Transcript: Nightly Business Report – September 12, 2016

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

TYLER MATHISEN, NIGHTLY BUSINESS REPORT: Stocks take off. Wall Street rallies after a voting member of the Federal Reserve warned against moving too quickly on interest rate hikes.

take something really big to keep insurers participating in the health care
exchanges in many parts of the country.

MATHISEN: And giving back. Sports stars and celebrities line Cantor
Fitzgerald`s trading floor to raise money to honor the victims of the
September 11th attacks.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Monday,
September 12th.

HERERA: Good evening, everyone, and welcome.

A Fed-fueled rally and September just got a lot more interesting. Stocks
soared after a Fed governor warned against moving too quickly on interest
rates. That alleviated some of the concern in the market that we saw on
Friday. When stocks tumbled when another Fed official said an interest
rate hike may be just around the corner.

But today`s speech by Lael Brainard was the last appearance from a Federal
Reserve official ahead of next week`s meeting of policy makers. Her
cautious language sent stocks sharply higher. The Dow Jones Industrial
Average climbed 239 points to 18,325. The NASDAQ added 85, and the S&P 500
jumped 31.

We begin with two reports tonight. Bob Pisani tells us why the markets are
being whip sawed by the Fed, but first, Steve Liesman on what exactly
central bank officials said and where the Fed`s voting members stand.


today, but the market taking its cue from Fed Governor Lael Brainard who
made a full-throated case for the Fed not to hike rates. Brainerd who is a
governor has a permanent vote on the Open Market Committee said the Fed has
not been hitting its inflation targets and there are risks from abroad and
a stronger dollar that the Fed should watch carefully.

LAEL BRAINARD, FEDERAL RESERVE GOVERNOR: To the extent that the effect on
installation of further gradual tightening in labor market conditions is
likely to be moderate and gradual, the case to tighten policy preemptively
is less compelling.

LIESMAN: Her comments followed those by Minneapolis Fed President Neel
Kashkari, he also made dovish remarks in an interview on CNBC this morning.

NEEL KASHKARI, MINNEAPOLIS FED PRESIDENT: My view is, there doesn`t appear
to be huge urgency to do anything, frankly, and let`s get as much data as
we can and let`s try to get our inflation back up. Again, look around the
world. Around the world, inflation generally is coming up low. This is a
global phenomenon. It`s not just a U.S. phenomenon.

That`s why I think we need to understand, what are those drivers? Why are
interest rates over the last 30 years, why have they been falling?

LIESMAN: Only Atlanta Fed President Dennis Lockhart sounded hawkish. He
said, quote, “I`m satisfied at this point that conditions warrant serious
discussion,” end quote, of a rate hike.

Here is one reporter`s subjective view of where the ten voters at the
meeting stand on hiking rates, based on their previous comments. Four look
likely to vote for a hike, and three, including Fed chair, Janet Yellen,
are possible supporters. Two Fed governors, Brainard and Dan Tarullo,
seemed unlikely hikers and one Fed Governor Jay Powell is unknown.

But it`s likely that all the Fed governors will side with the chair once
she makes up her mind as it`s rare for governors to dissent, as opposed to
Fed bank presidents who dissent more often.

So, it all now depends on Fed Chair Janet Yellen. She had said in August
that the case was strengthening for a rate hike. There had been some
lukewarm data since then. But we`ll find out only next Wednesday if she`s
changed her mind.




trader, who has to come in every day and put money on the line. They are
obsessed about what the Fed will be doing because interest rates at such
extreme lows given the improving economy that traders believe there has to
be some kind of big move in stocks and bonds and the dollar if and when the
Fed moves again.

But the last two trading days has not helped them understand the situation
at all. Traders went from complacent on Friday morning to a mild panic
midday Friday, from not caring to suddenly shorting the market. And then
on Monday, the traders had reversed their positions.

This is all in two trading days. How could you make money on this — on a
daily basis when one important Fed voter says they want to raise rates on
Friday and then on Monday, another important Fed voter says they likely
will not raise rates?

The short answer is, you really can`t. Maybe Fed officials should just
shut up and stop confusing everyone. We now have nine days before we`re
gong to learn what the Fed is going to do, and most traders are no closer
to having a firm conviction about what will happen than they did last week.

Is the Fed data-dependent or not? And what is the data telling us, anyway?
They`re all so confused down here. Welcome to the new world of Fed

For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock Exchange.


MATHISEN: The head of the largest U.S. bank assets wants the Federal
Reserve to get on with it. Speaking at the Economic Club of Washington,
JPMorgan (NYSE:JPM) Chase CEO Jamie Dimon said he wants to see Fed Chief
Janet Yellen raise interest rates sooner rather than later.


JAMIE DIMON, JPMORGAN CHASE CHAIRMAN & CEO: My own personal view, and she
does not call me for advice, by the way. But 25 basis points is a drop in
the bucket. You know, we always — we say to you all, 25 base points going
really slow, don`t worry about it. Let`s just raise rates.


MATHISEN: An interest rate hike means banks can charge a higher percentage
to borrowers, and that in turn could help bank stocks.

HERERA: Michael Hanson joins us now to talk more about the Fed, the
economy and the market. He is senior economist with Bank of America
(NYSE:BAC) Global Research.

Nice to have you here.


HERERA: So, Michael, where do you come down on this? In term — we have
had a lot of cross currents — I`m trying to be polite — in terms of what
the differing Fed officials are saying. But what`s the official stance
from Bank of America (NYSE:BAC) Global?

HANSON: Our expectation is we`ll likely get a Fed hike in September. I
think September is probably a little bit too soon for some Fed officials,
as we heard. And it doesn`t seem that even the ones that may be leaning
that — rate hike might be OK. Don`t really see a cost to waiting.

And so, for that reason, I think it`s probably likely that consensus — I
really do think that Chair Yellen wants to get consensus in the committee
as much as she can, and will likely be to not go in September, and can wait
until December.

MATHISEN: You know, today these days we hear more and more from Fed
governors, from Fed regional bank presidents. So we know what they`re
thinking. I can`t say that I can remember a time when I have looked at the
Fed and it seems as divided as it is today.

HANSON: Well, I think we had a lot of division around QE1 and QE2 in
particular, right? So, I do think it comes and goes in waves. Remember,
the Fed is probably the most decentralized central bank on the planet.
They all get the ability to say their views, and I think the market was
probably leaning a little bit in the direction of thinking that Brainard
today was going to be kind of a spokesman for the committee and I think
that`s not right. I think they all give their own individual —

MATHISEN: She`s been a dove, and she was certainly a, quote, “dove”,
meaning for lower for longer interest rates.

HANSON: That`s right. I think she was trying to persuade her fellow
committee members. She had five points she wanted to lay out on why she
thought it made sense to wait. So, I think that was really who her
audience was.

HERERA: What about Neel Kashkari`s comments that we heard in Steve
Liesman`s report, which is that the low inflation rate that we have here is
a global phenomenon, and not specific to the United States? And how much
should that influence, if at all, the Federal Reserve?

HANSON: Well, I think it matters. The Fed is focused obviously on U.S.
inflation, but it matters why U.S. inflation is low and whether it`s going
to come back up or not. And so, there is a large debate in the committee
whether the tightening labor market in the U.S. alone will help bring
inflation up and she is skeptical, or whether it is global factors and
other things that may continue to keep inflation lower for longer. And I
think that`s really one of the central debates in the committee right now.

MATHISEN: How much would higher interest rates help banks?

HANSON: It`s a good question. I mean, 25 basis points probably in the
grand scheme of things is fairly modest, but, you know, the market right
now is looking for some signs that rates will be going up as a favorable
indicator towards bank stocks. I`d say the market rally today, despite
that, because I think by and large, I think most in the stock market are
hoping the Fed will continue to keep a punch bowl full for longer.

HERERA: Yes. Michael, thank you so much. Appreciate it very much.

Michael Hanson with Bank of America (NYSE:BAC) Global Research.

MATHISEN: Well, the bond market has been rattled by the big debate over
interest rates. After defying predictions of a rise for years, bond yields
around the world have started to climb from historic lows. But are the
moves a head fake or something more?

Mike Santoli takes a look.


the bottom for interest rates?

An abrupt selloff in the past week has lifted bond yields across world
markets and raised this question. From Japan to Europe to the U.S.,
investors have stepped back from bonds, they question central banks
continued willingness to suppress borrowing cost near historic lows. This
is a reversal of the sentiment that took hold over the summer when
trillions of dollars worth of bonds traded with negative yields and
investors bet that central banks in Japan and Europe would continue buying
government debt indefinitely.

Meantime, Federal Reserve officials continue to suggest the rate increases
likely before the year is out. If not after next week`s policy meeting,
perhaps in December. Of course, many have incorrectly predicted rates
would start to climb for years now and the rise in the ten-year treasury
yield from a low of 1.6 percent in early July to just above 6.5 percent now
is hardly a dramatic move in the larger picture. That benchmark yield
ended above 2.25 percent.

This could prove to be yet another fleeting balance in yield and even if
the rates have been seen, low global growth and inflation should keep them
from rising too far or too fast. Still, a growing fatigue with central
bank policies and softening command for low yielding bonds provides a jolt
for investors who have been rushing into dividend-paying stocks, believing
those low bond rates insulated them from severe losses.

One bright spot of the recent lift in longer-term bond yields, it helps
banks on the better return on loans and is carried bank stocks higher. As
for the broad stock market, higher rates can usually be absorbed if they
come with improved economic growth and corporate earnings, as is the hope.

But until such a growth pickup is confirmed, fatter bond yields could upset
an equity market that`s going reliant on an assumption that rates would
remain lower for longer.

For NIGHTLY BUSINESS REPORT, I`m Mike Santoli at the New York Stock


HERERA: Republican presidential candidate, Donald Trump, directed his
criticism at the Federal Reserve. In an interview today on CNBC, he
questioned the Central Bank`s independence, and said the Fed chief was
keeping interest rates low to help President Obama.


DONALD TRUMP (R), PRESIDENTIAL NOMINEE (via telephone): She`s keeping them
artificially low to get Obama retired. Watch what`s going to happen
afterwards. It`s a very serious problem. And I think it`s very political.
I think she`s very political, and to a certain extent, I think she should
be ashamed of herself.


HERERA: John Harwood joins us now from Washington.

Good to see you, John.

So, how did Mr. Trump`s comments about the Fed compare to what he has said

On the very same show, just a few months ago, Donald Trump said that people
he knew had a very high regard for her, she was a very capable person,
she`s just doing her job, she`s a low interest rate person, just like I am.

And today, when we`re in the heat of the general election, he says she`s
very political and she should be ashamed of herself. He seems to be
impulsive and react in the moment based on the stimuli he`s getting at the
time, as opposed to having a consistent judgment of her or anybody else for
that matter.

MATHISEN: Let`s to Hillary Clinton, following the disclosure of her
pneumonia diagnosis. And what seemed to be a sort of going weak in the
knees at the very least on yesterday. How serious is her illness, and what
do we — when do we expect her to resume a full schedule?

HARWOOD: Well, it`s not clear how serious the illness is. The images look
very serious yesterday. Her knees just didn`t buckle. She collapsed.

Now, her aides have not described just what kind of pneumonia she has, and
potentially it could be treated successfully by the antibiotics. The
bigger challenge immediately, Tyler, is that this undercuts the argument
that she`s been trying to make that she is, in fact, straight forward and
not dishonest and not holding back information the way critics say.

Her — she and her aides encouraged that belief by not disclosing the
pneumonia diagnosis, which they now say was made on Friday. Not altering
her schedule and going through saying nothing, having her collapse and then
waiting until the end of the day to disclose that information.

HERERA: Yes, people have been talking a lot about that today, John. Do
you think this will have a long-lasting effect on the race?

HARWOOD: I doubt it. But you don`t know. The race is relatively close.

We have seen in “The Post”/ABC — “Washington Post (NYSE:WPO)”/ABC News
poll over the weekend, she had a five-point lead, that`s down from eight
before among likely voters. It`s substantial but it`s not an overwhelming

And when you`re a 68-year-old candidate, if you give people reason to doubt
your physical fitness to take on the job, that`s a problem.

HERERA: Indeed. John, thank you very much.

HARWOOD: You bet.

HERERA: John Harwood, in Washington.

MATHISEN: The coming election is one reason why businesses are reluctant
to increase investment or higher at a stronger pace. That`s the finding of
the Business Roundtable`s quarterly survey of chief executives. Most
leaders of America`s largest companies think the economy will continue to
grow slowly and they don`t think the election will increase economic

HERERA: Still ahead, why Silicon Valley and all of those fast-growing
startups may be at a turning point.


HERERA: Congressional leaders working towards temporarily funding the
government past the end of the current fiscal year and providing money to
battle the Zika virus. Senate majority leader, Mitch McConnell, said a lot
of progress has been made and then he expects to advance the legislation in
the Senate next week. He did not, however, provide any other details.

MATHISEN: Last week, we told you about a county in Arizona that has only
one insurer offering a health plan on the Affordable Care Act exchanges.
The lack of more than one option is not sitting well with some.

And as Bertha Coombs reports from Florence, Arizona, many want to know if
the problem can be fixed.


Pinal County was the epicenter of upheaval in the Affordable Care Act
market. Until Blue Cross of Arizona stepped in, no insurers offered plans
for 2017.

Broker Teresa Ferrin is bracing clients for the fact they`ll now have
access to just one insurer.

TERESA FERRIN, INSURANCE BROKER: I try to help my clients and I feel like
I`m a source that they can call to look at what`s happening in the
industry. And right now, I don`t have a lot to offer them.

COOMBS: One big reason insurers nationally are cutting back on the ACA now
is funding for the government risk and reinsurance program that was meant
to backstop big losses on high-cost claims expires in 2017. And that
funding has been a fraction of what was expected in part because of the
political impasse over the law in Congress.

cents on the dollar in the risk corridors, that`s just not right, if I
promised you $100, and I handed you 12, you`d be a little disappointed.

COOMBS: To fix the problem, analysts and insurers say Congress needs to
enact changes to make the ACA more like the Medicare market, which has a
permanently funded reinsurance program. Enrollment rules need to be
tightened to stop patients who only sign up for just a short time.

And insurers say they need flexibility to charge older, sicker parents a
bit more and offer younger, healthier ones, lower cost, leaner plans.
Analysts say that`s just a start.

LARRY LEVITT, KAISER FAMILY FOUNDATION: I think, you know, widening the
age bans and allowing insurers to offer skinnier coverage could get some
more people signed up. But I think — I think those fixes alone probably
are not enough.

COOMBS: Those measures will require legislative change in Washington, but
ultimately, the ACA markets will only stabilize if enrollment grows. And
that requires insurers to adapt, says consultant Jim Hammond.

JIM HAMMOND, PRO HEALHCARE SOLUTIONS, LLC: If we want everybody to get in,
and we want the younger and healthier people to get into an insurance
product, we have to give them a reason to do that.

COOMBS: Analysts say if Washington doesn`t come up with a real fix by this
time next year, we could see more communities like Pinal County, Arizona,
facing the prospect of no ACA coverage in 2018.

Bertha Coombs, NIGHTLY BUSINESS REPORT, Florence, Arizona.


HERERA: Potash and Agrium (NYSE:AGU) merged to become an agricultural
giant. And that`s where we begin tonight`s “Market Focus”.

We recently told you that Canada-based fertilizer makers were in talks
regarding a potential tie-up and now they have. The companies will merge
to create a company with a total value worth $36 billion. Shares of Agrium
(NYSE:AGU) down 2 percent to $19.64. Potash shares fell 1 percent to

Hedge fund Starboard Value disclosed a more than 4 percent stake in Perrigo
(NASDAQ:PRGO) and called for change at the drug maker. Over the weekend,
the activist investor sent Perrigo (NASDAQ:PRGO) a letter, saying the
company`s financial results have been poor since it fought off a hostile
bid from Mylan (NASDAQ:MYL) last year. Perrigo (NASDAQ:PRGO) has
responded, saying it will enter into constructive and productive talks with
Starboard. The shares pop 7 percent to $95.23.

Horizon Pharma said it would expand its business through an $800 million
acquisition of Raptar Pharmaceuticals. The deal allows the biotech company
to strengthen its portfolio for rare disease treatment and increase its
focus in that market. The Horizon Pharma shares rose 9 percent to $18.89,
and Raptor shares soared 20 percent to $8.98.

MATHISEN: Tesla will launch upgrades to the autopilot feature that will
include the use of advanced radar and will rely less on conventional
cameras. The move comes after a fatal crash in May while the vehicle`s
semi autonomous system was on. The new features are aimed at improving
driver safety, something that CEO Elon Musk is betting on.


ELON MUSK, CEO, TESLA: The 8.0 set of improvements, radar, inclusive of
the others, probably cuts the accident rates in more than half. That`s my
guess. It would make the Model S by far Model S and the X — I mean, by
far the safest car on the road.


MATHISEN: Tesla shares up you nearly 2 percent on the day to $198.30.

The French drug maker, Sanofi, will launch a joint venture with a division
of Google`s parent, Alphabet, to take on diabetes. The companies will
inject $500 million into the new company called Onduo, which is expected to
focus on treatment for the disease. Shares of Alphabet up 1 percent,
$798.82. Shares of Sanofi up 63 cents to $39.82.

HP is buying Samsung`s printer business for $1 billion. The computer maker
said the deal is aimed at reinventing and disrupting the copier industry.
After the transaction is finalized, Samsung will invest as much as $300
million in HP. HP shares were up nearly 4 percent to $14.49.

And Taro Pharmaceuticals disclosed in a filing late Friday that the drug
maker and two of its executives received a subpoena from the Department of
Justice. Officials are seeking documents regarding employee records,
generic drug pricing and sales. Taro said it will cooperate with the
investigation. Meantime, the news sent shares down nearly 4 percent to

HERERA: Silicon Valley may be at a turning point. The number of deals are
falling, and the majority of venture capital is not going to the newest
players. What happens next was a big topic of conversation at the Tech
Crunch Disrupt Conference.

Julia Boorstin has more tonight from San Francisco.


Crunch Disrupt brings together 500 startups, competing for investors`
attention at a time when it`s increasingly tough for the little guys here
to take their business to the next level.

Venture deal volume declined in the second quarter, and though overall
venture capital investment rose slightly, the majority went to private
giants, such as Uber and Snapchat, rather than newer players, raising the
bar for startups.

JAGER MCCONNELL, CRUNCHBASE CEO: You need to have a business model that
makes sense, and in my opinion, that`s good. It`s sort of a survival of
the fittest now, right? You coal out the ridiculous companies that
probably shouldn`t exist in the first place, now, we`re all thinking from
the beginning, what is our business model? How do we make money?

BOORSTIN: Startups here including Airmule, a company that allows travelers
to rent out their luggage space, says it`s harder to secure funding.

RORY FELTON, AIRMULE CEO: We`re finding that it`s taking more meetings
than it probably would have a few years ago to close this route.

BOORSTIN: Another factor, all the folks here have been watching, this has
been a slow year for IPOs. Through August 1st, it`s been the slowest year
since 2009.

Jerry Huang, COO of Shanghai-based iTutorGroup, which has a valuation
greater that a billion dollars, says his company sees the advantages of
staying private longer.

JERRY HUANG, ITUTOR GROUP COO: There`s an opportunity for a lot of these
organizations to grow at a significantly fast pace by staying with private
funding. So, companies like Uber, even companies like ourselves, what we
can do is really invest heavily on cutting-edge technology, solutions that
really drive results.

BOORSTIN: But industry-watchers say this IPO drought can`t continue, as
investors are looking to cash out.

MCCONNELL: I think there`s a lot of pressure to not go public right now,
just why you see this. Not going public. But I think that temperature is
slowly changing, where the investors are saying, when do I get my money
back, right? When is my return on my investment?

BOORSTIN: The mostly early stage companies here are far from an IPO. But
eager to get on the radar of investors who come here to discover what could
be the next generation of unicorn, or companies worth more than $1 billion.

For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in San Francisco.


MATHISEN: Coming up, Wall Street remembers and gives back to commemorate
the anniversary of the September 11th attacks.


HERERA: One day after the 15th anniversary of the September 11th attacks,
Cantor Fitzgerald is continuing its tradition of giving back. That firm,
which lost more than 650 employees on that day, is hosting its annual
charity day.

And Dominic Chu was there.


UNIDENTIFIED MALE: Sometimes, to tell them and certain people laugh that
DMC mean that Darrell makes cash!


firm Cantor Fitzgerald lost the majority of its New York-based employees in
the 9/11 attacks and now uses the anniversary to raise money for charity.

lost 650 people, and so when we rebuilt the company, we said we would have
a charity day. We ask all our employees to waive their day`s pay and ask
all our clients to do as much business as they can. And we don`t give away
our profits. We give away every dollar of revenue. Last year, raised $12
million on that day, $125 million so far.




CHU: Every dollar collected in commission revenue for the day goes to
charity. And a host of celebrities in the worlds of sports, arts and
entertainment turn out to help the cause.

UNIDENTIFIED FEMALE: I`m trading away. Making lots of moolah.

CHU: From football players like Eli and Peyton Manning and Brandon
Marshall, to baseball players Dellin Betances to super models like Lily
Aldridge to actors like Steve Buscemi and others.

BRANDON MARSHALL, N.Y. JETS: It`s not just about professional athletes.
It`s about every human being on this plane. It`s as you climb the ladder,
can you lift someone else up with you?

CHU: All day, seasoned traders sat alongside celebrities to get deals done
for stocks and bonds.




UNIDENTIFIED MALE: And nobody told me to say that.

CHU: The Cantor Fitzgerald relief fund was originally set up to help some
of the families directly affected by 9/11. But today, it helps a variety
of other charities.

STEVE BUSCEMI, ACTOR: If you give today, it goes a long way. And remember
friends of firefighters, they`re doing their benefit gala on October 20th.

CHU: For some, it`s a little bit of fun stepping outside their normal
professional lives.

LILY ALDRIDGE, MODEL: They`ve turned — what happened to them at 9/11 into
a day of positivity and raising money for charities, which is such a
beautiful thing to do to celebrate. You know, the lives, it`s always fun,
and it`s fun to pretend that I`m a stock broker for the day and trading.

DELLIN BETANCES, N.Y. YANKEES: This is a — a lot of work you have to do
here. I mean, you know, more nervous doing this than when I`m pitching.

CHU: It ends up being a great day for a great set of causes.

UNIDENTIFIED MALE: Thank you. I`m on fire.

CHU: For NIGHTLY BUSINESS REPORT, I`m Dominic Chu from the Cantor
Fitzgerald trading floor in New York City.


MATHISEN: I wonder if Peyton now traded Eli today. We`ll see.


MATHISEN: Before we go, let`s take another look at the rally on Wall
Street. Eli had a good day yesterday. The Dow climbed 239 points to
18,325. NASDAQ up 85 and the S&P 500 jumped 31.

Friday? Forget Friday.

HERERA: That`s right. That`s NIGHTLY BUSINESS REPORT for tonight. I`m
Sue Herera. Thanks for joining us.

MATHISEN: Have a great evening, everybody. I`m Tyler Mathisen. Thanks
for watching.


Nightly Business Report transcripts and video are available on-line post
broadcast at 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
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