Transcript: Nightly Business Report – March 9, 2017

ANNOUNCER:  This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Sue
Herera.

Funded in part by —

(COMMERCIAL AD)

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR:  Crude cracks.  The energy
market faces its next big test as the price of crude drops sharply and
suddenly.

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR:  Report card.  Engineers give
America`s roads and bridges a near failing grade and a big bill to fix
them.

MATHISEN:  Flip or flop.  Why that move in-ready dream house can quickly
turn into a nightmare.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Thursday,
March 9th.

HERERA:  Good evening, everyone, and welcome.

The price of oil is plummeting.  Crude lost 7 percent of its value in just
two days.  The tumble was quick, it was steep and it`s seemingly came out
of nowhere.  Today, prices settled below $50 a barrel for the first time
this year.  Prior to the decline, prices had held relatively steady in the
mid-$50 rank as a result of OPEC`s decision to cut production.

But as Jackie DeAngelis reports, that strategy is being put to the test.

(BEGIN VIDEOTAPE)

JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT:  The selloff was
sudden and sharp.  Domestic crude has been stable for months remaining
around that mid-50 range, but no more.  The straw that broke the camel`s
back — a wait-and-see approach from OPEC regarding extending its
production cut.  That cut, supporting the market, since it was announced.
Also, activities here as home.

JOHN KILDUFF, AGAIN CAPITAL FOUNDER:  The market finally reacted to really
swelling oil inventories here in the U.S.  They`re at a record level.  They
continue to grow.  They`re going to continue to get higher and higher.
Finally, the market couldn`t bear up under that any longer.

DEANGELIS:  But it`s a bit of a delayed reaction.  Supplies had been
steadily increasing in the United States, rig counts are up, companies are
raising spending plans, all to take advantage of higher prices.  The big
question: will American shell producers ramp up output and ultimately undo
what OPEC tried to do when it curbed production?

KILDUFF:  U.S. shale production has risen steadily now over the past
several weeks.  We are back over 9 million barrels per day they are in the
process of undoing in its entirety the very cuts OPEC and some other non-
OPEC countries particularly Russia were trying to engage in.  This is
helping to reflood the market with oil and it`s a real threat to the price
stability that we had experienced over the past couple months.

DEANGELIS:  But don`t underestimate OPEC and the Saudis.  With the Aramco,
that`s Saudi Arabia state-run oil company, looking towards an IPO, there`s
a strong incentive to keep prices on the high side.  If OPEC and the Saudis
were to extend the current production cut, industry analysts say, prices
could head back higher.

For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis.

(END VIDEOTAPE)

MATHISEN:  On Wall Street today, trading was choppy as the move in oil
prices starts to ripple through the broader market.  Investors were also in
wait-and-see mode ahead of the monthly job reports due out tomorrow.
Today, the Dow Jones Industrial Average rows just two points to 20,858.
That`s wait-and-see folks.  The NASDAQ and the S&P 500 were both up a point
and change.

HERERA:  Well, as Ty mentioned, small moves in the market today, but that
wasn`t the case eight years ago.  We were in the depths of the financial
crisis and if you were like many investors, you were probably holding your
head nervous about the future, if only you knew then what you know now.
That was the bottom.  The worse of it, and since then, stocks have climbed,
making this the second longest bull run in market history.

Morgan Brennan takes a look back and a look ahead.

(BEGIN VIDEOTAPE)

MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Happy birthday to
the bull, bull market that is.  Eight years ago today, the market hit its
bottom after free falling in the worse financial crisis to sweep the globe
since the Great Depression.  So much has changed since then.  The end of
the recession, a tidal wave of global stimulus, two presidential elections
a commodity price collapse and just recently, a record string of record
market highs.

ART CASHIN, UBS DIRECTOR OF FLOOR OPERATIONS AT THE NYSE:  Everybody`s down
here talking happily about eight years ago when the market bottom and they
seemed to have forgotten eight and a half years ago when Paulson and
Bernanke actually discussing the possibility of invoking or declaring
martial law in the United States.  That`s how close we came to the wheels
coming off the locomotive.

BRENNAN:  The S&P 500 has surged almost 250 percent.  The Dow Jones
Industrial Average has more than tripled and the NASDAQ has outdone both,
up more than 350 percent.

What`s led the rally?  Consumer discretionary stocks like beauty product
retailer Ulta Beauty, which has surged more than 6,000 percent.  Also
biotech stocks like Incyte (NASDAQ:INCY) and REnegeron which had gained
more than 6,000 and 3,000 percent respectively.  And Apple (NASDAQ:AAPL),
up over 1,000 percent, has been by far the biggest standout in the Dow,
which it only joined in 2015.

The biggest losers, energy names like Southwestern Energy (NYSE:SWN) and
Transocean (NYSE:RIG), which have plunged alongside oiling prices.  Even
ExxonMobil (NYSE:XOM), despite a 50 percent gain, has been the worse
performer in the Dow.

This bull market is the second oldest in history, behind the 13 year streak
that ended in 2000.  But on this birthday, investors are beginning to ask,
will this bull market continue to charge forward?

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan.

(END VIDEOTAPE)

MATHISEN:  The insurance company AIG has come a long way since that
financial crisis but today, its CEO said he`s stepping down.  Peter
Hancock, appointed less than three years ago, will remain as chief
executive until a replacement is found.  Recently, AIG posted a quarterly
loss of $3 billion worse performance since that financial crisis.  Back in
2008, the company was in near collapse and required a $180 billion bailout.

HERERA:  America`s infrastructure gets a near failing grade.  The American
Society of Civil Engineers assigned our nation`s roads, bridges, levees and
other infrastructures a grade of D plus.  That`s the same grade as four
years ago when the last report was released and it suggests that only minor
progress, if any, has been made.  And the price tag to fix it is steep.

Aditi Roy reports from Sacramento.

(BEGIN VIDEOTAPE)

ADITI ROY, NIGHTLY BUSINESS REPORT CORRESPONDENT:  The Sacramento River,
like so many other bodies of water in America, is lined with levees —
levees in desperate need of repair.

NICHOLAS PINTER, UC DAVIS PROFESSOR:  There`s an estimated up to 100,000
miles levees nationwide and across the whole country, they`re in a pretty
sad state of repair.  By the number of levees in the Army Corps of
Engineers rehabilitation program, just 1.8 percent of levee miles are rated
acceptable the highest grade.

ROY:  Levees got a D grade in the newly issued report card on America`s
infrastructure, released every four years by the American Society of Civil
Engineers.  That`s still a step up from the 2013 grade of D-minus but far
from where experts like U.C. Davis professor Nicholas Pinter believes it
should be.

PINTER:  Over 30,000 people living here, just a few feet away from the
Sacramento River.  These people depend — they depended this year on the
existence of this structure, this levee and it performing as it was
designed to, to keep the river out of there.

ROY:  And it`s not just levees which are causing infrastructure experts to
worry.  The ASCE report also gave America`s overall infrastructure a near
failing grade of D plus.  Bridges got a C plus.  Aviation and roads were
given Ds.  And America`s transit a D minus.  Down from a D in the last
report.

How much money would it take to improve the country`s infrastructure?  An
estimated $4.6 trillion by 2025 according to the report, at current
spending levels, will be about $2 trillion short.

GOV. DANIEL MALLOY (D), CONNECTICUT:  The former president couldn`t get out
of the Congress what he wanted on transportation or other infrastructure,
water and other projects.

ROY:  In Sacramento, California, the need for improvement is especially
critical.

Rick Johnson is the executive director of the city`s flood control agency.

RICK JOHNSON, SACRAMENTO FLOOD CONTROL AGENCY:  Much of the levee and flood
system that we live behind here was completed in early 1900s.  We have not
invested in this and like a lot of our infrastructure in the country and
now we`re finding that it needs upgrading to make it safe, to make it
usable.

ROY:  There are 106 miles of levees like the one I`m walking on here in the
Sacramento area.  Fifty of those miles have particular been refurbished,
bringing them up to flood protection standards for the state.  But experts
and neighbors agree more work needs to be done, nearly $2.5 billion worth
of it.

PINTER:  There`s a cost to fix this levee in the next several years, but
there`s also potential cost of not to fixing it and that is a very real
possibility to calculate a percent chance that you`re going to have a great
big flood in the next five years, 10 years.  And if you don`t make that
investment, the cost, those people, all these tens of thousands of people
on this side is very, very tangible.

ROY:  Costs that experts say will continue to rise as more levees fall into
disrepair.

For NIGHTLY BUSINESS REPORT, I`m Aditi Roy, Sacramento, California.

(END VIDEOTAPE)

MATHISEN:  Two key house committees have approved the Republican backed
approved to rework the Affordable Care Act.  But even as it appears to be
moving through the process swiftly, there`s still a lot of questions and a
lot of opposition.

John Harwood is in Washington for us tonight.

John, welcome.

The House Ways and Means Committee voted after 18 hours of debate.  The
Energy Committee, 27 hours.  Are things moving fast here?

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT:  They are moving fast.
Those committees acted, of course, without a CBO score, which Democrats and
some Republican senators have said they want to see.

Remember in 2009 and 2010, it took over a year for the Affordable Care Act
to move through with support from President Obama and a Democratic
Congress.  Republicans are talking about doing this, completing it in both
chambers, getting it on President Trump`s desk by Easter time.  That`s an
extremely fast timetable.

HERERA:  You mentioned the markup there, John.  Are there still questions
about what this is going to cost?

HARWOOD:  Yes, for sure.  Until the joint tax committee scores the effect
of the revenue provisions, until the Congressional Budget Office says how
many people would lose or gain coverage, and what the other implications
for the budget are, we`re not going to have a definitive sense of exactly
what the effects of this bill are.  Some things you can conclude in broad
outline, but big questions and, of course, there will be further questions
if Republicans have to amend this bill along the way to try to get more
votes.  It`s a broad level of opposition right now.

MATHISEN:  And to that point, the opposition is coming not just from
Democrats but also from Republicans, most particularly I suppose in the
Senate where different rules apply.

How big of an obstacle is this opposition?

HARWOOD:  Very big.  You`ve got senators from states like Ohio, Rob
Portman, West Virginia, Shelley Moore Capito, Arkansas, Tom Cotton, places
where there are a lot of the blue collar white voters who backed Donald
Trump put him in the White House.  They are concerned about cuts in
Medicaid.  They`re also concerned about how fast this process is going.
So, there are a lot of hurdles to get over.

You also got conservatives who from the other perspective are complaining
that this creates a new entitlement to replace the old Obamacare one.

A lot of work to be done by the president and by Republican leaders.

MATHISEN:  John Harwood, thanks again.  Appreciate it.  John Harwood in
Washington.

HERERA:  And still ahead, what Federal Reserve policymakers will likely be
watching closely bright and early tomorrow morning.

(MUSIC)

MATHISEN:  Are you feeling richer?  Well, new numbers today show that
household wealth climbed to a record $93 trillion in the fourth quarter of
last year.  Year end surge in the stock market and a rise in home prices
added more than $2 trillion to household balance sheets.  The Federal
Reserves quarterly report provides no information on the distribution of
wealth among households.

HERERA:  The treasury secretary sent a letter to Congress, warning them
about the debt ceiling.  Steve Mnuchin is urging lawmakers to raise it and
that the country is set to reach its legal borrowing limit next Thursday.
If Congress does not act in time, the Treasury Department will start taking
extraordinary measures to prevent the country from defaulting on its
obligations.

MATHISEN:  Tomorrow`s monthly report is the last major piece of economic
data to be released before the Federal Reserve policymakers meet next week.
Following yesterday`s strong private payroll number, tomorrow`s report
could seal the deal for just a third interest rate hike in the past decade.

Hampton Pearson takes a look at what to expect.

(BEGIN VIDEOTAPE)

HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT:  When the Labor
Department releases the February jobs report tomorrow, the consensus
forecast calls for 197,000 new jobs with the unemployment rate dipping
slightly to 4.7 percent.  But a blockbuster report earlier this week says
private sector jobs surged by 298,000 last month.

MARK ZANDI, MOODY`S ANALYTICS:  The bottom line is, the economy is
fundamentally strong.  It was fundamentally strong before the election.
It`s fundamentally after the election.

PEARSON:  Brand new data from the Labor Department shows a slight increase
last week in first time claims for unemployment benefits, up 20,000 to
243,000 the previous week, not enough to slow the momentum, because overall
claims are 6 percent lower than this time last year.

And there`s additional data from a global placement firm showing planned
layoffs are down 19 percent from January.

Wall Street economists expect another strong jobs report building on the
January surprise of 227,000 jobs.  And if there are also signs of wage
growth, the Fed will have a green light for another rate hike next week.

WARD MCCARTHY, JEFFRIES CHIEF FINANCIAL ECONOMIST:  They`ve made tremendous
headway on the dual mandate objectives in terms of getting the labor market
towards maximum employment and also just very close to hitting their
inflation target for the first time in almost five years.

PEARSON:  Tomorrow`s jobs report covers the first full month of the Trump
administration with a solid job market serving as the foundation for
growing the economy.

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

(END VIDEOTAPE)

HERERA:  While the probability of an interest rate hike is increasing, the
head of the European Central Bank is holding interest rates at zero.  At a
meeting today, ECB president Mario Draghi said the central bank plans to
continue with its generous asset-buying program until at least the end of
the year.

(BEGIN VIDEO CLIP)

MARIO DRAGHI, ECB PRESIDENT:  The risk surrounding the euro area growth
outlook have become less pronounced but remain tilted to the downside and
relate predominantly to global factors.

(END VIDEO CLIP)

HERERA:  Mr. Draghi also said underlying inflation pressures remain subdued
in the European Union.

MATHISEN:  Sears (NASDAQ:SHLD) reports a steep loss and that is where we
begin tonight`s “Market Focus”.

The retailer posted its sixth straight quarterly loss and called the
holiday season challenging as demand fell for appliances and clothing but
the results weren`t as bad as analysts had expected, thanks to cost cuts.
Shares rose nearly 7 percent to $8.01.

Meantime, JCPenney wants to get more customers into its stores by offering
more services.  Later this month, 100 stores will test new programs,
including bathroom remodeling, smart home technology installations and
heating and cooling systems.  CEO Marvin Ellison said it`s what customers
want.

(BEGIN VIDEO CLIP)

MARVIN ELLISON, J.C. PENNEY CEO:  I think it`s a recognition that the
customer`s desires are part of our strategy, so specifically.  We`re trying
to do a couple things.  We`re trying to: (a) find ways to grow.  Two, try
to find ways to de-emphasize our dependence on apparel and also to finds
ways to serve our customers in a differentiated way.

(END VIDEO CLIP)

MATHISEN:  Shares were up 6 cents to $6.30.

Investors had their first chance to respond to Tailored Brands` wider than
expected quarter loss and it wasn`t pretty.  The parent company of Men`s
Warehouse and Jos. A. Bank said weak traffic and a challenging environment
caused sales to fall and miss estimates.  Shares down 32 percent on the day
to $15.84.

HERERA:  Staples (NASDAQ:SPLS) swung to a loss and plans to close an
additional 70 stores.  The office supplies retailer saw revenue sink in
North America, its top market, as customers move away from brick and mortar
supply stores.  Still, shares were off 5 percent to $8.49.

Dutch paints maker AzkoNobel turned down a $22 billion unsolicited takeover
bid from U.S. industrial company PPG Industries (NYSE:PPG), saying that
offer substantially undervalued the country.  Following the rejection,
AzkoNobel said that it would review the potential selloff of its specialty
chemical business.  Shares of PPG Industries (NYSE:PPG) fell more than 3
1/2 percent to $102.93.

And the 3D printer maker Stratasys (NASDAQ:SSYS) saw sales rise above
expectations in the latest quarter, while profit also topped estimates.
But the company issued guidance for the year that was well below street
expectations, and that sent shares lower by 9 percent to $18.17.

And Signet Jewelers is reviewing its workplace related policies.  The
company is trying to stem the damage from sexual harassment allegations
made against executives at one of its units, a story we told you about.
Signet also reported better than expected quarterly profit helped by strong
demand for diamond jewelry.  Shares rose 8 percent to $70.02.

MATHISEN:  All right.  Coming up, are those picture-perfect flipped out
homes really just masked money pits?

(MUSIC)

MATHISEN:  RadioShack files for bankruptcy again.  This is its second
filing in two years.  The electronics retailer plans to close about 200 of
its 1,500 remaining stores immediately.  RadioShack CEO said Chapter 11 was
the best path forward because it lets the company restructure while
remaining in business.  RadioShack once had more than 5,000 stores in the
U.S.

HERERA:  The ride-hailing company Lyft is expanding faster than it
expected.  The Uber rival has already reached its year end goal of
launching in 100 new cities.  That`s nine months ahead of schedule.  With
the expansion, Lyft will compete with Uber in even more markets and
continue to put pressure on prices, something Uber CEO recently complained
about in a leaked video.

Uber is also currently dealing with accusations of gender bias and says it
will stop using software to dodge regulators.

MATHISEN:  Lego today reported its highest revenue ever in its 85-year
history.  The Danish toymaker says demand for the ubiquitous colored
plastic bricks and other pieces is grown globally.  The company says it
sees strong potential in China and is encouraged by results in Europe.
Sales in the U.S., though, were flat.

About 75 million Lego pieces, most of them in couch cushions, were sold
last year in more than 140 countries.

HERERA:  Mortgage rates may be at a high for the year, but that`s not
stopping people from buying homes, fixing them with the intention of
selling them quickly at a profit.  In fact, a growing number of flippers
are now seeing record returns.  But buyers beware, the more flippers, the
greater the possibility you could get stuck with a costly lemon.

Diana Olick explains.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT:  This historic D.C. row
house looks like a renovated gem outside and in.  And that`s exactly what
empty nesters Cameron McGuire and his wife wanted.

CAMERON MCGUIRE, FLIPPED HOME BUYER:  It was so seductive with all of the
high end appliances and those pieces we thought it was going to be a dream
and it really turns out to be a nightmare.

OLICK:  The three bedroom three bath home had been renovated and expanded
by a local house flipper, with high end appliances, fixtures and
finishings.  It looked picture perfect.

Because I am looking in this gorgeous kitchen and I`m saying it all looks
good, what`s wrong?

MCGUIRE:  So when you look at it, things you wouldn`t even realize.
Receptacles are not permitted the way that they`re installed here.

OLICK:  The list goes on and on.  Improper light canisters, a fire hazard.
A bathtub installed incorrectly.  The emergency shutoff to the charming gas
fireplace is behind the fire.  And the new heating system had a 25 degrees
difference between the two floors.

MCGUIRE:  It turns out there`s not even a certificate of course pansy for
this property.  There is two large a space.

OLICK:  They only found out because the D.C. inspector called investigating
complaints from other homeowners who bought from the same flipper.  And
then came the killer code violation.

MCGUIRE:  We purchased a three bedroom, three bath unit and then found out
that the bump out that holds two of the bedrooms and two of the bathrooms –

OLICK:  This addition.

MCGUIRE:  This addition — is illegal and the city has the authority to
make us tear it down.

OLICK:  The McGuires are now working with the city to bring the home up to
code but it will likely cost more than $100,000 and that`s on top of the
630,000 they originally paid.  Unfortunately, stories like this are
becoming more and more common as more flippers get into the business.

STEVEN CARPENTER-ISRAEL:  A lot of times we`ll see where there`s termite
damage or water damage and it literally just gets slapstick, you know,
right over top of it.  So, it`s literally doing lipstick on a pig.

OLICK:  Steven Carpenter-Israel works only with buyers and helps them see
what is behind the walls.

CARPENTER-ISRAEL:  Flippers, the bad ones, won`t pull permits and at that
point, you`ve got a huge issue because no one`s looked at this.

OLICK:  He recommends flip buyers pull all the permits on the renovation.
Check that inspections were completed.  Ask for all disclosures on
upgrades, including receipts and warranties.  Have a professional termite
and mold inspection and make sure the property as a certificate of
occupancy, and most of all, don`t be fooled by fancy appliances and
finishings.

MCGUIRE:  All of those things were part of the appeal for us.

OLICK:  Because they might be masking a mess.

For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Washington.

(END VIDEOTAPE)

HERERA:  And that`s it for tonight.

We want to remind you this is the time of year your public television
station seeks your report.

MATHISEN:  Thank you for your support and we`ll see you tomorrow.

END

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) 2017 CNBC, Inc.

<Copy: Content and programming copyright 2017 CNBC, Inc. Copyright 2017 CQ-
Roll Call, Inc. All materials herein are protected by United States
copyright law and may not be reproduced, distributed, transmitted,
displayed, published or broadcast without the prior written permission of
CQ-Roll Call. You may not alter or remove any trademark, copyright or other
notice from copies of the content.>

This entry was posted in Transcripts. Bookmark the permalink.

Leave a Reply