 million people. But we’re really just getting started working on the business part of those.
BOORSTIN: And as Zuckerberg continues to build the business, thanks to the new class of shares approve today, he’ll be able to maintain his voting control, even as he slowly sells shares to fund his philanthropic efforts or if the company makes acquisitions or issues more shares to employees. Even though Facebook (NASDAQ:FB) shares are up 38 percent over the past year, Zuckerberg’s proposal drawing opposition from shareholder advocacy groups as well as North Star Asset Management, saying it’s not in the best interests of shareholders. But other investors say it comes with the territory.
ROSS GERBER, GERBER KAWASAKI MANAGEMENT: The whole shareholder meeting is almost a farce. He votes everything on or off himself. But that’s who we’re betting with is Zuckerberg and that’s totally transparent. So, my thing is if you don’t like it, don’t buy the stock.
BOORSTIN: And the mood of the shareholder meeting which took place in the hotel here behind me was upbeat. When Zuckerberg was asked if he plans to take a step back from management to focus on philanthropy, he said, no, he plans to continue to run Facebook (NASDAQ:FB) for quite some time, drawing a round of applause from the audience.
For NIGHTLY BUSINESS REPORT, I’m Julia Boorstin in Redwood City, California.
EPPERSON: Coming up, looking for a job? We’ve got the latest list on the best places to work.
MATHISEN: Here’s a look at what to watch tomorrow. As we reported, Fed Chair Janet Yellen testifies on the economy in front of the Senate Banking Committee. European Central Bank President Mario Draghi speaks on the European economy. And FedEx (NYSE:FDX), often viewed as an indicator of the economic health in the U.S., will report earnings. That is what to watch Tuesday.
EPPERSON: A major victory for the daily fantasy sports business. Over the weekend, New York state lawmakers moved to legalize the multi-billion dollar industry which has come under scrutiny in recent months. The CEO of DraftKings, one of the biggest daily fantasy sports companies, applauded the move and says other states may follow.
(BEGIN VIDEO CLIP)
JASON ROBBINS, DRAFTKINGS CEO: A lot of states are watching what’s happening in New York. New York often does serve as a beacon for other states. But it depends on the state.
(END VIDEO CLIP)
EPPERSON: The bill in New York now gets sent to the governor but it’s unclear whether he will sign the legislation. Comcast (NASDAQ:CMCSA) (NYSE:CCS), the parent company of CNBC which produces this program, is an investor in DraftKings’ rival FanDuel.
MATHISEN: Retirement savers should expect less. That’s the word from the chairman and CEO of BlackRock (NYSE:BLK), Larry Fink. In an interview, the head of the world’s largest asset manager said returns from the typical retirement portfolio likely won’t be as high as they once were.
(BEGIN VIDEO CLIP)
LARRY FINK, BLACKROCK CHAIRMAN & CEO: I think it would be wrong of you to expect anything beyond 4 percent or 5 percent at this time. If you’re putting money to work today, you should be savings without objective. If you’re in more you can mitigate that. If you go into that without that assumption, I think you’re going to be wrong.
(END VIDEO CLIP)
MATHISEN: Fink went on to explain that as you do get closer to retirement, the asset mix of a typical retirement portfolio changes and tends to favor bonds over stocks.
EPPERSON: There is a fierce battle among companies to attract the best workers. And LinkedIn (NYSE:LNKD) using data from more than 430 million members is out with its first-ever ranking of the most sought after employers.
Deirdre Bosa has more.
DEIRDRE BOSA, NIGHTLY BUSINESS REPORT CORRESPONDENT: Results are in and tech is winning the talent war. In the U.S., Google (NASDAQ:GOOG) takes the top spot followed by Salesforce, Facebook (NASDAQ:FB), and then Amazon (NASDAQ:AMZN).
But it’s not just the top five or ten that’s dominated by tech names. The industry makes up nearly half the list. Part of the appeal may be in perks and benefits that go far beyond the usual. Salesforce offers employees mindfulness areas designed with help for months. Airbnb gives its workers a $2,000 travel stipend. And music discovery platform Pandora which comes in ahead of heavyweights like Starbucks (NASDAQ:SBUX) and Cisco (NASDAQ:CSCO) even pays for workers to have gender affirmation surgery.
But perks aren’t everything.
DAN ROTH, LINKEDIN EXECUTIVE EDITOR: I think perks are important. Perks are kind of the baseline, you have to have them. But people don’t go to work for these perks. There’s so many founder-led companies.
And somebody like Benioff who can say, this is my company, I believe in monks in the office, I believe in giving back, you can have seven days off to volunteer, those are the kind of things people want to work for places that they’re already inspired.
BOSA: Indeed, the list suggests that people are seeking growing companies over blue chip stalwarts. Absent from the list are huge profitable Fortune 500 companies like Disney (NYSE:DIS) or Procter & Gamble (NYSE:PG) or GE, and not a single company in the energy or retail sector show up either.
Many of the top attracters are also top market performers. The top five names on the list have all at least doubled their share price in that period compared to the S&P’s 65 percent. Employees like investors are following the money.
Deirdre Bosa for NIGHTLY BUSINESS REPORT in San Francisco.
MATHISEN: While some employers are offering more perks, others may be scaling back. According to a new survey by the Society for Human Resource Management, employers are cutting down on certain wellness programs. The report found perks that were once considered hot like on-site flu shots and health coaching have declined over the past year. So, what’s changed and what does it mean for other workplace wellness benefits?
Evren Esen is director of Survey Programs at the Society for Human Resource Management.
What did your study show exactly? What kinds of programs are getting scaled back?
EVREN ESEN, SOCIETY FOR HUMAN RESOURCE MGMT: Well, we have seen an increase in well — we had been seeing an increase in wellness benefits over the last five years. This year, we did start to see a decrease, a decline, in certain types of wellness programs. And these are probably programs that were underutilized and perhaps didn’t have a large return on investment for employers.
And so, we did see a decrease in health and lifestyle coaching, as well as a decrease in areas that would also have a more individual type of program, for instance, chronic disease prevention. And so that individual focus and attention, those types of programs we saw a decrease in.
EPPERSON: Well, a lot of folks have said for many years, I think, at least anecdotally in the workplace, show me the money. Rather than have this particular perk, I’d like to have a bonus, or I’d like to have a little bit of extra money in my paycheck.
Are we seeing more employers moving in that direction giving monetary bonuses?
ESEN: Well, we are actually seeing more sign-on bonuses for executives and nonexecutives. Then we’ve also seen an increase in stock bonuses over the last year. And so, this does indicate that organizations are using bonuses as a way to reward employees and to recruit their top candidates.
MATHISEN: Are those bonuses tied to wellness goals? Or recruitment bonuses, as opposed to being paid $500 if you join a stop smoking program at work and you stop smoking, or you lose 30 pounds, or whatever?
ESEN: Well, both. On one hand, we are seeing monetary bonuses for select areas related to performance. But in terms of wellness that is one area we did see an increase as well. Individuals that completed certain wellness types of programs were awarded with bonuses. So, for instance, if you completed a ten-week boot camp, at the end of it you would get a $100 bonus or $500 bonus.
MATHISEN: What’s your favorite benefit at work, Evren, quickly? Your favorites?
ESEN: My favorite benefit at work is I love flexibility.
MATHISEN: All right. Good.
ESEN: And that’s an area that we saw an increase in as well. Especially over the last 20 years.
MATHISEN: Evren Esen, thank you very — with the society for Human Resource Management.
EPPERSON: And before we go, here’s another look at the day on Wall Street. The Dow Jones Industrial Average rose 129 points to 17,804. The NASDAQ added 36. And the S&P 500 was up 12.
That is NIGHTLY BUSINESS REPORT for tonight. I’m Sharon Epperson. Thanks so much for watching.
MATHISEN: And thanks for me as well. I’m Tyler Mathisen. Have a great day after Father’s Day, everybody. We’ll see you tomorrow.
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.