Transcript: Nightly Business Report – October 7, 2016

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

But today`s jobs report may not be just right, either. And now, it`s up to the Federal Reserve to decide if                                                                       the hike is fast approaching.

Grinding up the coast. Hurricane Matthew hits Florida, hard. We`ll assess
the damage and give you the latest on this mammoth storm.

And bright idea. Meet the entrepreneurs who are taking the frustration out
of pharmacy visits, so you can get the medicine you need quickly.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Friday,
October 7th.

Good evening, everyone. I`m Tyler Mathisen, Sue Herera has the evening

We begin tonight with jobs, an issue important to Wall Street, to Main
Street and, of course, to Washington. Today, we learned that the economy
created 156,000 of them in September, with the unemployment rate ticking
higher to 5 percent. But the monthly report was a bit puzzling. Some like
the number, calling it solid. Others describe it as disappointing and
lackluster. And some just said it was modest.

But what does the Fed think of this latest number?

Hampton Pearson takes a look.


growth slowed for a third straight month. From a revised high of 252,000
jobs in July, a big drop to just 167,000 in August, and an even further
slide with employers adding just 156,000 new workers last month. Good-
paying professional and business service jobs led the way with 67,000 new
hires. Hourly wages, now just under $26 an hour, are up 2.6 percent year
over year, and are showing signs of accelerating.

Today, Fed Vice Chair Stanley Fischer said today`s jobs report was pretty
close to goldilocks.

participation went up, the unemployment rate went up. Those two things are
fine. It means employment was going at a rate that is fully consistent
with keeping unemployment declining somewhat further.

PEARSON: More than 440,000 Americans did come back into the job market
last month, but only about 95,000 got hired, triggering an uptick in the
unemployment rate to 5 percent. Leading economists point out that it`s the
slack in the labor market that Chair Janice Yellen has cited as a reason to
hold off on raising interest rates.

AARON KLEIN, BROOKINGS INSTITUTION: This recovery has more room to run,
especially when there`s no hint of inflation yet.

PEARSON: It does not appear today`s jobs report has moved the needle as
far as the debate inside the Fed on the timing for raising rates.

Cleveland Fed President Loretta Mester says the slow down in job growth
does not mean monetary policymakers should wait.

inflation measures are moving up. We have to be forward-looking. So, in
terms of our two goals, monetary policy goals, I think we`re — it takes —
makes sense to move up the rate another 25 basis points.

PEARSON: This is the last jobs report before the Fed`s next policy meeting
in early November. Investors say today`s weaker than expected report
decreases the likelihood of a rate hike just one week before the
presidential elections.

For NIGHTLY BUSINESS REPORT, I`m Hampton Pearson in Washington.


MATHISEN: Ethan Harris (NYSE:HRS) joins us to talk more about today`s jobs
report and what he thinks it will mean for the Fed. He`s co head of Global
Economic Research at Bank of America (NYSE:BAC), Merrill Lynch.

Ethan, welcome back. Good to have you with us.

I want to look at one number within the number, and that was the number of
new job seekers who came sort off the bench and into the market. That was
one of the reasons the unemployment rate went higher, but isn`t that really
a good sign that people are feeling more optimistic about their job

good report. I mean, you had two pieces in it I liked.

One was the wage increase. We`re finally getting out of this 2 percent rut
we`ve been in for wage growth. And the other one was the participation
rate — people coming back, feeling more optimistic about the job market,
and willing to look for a job.

So, that`s a sign we`re in the later stage of — stages of healing in the
labor market.

MATHISEN: So, does this imply anything to you about the third quarter
economic growth numbers? You know, we`ve had growth that`s been 1 percent,
1.5 percent. Is the third quarter likely to be better?

HARRIS: Yes. I mean, we had a pretty soft start to the year as companies
cut back a lot on their inventories and cut back on production. But the
third quarter is looking okay. We`re looking at growth close to 3 percent.
These jobs numbers are consistent with that kind of growth. The economy
has been looking soft to start the year off. But we`re starting to get
back on track.

MATHISEN: So, what`s next for the Fed and when?

HARRIS: I think they`re very likely to hike in December. I mean,
something has to come along to stop them. We saw at the September meeting
they got close, and they had several dissenters at the meeting. I think
that the people still on the fence at the fed just need a few more months
to decide. I do think the Fed will hike in December.

MATHISEN: Talk to me a little bit about what if any impact this mammoth
storm might have on economic numbers in the fourth quarter? Does it mean
higher economic output? Lower? Nothing?

HARRIS: Well, what happens when you have a storm like this is that there`s
a temporary disruption to activity that then comes back on board. And
usually, the rebuilding effort slightly more than offsets the weakness.
So, when you tend to get in the data, the month of the storm, you may see a
little weakness in the numbers like fewer housing starts and a little less
retail sales and the regions impacted. But once they get back in business,
people, you know, move back to their prior activities, and you get the
rebuilding spending.


HARRIS: Storms, ironically, are actually slightly stimulative in the long
run to the economy.

MATHISEN: Ethan, thank you very much. Have a great weekend.

HARRIS: Thank you.

MATHISEN: Ethan Harris (NYSE:HRS) with Bank of America (NYSE:BAC), Merrill

Well, on Wall Street today, stocks did close lower following the release of
the employment report and a slide in oil prices. The Dow Jones Industrial
Average fell 28 to 18,240. NASDAQ off 14. The S&P 500 lost 7.

For the weeks, stocks suffered their first weekly decline after three
straight weeks of gains.

Hurricane Matthew battered parts of Florida, though it could have been a
lot worse. That said, there was a tremendous amount of damage and power
loss. Morgan Brennan is in Daytona Beach tonight.


Avenue in Daytona Beach. And as the worst of Hurricane Matthew has pushed
through here, and is heading north along the coast, we`re getting an early
look at some of the damage here in the area.

Now, we`ve got cars beginning to move through. Mainly first responders, a
lot of fire trucks, police cars and utility trucks. The street signs — or
streetlight, I should say, are still out on the next block. You even have
a business where the entire roof was torn off.

Throughout the area, we have debris everywhere. Including, take a look at
this big piece right here behind me. Where did this come from? Across the
street. The Hilton Hotel. This is as part of the facade with ripped off
during the storm.

Those two holes flanking the signage were windows. At least one of those
windows came crashing down, and smashed to smithereens over here in the
landscaping. This is the hotel where we have been staying all day, and
this is just the damage in the front. On the other side of the hotel, the
beachside, even more damage. You have flooding due to storm surge.

Earlier in the day, waves that came up over the beach wall, ripping the
guardrail on that beach wall. We had a dock that detached and floated down
into the surf.

The historic Campbell Clock Tower sustaining damage, as well. Something of
a landmark in this area with some of the clock faces cracked and pushed in.

And all of this is just the outside of this particular property. Inside,
damage as well. Water coming through the light fixtures and in the lobby,
a lot of soaked towels. Not to mention, even on the upper floors, water in
some of the carpet. Though staffers here saying that initial take on the
damage for this property, as they expect, this hotel could be closed for
some time.

This is just one of many in this area, and throughout the eastern coast of
Florida, that have been affected by Hurricane Matthew.

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan in Daytona Beach, Florida.


MATHISEN: Well, as Hurricane Matthew continues on its path and it does
this evening, people are bracing themselves and points north.

Scott Cohn is in the port city of Savannah, Georgia, tonight.


Matthew is still several hours away from Savannah, but we`re already
feeling the impact. The hope is that the storm will stay offshore, like it
did in Florida. But they`re not taking any chances.

Federal troop pouring into the streets of Savannah, to enforce a dusk to
dawn curfew, as thousands of evacuees prepare to flood out.

GOV. NATHAN DEAL (R), GEORGIA: Let`s not underestimate how dangerous this
hurricane can be.

COHN: In savannah, some people walked for miles to catch the last bus out
of town to Red Cross shelters.

UNIDENTIFIED FEMALE: Me and my two boys, I don`t know where they`re taking
us, but we came from over off victory — by the Truman Freeway, by Whole
Foods, and we walked down here to get to the transit center so that we can
get on the bus today.

COHN: How far a walk is it?

UNIDENTIFIED FEMALE: We left our house at 6:00 this morning.

COHN: The biggest worry is water. More than a foot of rain in the
forecast on top of the storm surge — the wall of water that comes with a

EDDIE DELOACH, MAYOR OF SAVANNAH: The surge is what scares us. If you get
an 11-foot surge and the road out there — highway 80 is about 2 feet above
— 2 feet above the ocean, you`ve got an issue.

COHN: The port of Savannah, one of the busiest in North America, is shut
down. No operations on or offshore until at least Sunday.

And it`s not just people evacuating. The Air Force moved A-10 fighter jets
from southern Georgia to the Florida panhandle and out of harm`s way.

As many as half a million people in Georgia alone evacuated ahead of
Hurricane Matthew. There is no telling when they`ll get back home.

Scott Cohn, NIGHTLY BUSINESS REPORT, Savannah, Georgia.


MATHISEN: Still ahead, EpiPen maker Mylan (NASDAQ:MYL) settles with the
Justice Department, and the stock soars in late-day trading.


MATHISEN: Mylan (NASDAQ:MYL) agrees to pay $465 million to settle Justice
Department charges it overcharged Medicaid for its EpiPen treatment. As
part of the deal, Mylan (NASDAQ:MYL) does not have to admit any wrongdoing.
As a result, Mylan (NASDAQ:MYL) lowered its full year earnings outlook, but
shares of the stock rose in after-hours trading because some expected the
settlement amount to be larger.

The U.S. has officially accused Russia of political hacking to interfere
with the upcoming elections. The office of the director of national
intelligence and the Department of Homeland Security say they are the
confident that the Russian government directed the recent attacks against
the Democratic National Committee and others. The U.S. added that given
the scope of the breaches, only the most senior Russian officials could
have been behind them.

The election is less than a month away, and the race is tight in the key
battleground state of Ohio, where there is a clear division among voters.


UNIDENTIFIED MALE: I`m going to vote for Hillary.

REPORTER: Why are you voting for Hillary?

UNIDENTIFIED MALE: I think she is the better choice.

REPORTER: And what`s your biggest issue?


UNIDENTIFIED MALE: I`m going to vote for — not for Clinton, that`s for

REPORTER: You`re not voting for Clinton. So, that means you`re voting for
Donald Trump?


REPORTER: Why are you voting for Donald Trump?

UNIDENTIFIED MALE: Because he aligns with my political values.


MATHISEN: The economy, of course, an important, maybe the key issue in the
Buckeye State. And that`s where we find Andrew Ross Sorkin.


presidential election just a month away, Ohio is living up to its status as
a battleground state.



SORKIN: Winning the Rust Belt state has always been vital in getting to
the White House. No Republican since Lincoln has won the presidency
without winning Ohio, and no Democrat since John F. Kennedy. The Buckeye
State has voted blue three out of the last five presidential elections.

But Donald Trump is now slightly ahead in the polls. Clinton surrogates
say his temperament is still a major factor for undecided voters.

REP. JOYCE BEATTY (D), OHIO: It`s about this nation. It`s about Donald
Trump, who has offended women, who has made a mockery out of reporters who
have disabilities. I have no problem defending my surrogate.

The economy is a key platform, while candidates stump here. Ohio`s
unemployment rate is below the national average. But jobs are still top of
mind for voters in Columbus, as are taxes.

Millennial are now just as large a political force as baby boomers. Both
generations making up roughly 31 percent of the electorate. They`re
focused on some different issues.

important for people our age, something we`re concerned about after
graduating and something we want to see talked about.

abroad than I do eight years ago. You know, I`m going into the Marine
Corps, and it`s just — you know, eventually the next president is going to
be my boss. I want to know who is going to do a better job.

SORKIN: The candidates face off again in a debate on Sunday, which could
end up deciding which way these 18 electoral votes will go.

For NIGHTLY BUSINESS REPORT, I`m Andrew Ross Sorkin in Columbus, Ohio.


MATHISEN: Well, as Andrew just mentioned, voters in Ohio and across the
country will watching Sunday`s debate to hear the candidate detail their
positions on jobs, taxes, trade and other economic issues.

John Harwood tells us what Hillary Clinton and Donald Trump are likely to
say when they go head-to-head.


focal point of this very unusual campaign, but economic issues did play a
significant role in the first Trump/Clinton debate nearly two weeks ago.

CLINTON: We need to have strong growth, fair growth, sustained growth. We
also have to look at how we help families balance the responsibilities at
home and the responsibilities at business.

TRUMP: You are going to prove one of the biggest tax increases in history.
You are going to drive business out. Your regulations are a disaster. And
you`re going to increase regulations all over the place. And, by the way,
my tax cut is the biggest since Ronald Reagan.

HARWOOD: So, here are some of the key economic specifics that may come up
in their second debate on Sunday night in St. Louis. First of all, on
taxes, Hillary Clinton wants to raise top rates on its states and high-
income earners. Donald Trump wants to slash taxes across the board, even
though he would significantly expand the deficit.

On trade, Hillary Clinton says we need smart, fair trade deals. She says
she doesn`t support the Trans Pacific Partnership. Donald Trump says rip
up NAFTA, renegotiate it and get rid of the TPP.

On regulation, Hillary Clinton wants to build on Obamacare and the climate
change efforts by President Obama, both domestically and around the world.
Donald Trump says end Obamacare, lift climate change regulations, get rid
of the Paris agreement among nations around the world.

Now, the stakes are especially high for Donald Trump in this debate because
of how poorly he did the first time around. Check out these poll numbers.
In the national average of polls, before the first debate, he trailed
Hillary Clinton by roughly two points. Now more than ten days later, he
trails by more than four points nationally and is behind almost all the key
battleground states.

For NIGHTLY BUSINESS REPORT, I`m John Harwood in Washington.


MATHISEN: Boeing (NYSE:BA) lands a big order from the Middle East. And
that is where we begin tonight`s “Market Focus”.

The company has inked a deal with Qatar Airways for up to 100 planes. The
contract is for 40 wide-bodied jets and a letter of intent for 60 more
narrow-body aircraft. If the full order is completed, the deal would be
worth about $18.5 billion. Boeing (NYSE:BA) shares slipped, nonetheless a
half percent to $133.85.

Verizon (NYSE:VZ) reportedly wants $1 billion discount on its deal to buy
Yahoo (NASDAQ:YHOO), or scrap it all together. “The New York Post” says
Verizon (NYSE:VZ) wants to lower the nearly $5 billion price tag on the
pending deal, because of Yahoo`s lack of transparency over its recent data
breach, and allegations it spied on e-mails for the U.S. government.
Verizon (NYSE:VZ) shares were off a fraction at $49.92 while Yahoo
(NASDAQ:YHOO) dropped a percent to $43.22.

And Camping World debuted on the New York Stock Exchange today, pricing
more than 11 million shares at $22 each, which was the mid-point of the
expected offering range. The recreational vehicle company raised a quarter
billion dollars and said that profits from its initial public offering will
be used to trim debt. Shares rose 2 percent to $22.50 on the session.

Pivotal Research downgraded Tyson Foods (NYSE:TSN) from a buy to a sell,
saying a class action lawsuit filed early this month against the meat
producer over a potential price fixing scheme could pose a problem for the
company. Pivotal also slashed its price target to $40 a share, down from
$100. Tyson off nearly 9 percent at $67.75.

Well, our market monitor likes metals and energy stocks among others and
has names she says have rebounded nicely, in some cases from a year ago.
This is the first time on the program. So, please welcome, Donna Wilson
with Invesco Quantitative Strategies.

Donna, welcome. Good to have you here.


MATHISEN: So, what did you think of the jobs number today? The overall

WILSON: Pretty much uneventful. I know the market reacted somewhat
negative to it, but generally, I think that when you look under the hood
and look at the details, it was a solid report.

MATHISEN: It`s been a pretty good year for the market, and you`ve got some
stock picks that have done pretty well. And in one case, has doubled so
far this year. Let`s start with your big one, which you say is kind of a
more safety play. It`s going to split in two soon.

Tell me about it, which it is, and why.

WILSON: Alcoa (NYSE:AA). So we like Alcoa (NYSE:AA). It has really
strong — management has made some really good decisions in terms of
splitting the company into two separate organizations that is going to —
should lead to good, kind of value play. Going forward. Unlock the value
that`s there.

MATHISEN: Better it buy it now or to wait until it splits.

WILSON: Oh, no.

MATHISEN: Now is the time to go.

WILSON: Yes, absolutely.

MATHISEN: So, you think this transformation is a good move.

WILSON: It`s a good move, and I also think it`s not just a commodity play.
They are going to truly benefit from the growth in the aerospace industry.
And that`s a key component of their growth strategy.

MATHISEN: Number two is a mid cap stock, we`ll call Alcoa (NYSE:AA) big
cap. It`s called Commercial Metals (NYSE:CMC). Tell us what they do and
why you like it.

WILSON: Commercial Metals (NYSE:CMC) primarily makes steel bars that
reinforce concrete, masonry structures. We believe that it`s a great
infrastructure play. They`re also going to benefit from anti-dumping
tariffs that were levied this year against China.

So, it`s going to create a more level playing field for them here in the
U.S., blocking China and allowing them to compete. And really, benefit
from that infrastructure in the build-out in the U.S. Sun Belt.

MATHISEN: These first two picks, Alcoa (NYSE:AA) down a little bit over
the past 12 months, commercial metals up a little bit, we`ll call them
flat-ish, OK? You`re next one, Encana (NYSE:ECA), an aggressively play, up
100 percent this year, or one year out of 28 percent. But it`s a strong
performing stock.

WILSON: It`s a strong performing stock. When we really like about this
name, they have great acreage. So good acreage, good producing acreage.
They just did an equity offering, and that has raised significant capital
for them to shore up their balance sheet, invest in future growth and from
that perspective, we believe that the next three to five years, they have
huge potential to be — to produce from their wealth.

MATHISEN: So, Encana (NYSE:ECA), Commercial Metals (NYSE:CMC), and Alcoa

Donna, thank you very much.

WILSON: Thank you.

MATHISEN: Appreciate it.

Donna Wilson with Invesco Quantitative Strategies.

All right. Coming up, ever go to the pharmacy only to find out there is a
problem with your prescription. It might not be covered, or even paid for
at all? One startup found a solution and turned it into a fast-growing
business. His bright idea is next.


MATHISEN: Health insurer Anthem says it will not cover the FDA improved
drug to treat Duchenne muscular dystrophy as we`ve been reporting. The
drug developed by Sarepta was okayed last month, despite a dispute within
the agency over its effectiveness. Anthem, the nation`s second largest
insurer, calls the drug experimental. Shares of Sarepta fell 6 percent on
this news, and says it is aware of Anthem`s statement. As for other
insurers, UnitedHealthcare and Cigna say they are covering it. Humana
(NYSE:HUM) is evaluating the clinical merits of the treatment.

More and more prescription medication require so-called prior
authorizations. These days, 250 million times a year, insurance companies
do take a second look before coverage is approved or declined. That sort
of scale got the attention of two entrepreneurs from Ohio. They had the
bright idea to bring the approval process into the 21st century.


PETER D`APRILE, PHARMACIST: Kent Station Pharmacy, this is Peter.

MATHISEN: Even a small town pharmacist like Peter in Kent, Connecticut,
sees it happen. Prescription placed on hold, requiring prior
authorizations or P.A.s, before insurance companies will pay for medication

D`APRILE: All of the time, every day. There`s at least one every day, if
not five every day.

MATHISEN: Prior authorizations force doctors to decide whether to
prescribe something else, or ask an insurance company for an approval.
That used to mean phone calls, forms to fill out, and faxes to be sent.

D`APRILE: It could be a week or two type of situation. And, you know,
sometimes patients need medication.

MATHISEN: Enter Cover My Meds. It`s software that supplies the forms,
then auto-populates them with patient records. Once D`Aprile hits send, it
helps put pharmacist, doctors and insurances companies all on the same
page. Now headquartered in Columbus, Ohio, Cover My Meds was created by a
former pharmacist and software developer.

when they`re frustrated with a process. Why won`t they just cover my meds?

MATHISEN: Columbus native Matt Scantland was building software and
websites before he teamed with one of his top customers, Sam Rajan, back in
2007. At the time, Rajan was helping to run a successful pharmacy benefits

SAM RAJAN, COVER MY MEDS CO-FOUNDER: The aha moment for us is when we
decided to put a prior authorization on multiple sclerosis drugs. We found
40 percent of our patients never went on the drug.

MATHISEN: He learned that most feared they couldn`t afford to pay for the
drug without coverage. It became imperative then to simplify and speed up
the approval process. Instead of sending patients off to fend for
themselves, Rajan wanted to tell patients, OK, we`ve got this for you.

RAJAN: When a doc has an all-drug, all-payer solution, that`s when the
adoption and viral adoption model really came about.

UNIDENTIFIED MALE: We now helped 42 million people.

MATHISEN: Cover My Meds is free for patients and a half million
prescribers who use it. It`s also free for the 47,000 pharmacies using it.

It`s paying customers are insurance companies and those pharmacy benefits
managers who hope that Cover My Meds can help reduce the costs that build
when patients don`t take their medicine.

Cover My Meds won`t discuss exactly what it charges, saying only that it
cuts the average cost of each prior authorization request from roughly $40
to less than $10.

SCANTLAND: We picked a problem that can be solved in a way where everyone
wins. The insurance companies are very important customer for us. They`re
really the way that all of this has to work.

MATHISEN: It`s been working and selling, too. Cover My Meds doesn`t
quibble with reports that last year`s sales were roughly $100 million. By
the end of 2016, they`ll have more than 500 employees, and with insurance
companies requiring approval on more and more drugs, an even higher

SCANTLAND: This company can become quite large, because we`re solving a
problem that is daily life.


MATHISEN: More and more states are requiring standardized electronic forms
for those prior authorizations and the Cover My Meds model has often been a
key aid to lawmakers during the painstaking process of modernizing our
health care system.

And that is NIGHTLY BUSINESS REPORT for tonight. For Sue Herera, I`m Tyler
Mathisen. Thanks for watching. Have a great weekend, everybody.

We`ll see you here on Monday.


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
investment advice. (c) 2016 CNBC, Inc.


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