BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Rally on. Stocks surge as
the market decides a trade war is not something it wants to dwell on. At
least not right now.
Focal point. Tomorrow`s jobs report will have the market`s full attention
as the conversation starts to shift to economic growth. We have the
And gear shift. More and more automakers are going all in on SUVs and
trucks. Sound strategy or risky business?
All that and much more tonight on tonight it`s edition of NIGHTLY BUSINESS
REPORT for this Thursday, April the 5th.
And we bid you a good evening, everybody. And welcome. I`m Bill Griffeth.
Sue is off again this even.
The beat goes on after yesterday`s more than 700-point reversal from bottom
to top, stocks extended the rally again today on Wall Street as investors
once again put aside fears of a trade war. The Dow rose another 240 points
today to close at 24,505. The Nasdaq added 34. And the S&P tacked on 18.
But the focus is about to shift now to jobs as the government`s monthly
employment report comes out tomorrow. Today, we got a warm-up with the
weekly jobless claims. The number of people filing for first-time
unemployment benefits rose by 24,000 last week. That was a little more
than was expected, but the more important continuing claims, which tracks
the number of people currently on unemployment, that still remains near 45-
But the big number is out tomorrow first thing. And there will be a lot of
attention being paid to it including by policy makers at the Federal
Steve Liesman tells us what we might expect.
STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: The market tomorrow
may be forced to make some tough decisions about whether good news is good
news when it comes to jobs, or could it be bad news for equities?
And then it`s more complicated than that. Which part of the news is good
and which part is bad.
Here are the expectations for the jobs report tomorrow from the government.
March non-farm payroll seen rising 178,000. That`s after a very strong
213,000 in February. The unemployment rate seem ticking down by one tenth
of a percent to 4 percent. Average hourly wages seeing a modest rise of
The ADP number we got on Wednesday was up 241,000, more than expected,
pointing towards a strong report. The three month average of job growths
that risen to a 17-month high of 242,000. That`s far in excess of the
growth of the working age population.
Over at TS Lombard, economists there saying, quote, the great U.S. job
creation machine is back gaining momentum. At the Liscio report they note
a growing number of state revenue contacts, those who count the taxes
coming in are suggesting an acceleration in wage growth, may be playing a
role in strong withholding tax growth.
The market right now priced for two more Fed rate hikes this year, one in
June and another sometime in the fall. A third hike or the fourth one this
year, it seems as a low probability event for now. But the jobs report
tomorrow could change those plans.
For NIGHTLY BUSINESS REPORT, I`m Steve Liesman.
GRIFFETH: And wages were something that J.P. Morgan CEO Jamie Dimon
mentioned in his annual letter out to shareholders this morning. In it, he
wrote: I believe that many people underestimate the possibility of higher
inflation and wages, which means that they might be underestimating the
chance that the Federal Reserve may have to raise rates faster than we all
Mr. Dimon also said that he wants the same outcome as President Trump in
regard to trade, but that he would go about it in a given manner.
Let`s turn to our guest, Dan Roth, for more on the employment picture and
what he`s expecting in tomorrow`s big jobs report. He`s editor in chief at
Dan, thanks for joining us tonight.
DAN ROTH, LINKEDIN EDITOR-IN-CHIEF: Thanks for having me.
GRIFFETH: The 145 million users on LinkedIn, you believe give you a pretty
good sampling of the jobs market and it tracks pretty closely to what the
Bureau of Labor statistics reports on a monthly basis. So, what are you
expecting to hear tomorrow about the March jobs number?
ROTH: Sure. Well, it`s 145 million in the U.S. 540 million worldwide.
But when we look at those U.S. numbers what we are seeing is a nearly 20
percent increase in hiring year over year last month. And a 3 percent
month over month up increase.
When we look at what`s going on with people updating their profiles saying
where they are working, hiring is still very holiday. We are seeing double
digit hiring rates every month for the last seven months. Don`t expect
that to slow.
So, I think the BLS numbers probably will show something similar. You
know, the train doesn`t stop in its tracks. The hiring has been so hot
lately that it`s probably — it`s more likely to keep up than it is to slow
GRIFFETH: Where do you see the hiring going on? Is it blue collar —
white collar or maybe a lot more construction? What do you see happening?
ROTH: Yes, sure. Financial services has been hottest for the last couple
of months, and insurance. And then it does get a little bit more blue
collar. Manufacturing, autos, and aerospace, and building have been some
of the hottest — construction have been some of the hottest sectors for
the last few months.
GRIFFETH: Now, is this cyclical what we are seeing here or did something
else happen to spur the kind of job growth we are seeing right now?
ROTH: I think it`s been a number of factors. One is people were waiting
the last year or so to see what happens in the economy, what was going to
happen with the new administration. And for the last few months, there has
been a feeling that in the spring of last year, there was a sense tax cuts
were coming, deregulation was coming, companies started opening up their
wallets a little bit and hiring more. And then the stock market has been
So, it makes it easier to decide to invest in the future. All of that has
kind of fueled the animal spirits of hiring managers. And once you start
hiring, you have to replace people — you know, someone leaves, they get
poached, they believe, you`ve got to replace their position.
ROTH: So, this hiring tends to beget more hiring.
GRIFFETH: Well, I have a lot of questions but I`m running out of time
here. Do you see more older workers being able to fine jobs that they
weren`t able to find after the financial crisis?
ROTH: It is clear that as companies need to fill positions they have to
start thinking more creatively about who they want — they can`t wait for
the perfect person. They have to take chances and maybe raise rates, maybe
look use outside where they`re located or have more remote workers. And I
think the idea of hiring more senior workers, people who might have
different skills and trying them out in this job is something that
employers are trying to do because they`ve got to get people into seats to
start doing the work that needs to get done.
GRIFFETH: OK. Before I let you go, very quickly, so, last month, huge
number, 313,000 jobs created. What do you think tomorrow`s looks like?
ROTH: Well, I`m not going to pull out the crystal ball but I think it`s
going to be — I think it`s going to be an up number. I think it is going
to look good from — more people are going to be working than we are
GRIFFETH: OK. You`re not going to give me a number, but that`s OK.
ROTH: I`m not giving you a number.
GRIFFETH: I don`t blame you.
Dan Roth with LinkedIn, thanks for joining us tonight.
ROTH: Thanks a lot.
GRIFFETH: Meanwhile, the trade deficit rose to a nearly ten-year high in
February as both imports and exports picked up momentum. The Commerce
Department reported that the trade gap rose by more than 1.5 percent to
just under $58 billion. The trade deficit with China actually fell, but it
is still up about 20 percent this year so far.
Elsewhere on the trade front, the U.S., Canada, and Mexico are apparently
moving closer to a deal on a new NAFTA agreement.
Kayla Tausche tells us about that tonight.
KAYLA TAUSCHE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Speaking in West
Virginia, President Trump expressed some optimism that a NAFTA deal could
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We are working very hard on
NAFTA with Mexico and Canada. And you know, we`ll have something, I think,
TAUSCHE: But he downplayed reports that there could be a deal reached by
next week`s Summit of the Americas meeting in Lima, Peru.
TRUMP: They said, oh, let`s have NAFTA before. I said, don`t rush it.
Take it nice and easy. There`s no rush. We`ll get it done right or we`ll
TAUSCHE: Time is running out for a deal to get done. Any agreement faces
a lengthy approval process in the U.S. Congress. Elections are upcoming in
Mexico and popularity there is growing for the anti-American candidate.
And U.S. midterm elections could also create uncertainty. Negotiators from
Canada and Mexico were meeting with American counterparts in D.C.
Here`s Jared Kushner entering USTR`s office with Mexico`s foreign minister
Speaking to reporters from Quebec, Prime Minister Justin Trudeau also
JUSTIN TRUDEAU, CANADIAN PRIME MINISTER: I believe we are at a moment
where we are moving forward in a significant way. Hopefully, there will be
some good news coming.
TAUSCHE: Sources say the three nations are getting closer to a deal on the
amount of U.S. parts and automobiles and there have been progress on
reducing protections companies get for investing in foreign country.
White House advisor Peter Navarro says it wants to cut trade deficits, but
the ultimate goal is free trade.
PETER NAVARRO, DIRECTOR OF THE OFFICE OF TRADE AND MANAFACTURING: When it
comes to trade, the vision here, the strategic vision is to get to a world
not dominated by massive trade imbalances driven by unfair non-reciprocal
trade imbalances driven by unfair, nonreciprocal trade practices, but
rather to a world of free trade.
TAUSCHE: Top trade negotiators have a dinner scheduled tonight and plan to
meet again tomorrow. But even if an agreement is reached, it would be in
principle only, with much of the fine print still to be worked out.
For NIGHTLY BUSINESS REPORT, I`m Kayla Tausche in Washington.
GRIFFETH: Time to take a look at today`s upgrades and downgrades.
We begin with Stifel downgrading Intel to hold from buy. The analyst there
saying the company could face pressure as the upgrade cycle for its
computer server business peaks. The price target stays at $53 a share.
By the way, at the same time, Stifel said it was seeing an opportunity for
rival AMD to pick up PC market share, so the firm has upgraded AMD to buy
Intel closed up 3/4 of a percent to $50.38. AMD added 2-1/2 percent to
Barclays upgraded Dow component Merck to overweight from equal weight,
citing bullish prospects for its key lung drug Keytruda. Price target
there was raised to $64 from $62 a share. Merck shares were off a penny
though to $54.43 today.
And UBS upgraded Citi Group to a buy from neutral. The firm believing the
risk-reward for owning Citi is now positive, says the profitability in its
global consumer banking division should grow from here. Price target was
raised to $80 from $78. Citi closed at $70.22. That was up more than 1
And UBS also raised fellow bank Wells Fargo to buy from neutral. The
analyst, while acknowledging the reputational challenges that Wells still
faces due its fake account scandal said that shares are at a discount
compared to its peers. But UBS did cut its price target on Wells to $60
from $63. And today`s shares finished at $53.26, up a fraction.
Now back to the story that`s been taking up all the oxygen over the past
few weeks, that would be tariffs. While the stock market seems to feel
that the salvo is by the U.S. and China will not lead to a trade war, but
instead are all part of the negotiation process, you would never know it by
the Chinese state media who seem set on winning the PR war.
Eunice Yoon has more from Beijing for us tonight.
EUNICE YOON, NIGHTLY BUSINESS REPORT CORRESPONDENT: If you only read the
Chinese state press, you`d probably believe that Beijing just bested the
Trump administration. That`s because the official press here has been
reporting that China has just won the first battle in the U.S./China trade
The papers here are citing President Trump`s tweet in which he said: We are
not in a trade war with China. And quoting Commerce Secretary Wilbur Ross
on CNBC where he suggested that these actions are all headed for
WILBUR ROSS, SECRETARY OF COMMERCE: I think it`s very difficult to put a
specific time denomination on negotiations at are as complex as these.
YOON: “The People`s Daily” posted a commentary, bragging that China`s
tariffs, which target many agricultural products, have hit Trump where it
hurts and said Beijing`s quick counter-attack has caught the administration
“The China Daily” also ran an editorial saying the U.S.`s climb-down shows
China can`t be coerced.
The background of this is that President Xi Jinping and the Communist Party
have been trying to portray themselves as a defender of Chinese interests
against the West. That`s the image they are selling to the public in the
state media and they can`t be seen as backing down.
However, according to the official state media, that doesn`t mean that the
door isn`t open. According to “The China Daily” today, if the Trump
administration is open for negotiations, that it`s time for Trump to give
up the useless tariff weapon.
For NIGHTLY BUSINESS REPORT, I`m Eunice Yoon in Beijing.
GRIFFETH: China`s proposed tariffs are certain to impact the energy
industry as well. But not where you might expect.
And our Jackie DeAngelis has that part of the story for you tonight.
JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT: China is
targeting two areas in energy with proposed tariffs, propane and ethanol.
While both products are exported in relatively small quantities, China is a
The U.S. energy information administration reported last year that China
consumed a little less than 15 percent of U.S. propane exports. Tariffs
would make propane more expensive when imported. That would make it less
attractive to buy from the Chinese perspective.
The risk to the propane market, prices could take a hit. Less demand means
for supply. And oversupply pushes prices down.
Meanwhile, Chinese could get their propane from OPEC producing companies,
namely Saudi Arabia. From an ethanol prospective, exports were just
getting started because China is looking to expand its ethanol blending by
2020. Tariffs would make U.S. ethanol less attractive and there are other
places the Chinese can look for it, like Brazil, Europe, and Canada.
JEFF KILBURG, KKM FINANCIAL FOUNDER & CEO: The Chinese buyers of U.S.
ethanol and profane will have to cut imports because of the higher tariffs.
So, that`s going to translate into less demand and that will certainly
impact the price of ethanol and propane that should push prices lower as
the demand has waned.
DEANGELIS: What`s interesting is that crude oil isn`t on China`s list.
Analysts that`s because the global oil market is so large, if China stops
taking U.S. crude, other countries in the region will and it won`t have a
negative effect. The tariffs hit red state producers directly. And
analysts say that`s no coincidence, places like Texas, Oklahoma, Louisiana
and Wyoming for propane, Nebraska, Iowa, Indiana for ethanol.
For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis.
GRIFFETH: Coming up, America`s seemingly insatiable appetite for trucks
and SUVs is driving auto sales, and causing car makers to accelerate a new
strategy. We will explain.
GRIFFETH: Saudi Arabia`s crown prince, Mohammed bin Salman, is meeting
with Silicon Valley executives today. This visit is, of course, part of a
multi-week U.S. tour that the prince hopes will spur investment and
economic development in his kingdom.
Michelle Caruso-Cabrera looks at what has been accomplished so far.
MICHELLE CARUSO-CABRERA, NIGHTLY BUSINESS REPORT CORRESPONDENT: First stop
for the crown prince of Saudi Arabia, Washington, D.C. for a meeting with
MOHAMMED BIN SALMAN, SAUDI CROWN PRINCE: Thank you Mr. President.
CARUSO-CABRERA: Followed by stops at Harvard and MIT with big plans for
Next, New York City. Dozens of events including a last-minute late night
press conference signing what they said was a $200 billion solar energy
agreement with Softbank`s Masa Son.
Plus a day long each with American CEOs, where they announced more than $20
billion worth of memorandums of understanding with companies like Google
and Raytheon, and held a panel on the changing role of women which included
the head of the Saudi Stock Exchange, Sarah Al-Suhaimi.
Are you going to learn to drive?
SARAH AL-SUHAIMI, SAUDI STOCK EXCHANGE CHAIR: Yes, of course, I`d love to
have the choice.
CARUSO-CABRERA: Then off to the west coast for meetings with Boeing,
Richard Branson, Jeff Bezos, Satya Nadella, and Bill Gates among others.
Dinner with the royalty of the west coast, media executives, Rupert
Murdoch, Bob Iger and Oprah, too.
This as Saudi Arabia dramatically opens up to foreign entertainment in the
kingdom, going from zero to big box, including an agreement enabling AMC
cinemas to operate in the kingdom after a 35-year long ban.
American companies thus far seem happy to sell goods or movies in Saudi
Arabia, but will they be willing to invest the big capital in the country
that it needs to truly grow?
When it comes to those deals, those memorandums of understanding that were
announced, there weren`t a lot of details given to the press. So, it`s a
hard to know just how meaningful they are. The bottom line, the crown
prince is trying to chain the country`s image when it comes to the general
public but also the investing public.
And the key question is, did he put to rest the concerns about rule of law
in the kingdom, after he put hundreds of royals imprison at the Ritz-
Carlton in Riyadh, accusing them of corruption. Whether this trip achieves
what he wanted depends on whether or not we see real investments in the
kingdom in the future.
For NIGHTLY BUSINESS REPORT, I`m Michele Caruso-Cabrera.
GRIFFETH: Weaker corn sales hurt results of Monsanto and that`s where we
begin tonight`s “Market Focus”.
The seed company sold less corn because there were fewer farms in the U.S.
growing that crop. Overall, though, revenue came in lower than expected.
Profits did see an uptick, thanks to strength in Monsanto`s soybean and
cotton businesses. But those results were also below expectations.
Monsanto shares were up 1 percent today to $118.05.
Delta and Sears were impacted by a cyber security breach that may have
compromised customers` payment information. The breach occurred last
September at a software company that provides online support to Delta and
Sears. And the two companies said that they have launched an investigation
to determine the extent of any damage. Delta shares rose fractionally to
$54.21. Meanwhile, shares of Sears climbed nearly 3 percent to $297.
Software company NetApp said that it was launching a $4 billion share
buyback and is raising its quarterly dividend. The company said it was
hiking the dividend to 40 cents a share and shares rose more than 1 percent
Cleaning products maker WD-40 reported higher profits after the bell. But
sales were a little light. The company said it expects sales to rise
between 7 percent and 9 percent this year overall. Shares were volatile in
after hours. They ended the regular session up 1.5 percent to $133 even.
And thanks to a strong appetite for SUVs and trucks, Ford and GM plan to
stop making three car models here in the U.S. Ford says it will shift its
focus by 2020 to make more high margin SUVs and trucks.
But is this a good strategy? And how would potential tariffs play a role?
Joining us to talk about it tonight, David Whiston is an auto analyst at
David, thanks for joining us tonight.
DAVID WHISTON, MORNINGSTAR AUTO ANALYST: Good evening.
GRIFFETH: I`m fascinated by this story. Ford, for example, says that 90
percent trucks and SUVs. Is this a demographic play or what`s going on
WHISTON: Well, the whole U.S. industry has been moving away from sedans
and into light truck models, pickups, minivans, crossovers, SUVs.
WHISTON: Back in 2009, it was about 45 percent light truck. And last
year, we were about 65 percent light truck.
The winner is crossovers, things like the Ford Escape, they were about 35
percent of the market last year. They gained 230 bits of share just in `17
versus `16. The loser is midsized sedans, down 230 bits.
GRIFFETH: So, and, yes, the thing is that we are buying the SUVs and the
trucks and the crossovers and the smaller cars because of the gasoline and
the electric cars and so forth. But what happens to those sedans that were
a staple for so many years like the Taurus which apparently is in danger
WHISTON: Right. It really could be the end of the era. GM, for example,
is rumored to be nixing the Impala, although nothing is being confirmed
yet. So, Taurus and Impala, for example, that`s full size sedans.
Last year for new vehicle sales, full size sedans were just about 1.5
percent of sales. The highest volume is in subcompact and mostly compact
cars really. And on the subcompact side, Ford is getting rid of the
Fiesta. And the big staple is the stereotypical midsize sedan, the family
sedan of Ford Fusion, Chevy Malibu, Toyota Camry, Honda Accord. That
segment is losing share, as were just discussing a moment ago to
The reason for your question here is really Americans don`t have to
compromise on space versus fuel economy. You can get the best of both
worlds in a crossover. If you want to go really big, you go up to
something like a Ford Expedition.
GRIFFETH: So, quickly, before I let you go here, you — I mean, I can
remember in the `60s and early `70s when they were going, Detroit was going
big on bigger cars, and then we had the gasoline impact when the prices
went sky high, and they had to make the smaller cars.
Do they risk that again do you think?
WHISTON: There is definitely risk when you are making a makeshift that
drastic. The thing is really, nobody expects gas to ever get higher again.
And, obviously, there`s history here with the oil embargo and whatnot.
But you have got all this fracking going on. You`ve got a lot of extra
supply. And frankly, between that cars getting — and powertrains getting
more fuel efficient and a makeshift over time to hybrids and pure electric
vehicles, no one is really expecting sedans to be that dominant anymore.
GRIFFETH: All right. Fascinating.
David Whiston with Morningstar, thanks for joining us tonight.
WHISTON: Thank you.
GRIFFETH: He`s back. For the first time since 2015, Tiger Woods is at the
Masters. And that is good news for golf. We`ll tell you why.
GRIFFETH: The Masters teed off today, and the golf industry is abuzz as
Tiger Woods makes his first appearance in the tournament since 2015.
And as Dominic Chu tells us now, Tiger`s return is proving to be a big boon
DOMINIC CHU, NIGHTLY BUSINESS REPORT CORRESPONDENT: There is no other time
of the year that`s more exciting for the game of golf than now. The
Masters is the game`s first major championship. And there is more buzz
this year thanks in large part to one player.
GARY PLAYER, 3-TIME MASTERS WINNER: Tiger Woods has had a lot of adversity
in his life to come here now and possibly win a major, I didn`t think he
would be able to do that with all that he went through. It just shows what
a competitor he is.
So, he`s got a good chance to win. And we need him to win because he
brings out the people, the media, the sponsor, the public, everybody. You
can see a vast difference in ticket sales.
CHU: According to data from Ticket IQ, the average resale price of a
weekly pass to attend the Masters this year is nearly $7,700. That`s more
than double what it was last year. But the impact isn`t just limited to
what is happening for patrons this week.
DAVID ABELES, TAYLORMADE CEO: Tiger`s presence in everything is
undeniable, right? The energy he brings to the sport. The awareness he
brings to the sport. The attention he brings to the sport is simply
incredible, right, and we have talked about that at length. Specifically
for TaylorMade, he helps us quite a bit.
CHU: That echoes what industry research firm Golf Data Tech found in a
study which showed that interest among golfers to buy new equipment is the
highest in three years. The hope is that interest is taking hold in a
younger and more diverse set of potential golfers.
STEVE MONA, WORLD GOLF FOUNDATION CEO: Junior golf has increased
substantially over the past ten years, number one, from just a raw numbers
standpoint, and number two and maybe more importantly the face of junior
golf has changed. Today, 33 percent of junior golfers are girls and 24
percent of junior golfers are minorities.
And so, if you buy the premise that junior golf leads ultimately to adult
participation in the game, you are going to see the face of golf change
over time. And we`re very encouraged by that.
CHU: The future of golf will depend a lot on getting more people to play
the sport. And if Tiger Woods and others provide a drama-filled week at
the Masters this time around, it could be a big shot in the arm for the
For NIGHTLY BUSINESS REPORT, I`m Dominic Chu in Augusta, Georgia.
GRIFFETH: And before we go, let`s take a quick look at the day`s market
action once again. The Dow rising another 240 points today to 24,505. The
Nasdaq added 34. The S&P tacked on 18.
That is the NIGHTLY BUSINESS REPORT. I`m Bill Griffeth. Thanks so much
for watching, everybody. Have a great evening. 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 ASC Services II
Media, 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) 2018 CNBC, Inc.