Transcript: Nightly Business Report – May 14, 2018

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Bill Griffeth and Sue

extends its win streak as trade tensions cool, but can the upward climb for
stocks continue?

Supreme Court`s ruling today could give cash strapped states a new
financial life line.

HERERA: Outliving your money. It`s a big worry for those saving for
retirement, but is it just a myth?

Those stories tonight on NIGHTLY BUSINESS REPORT for Monday, May 14th.

GRIFFETH: And we do bid you good evening, everybody. Welcome.

Eight straight, that`s how many consecutive sessions the Dow has now logged
gains marking the average`s longest win streak in eight months. An easing
of trade tensions with China, optimism over corporate earnings and upcoming
economic data all gave investors more reasons to buy apparently even if the
buying was relatively quiet.

The Dow when all was said and done rose by 68 points, close at 24,899. The
Nasdaq was up by eight. The S&P added 2.

But can this mini up swing that we`ve seen the past couple of weeks turn
into something bigger?

Mike Santoli tackles that for us tonight.


be a charm? Stocks are up 4 percent in less than two weeks and they`re 6
percent above their April low. The third strong rally since the short
market set back struck at the end of January.

The previous two tries regained a bit more than half the value loss in the
correction before stalling out close to current levels and sagging back
towards the year`s lows. Investors are now asking whether this recovery
attempt can be trusted.

There are a few reasons to believe this advance does have a better shot of
holding up than the prior ones. For one, the best corporate earnings
season in years is just about in the books and the results now may stop a
good deal less expensive than at the start of the year. The results were
strong enough to support stocks through this period of rising bond yield,
helping investors make peace with the ten-year treasury near 3 percent.

The market`s own behavior has been much more stable this time around with
measures of S&P 500 index volatility back near normal levels after months
of elevated readings that suggested greater market risk. This rally is
also fairly broad and its leadership is encouraging. Small cap stock
indexes tied closely to the U.S. economy are just about at a record high.
Technology, financials, energy and industrial shares are outperforming as
well which also sends a solid signal about growth.

All these factors suggest this rally is on its way to earning back the
benefit of the Dow for stock bulls but not completely. It`s unclear if the
market will continue to take a further rise in interest rates or oil prices
in stride. And while corporate profits exceeded most expectations in the
first quarter, nagging doubts about the durability of the earnings boom
remain. So investors can trust this rally for now but need to verify that
it can handle the possible challenges of this point in the economic cycle.



HERERA: As we mentioned, stocks traded higher today amid hopes of a
potential breakthrough in trade tensions between the U.S. and China, the
world`s two largest economies may be close to reaching some type of deal
ahead of a visit by China`s vice premiere to Washington this week.

Kayla Tausche has more.


chip in the talks between the U.S. and China, removing barriers for Chinese
telecom giant ZTE.

President Trump saying he wants the company back in business fast,
tweeting: today is part of a larger deal being negotiated.

RAJ SHAH, DEPUTY PRESS SECRETARY: This is part of a very complex
relationship between the United States and China that involves economic
issues, national security issues and the like. And it`s an issue of high
concern for China.

TAUSCHE: It`s a sharp reversal from the multiple enforcement action the
administration has taken as intelligence agencies issued warnings about
ZTE. Last March, commerce fining the company $1.2 billion for violating
Iran and North Korea sanctions.

WILBUR ROSS, COMMERCE SECRETARY: This unprecedented penalty reflects ZTE`s
premeditated, egregious scheme to evade U.S. law.

TAUSCHE: In April, banning U.S. firms from supplying components to ZTE.
This month, the Pentagon says ZTE was a security risk and prohibited the
sale of devices on military bases.

The president`s about-face meeting criticism from both sides of the aisle.

New York Democrat Chuck Schumer.

SEN. CHUCK SCHUMER (D-NY), MINORITY LEADER: His policy seems designed for
a new goal, make China great again. The toughest thing we could do. The
thing that sent a shot across the bow to the Chinese was taking tough
action against actors like the ZTE network.

TAUSCHE: Republican Senator Marco Rubio said the U.S. would be, quote,
crazy to allow them to operate without tighter restrictions.

Today, Secretary Ross suggested things had changed.

ROSS: ZTE did do some inappropriate things. They`ve admitted to that.
The question is, are there alternative remedies to the one that we had
originally put forward? And that`s the area we will be exploring very,
very promptly.

TAUSCHE: The White House declined to comment on what China would offer the
U.S. in return if penalties on ZTE were relaxed. A source briefed on the
matter says at least two options are on the table — the approval of a U.S.
semiconductor merger and reversal of tariffs on U.S. agriculture.

For NIGHTLY BUSINESS REPORT, I`m Kayla Tausche in Washington.


GRIFFETH: The price of crude oil continues to rise and it`s all about
supply and demand. A new report from OPEC says the global glut of crude
oil may be mostly gone. The oil cartel says the stockpiles in the
developed world stand just 9 million barrels above the 5-year average.

OPEC also increased its forecast for demand this year while lowering its
outlook for production, hence, the continued rally. Oil traders today were
also watching the deadly violence in Gaza between Israeli troops and
Palestinians marking the bloodiest day there since the 2014 war.
Palestinians were protesting the opening of the U.S. embassy in Jerusalem.
Price of domestic crude settled above $70 a barrel today.

HERERA: As oil prices rise, so do gas prices. One survey says the
national average is inching towards $3 a gallon, and less money in people`s
pockets has traditionally been viewed as bad for the economy.

But as Steve Liesman reports, that may no longer be the case.


to rise in America, economists have always been quick to say, it will drag
down growth. But that looks to be changing.

In a dramatic shifts, some economists now think the scourge of higher oil
prices will have only a negligible effect on U.S. growth, some think it
could even be zero. The reason, U.S. oil production has surged, making it
now the number two oil producer, that means less exports and more imports.
And capital spending by all oil companies is so growth that it could offset
the decline in consumer spending.

Mike Feroli, chief U.S. economist with J.P. Morgan Chase says, quote: We
think the effect will round to a wash. Our prior modeling would likely
have produced a slightly more adverse impact.

Feroli says specifically, a 0.2 percent decline in consumer spending will
likely be offset by a 0.2 percent increase in capital spending.

Comments by St. Louis Fed President James Bullard suggests the Fed is
thinking the same way.

JAMES BULLARD, ST. LOUIS FED PRESIDENT: It used to be a big oil frac was
bad news but now I think it`s neutral. It hurts our consumer side but it
helps us on the production side and more or less washes out at this point.
So I think it`s not what it used to be a big oil track was probably bad
news for the U.S. economy, but now I think it`s neutral. It hurts our
consumer side, but it helps us on the production side, and more or less
washes out at this point.

So, it`s not what it used to be to track oil prices for the U.S. economy.

LIESMAN: And John Riding of RBG Economics says the biggest issue will be
one of distribution. (VIDEO GAP) wealth transfer of consumers to oil
companies from oil consuming regions in the U.S. to oil producing regions
of which there are now many more. But this time, a lot more of the money
stays in the United States.

Economists we contacted said (VIDEO GAP) if oil surges above $100 (VIDEO
GAP). Sustained gas prices above $300 a gallon —



TYLER MATHISEN, NBR ANCHOR: Some 40 million Americans under the age of 18
play some kind of organized sports. And for many of them, their coaches
will be among the most influential people they`ll ever meet, and that`s why
coaches love coaching. But as Sue Herera tells us, the business of
coaching often involves a lot of extra work.

At least, it did, until one young man from the Boston area got the idea to
simplify it.


HERERA: Football is a team sport. But Shalik Billups (ph) is working one
on one with Coach (NYSE:COH) Kevon Watkins. It`s the kind of attention
Watkins says he never got when he played in high school, and while he was
in the U.S. Marine Corps.

UNIDENTIFIED MALE: Nothing like this was ever even thought of.

HERERA: Individual coaching is nothing new. Watkins has been doing it for
about ten years. But now he says finding customers, collecting reviews,
and maintaining his business is much simpler.

Thanks to a website, Coach (NYSE:COH) Up, the site vets and ranks 15,000
coaches in individual and team sports across the country.

Jordan Fliegel came up with the idea for the site back in 2011.

JORDAN FLIEGEL, COACH UP: If you want a tutor, if you want to improve your
SAT score, you get a tutor. In sports, they learn how to play the sport,
how to really learn it. We don`t do that in academics. We don`t do it in
anything else, why do we think it would work in sports?

HERERA: Fliegel`s sport was basketball. He never heard of working on a
team sport with an individual coach before he tried it during his high
school years.

FLIEGEL: It was at best mediocre high school player.

HERERA: Mediocre that is until a camp counselor Greg Christoph (ph) helped
Fliegel develop into a high school and small college star. He played
professionally in Israel for two years. But he said the coaching he
received didn`t just change his game, it changed his life.

FLIEGEL: That led to direct improvement for me academically. You know, if
I really applied myself, I can figure out anything. I can figure out how
to become a better athlete, I can figure out how to become a better
student. And I can learn to really write a paper. I can learn how to
build a startup.

HERERA: Fliegel began to do some coaching himself while he was in college.
Later, after a broken foot and business school ended his playing days, he
kept on coaching easing the transition into the next stage of his life.

FLIEGEL: I created my own Web site. I paid a Web site designer to do
that, every time I wanted to update it I had to pay that designer to do it.
I wanted to collect reviews. I just wanted to work with kids and I wanted
the rest to care itself.

HERERA: Fliegel says Coach (NYSE:COH) Up provides a platform to deal with
the business of coaching, so coaches can focus on what they do best.

FLIEGEL: We provide insurance, we provide payment processing, we provide
customer support. I mean, for our coaches, we`re they`re marketing
department, their technology department, their personal assistant, web site
host, there`s no great solution from this. So, I decided to build it.

HERERA: Most of those services are outsourced from Coach (NYSE:COH) Up`s
Boston office, home to 30 full-time employees. The model has attracted
investment money from world champion athletes. Like Julian Etleman of the
NFL`s New England Patriots, and Steph Curry of the NBA`s Golden State
Warriors. Each has benefited from working with individual coaches.

UNIDENTIFIED MALE: Bring it back, bring it back. There you go.

HERERA: For most players, though, the next level isn`t a world
championship. Billups is just hoping to make his high school team. But
with a little help from Coach (NYSE:COH) Watkins, he may have a better
chance to bring his “A” game to wherever he decides to go.


KEVON WATKINS, COACH: Everything we found on the football field can apply
to everyday life. The biggest thing for me is hard work. You know, you
have to work hard in order to make yourself better.

That`s what I`m talking about.


MATHISEN: Fliegel says more than 200,000 young and older athletes have
found coaches on his site. Well, now to another solution for kids. We
talk about it every year. Parents can spend $200 or more a year, per
child, on school supplies — those who can afford those supplies, that is.

Teachers also spend money out of their own pockets — $500, on average,
every year. That`s why one company decided to help families get some
newer, funkier, school supplies into the hands of students who need them.


CHILDREN: Good morning!

MATHISEN: At the Camino Nuevo Charter Academy in a part of Los Angeles
where the median income is less than $28,000 a year, Ido Leffler`s school
supplies are a welcome gift.

Leffler got the idea to help after shopping with his own kids back in 2013.

IDO LEFFLER, YOOBI CO-FOUNDER & CEO: They basically ignored the school
supplies aisle. If I`m not excited about what`s in the aisle and my kids
aren`t excited about what`s in the aisle, that`s low-hanging fruit. So, we
decided to funk it up a little bit.

CROWD: His company, Yoobi, didn`t invent finders and pencil cases. It
redesigned them. Bright colors, tactile textures, jumbos and minis. The
products are fun.

But Yoobi is serious about its mission. For every item it sells, it
donates one. For a while, Leffler could have used that kind of help when
he was growing up in Australia.

LEFFLER: I know what it`s like for my mother as a schoolteacher to pull
money out of her own pocket to buy supplies.

MATHISEN: His dad`s real estate business had failed back in the 1990s.
Things are just fine now, and Leffler has started several companies. His
Yes To is a hit in the all-natural beauty products space, which helped get
him a meeting with a contact at Target (NYSE:TGT) to pitch Yoobi.

LEFFLER: I said to her would you like to turn around and see the product?
And she looked me and looked me straight in the eye and say, you know, I
don`t have to. We`re going to impact millions of kids. Let`s do this.
And boom.

MATHISEN: Boom is right. Yoobi launched in June 2014 and did $20 million
in sales in a year. Its donations have impacted more than a million

Still, some wonder how effective the buy one/give one model can be.

CHRIS MARQUIS, CORNELL UNIVERSITY: One of the big criticisms of the model
is that it doesn`t address the root causes of the social issue.

MATHISEN: Cornell University`s Chris Marquis has written about how
companies like Tom`s Shoes and Warby Parker with its eyewear have addressed
symptoms without actually solving any problems. Raising awareness is a
plus, but to be successful, the cause has to resonate with consumers and
the price point has to make sense for the company.

MARQUIS: There`s a lot of research that shows that younger consumers
actually want to give back, they want to actually have some sort of social
impact, so I think actually this market will continue to grow.

LEFFLER: The first thing we need to do is make her a Yoobi teacher.

MATHISEN: Yoobi also helps teachers like Camino Nuevo`s Maria Cortez, who
spends a lot of her own money on her students.

MARIA CORTEZ, TEACHER: Over 1,000 a year. For them, what it means is they
are valued, right? Like our classroom is valued, our school is valued,
their work is valued. And I tell them they are the leaders of the future.
And Yoobi is really supporting that for our children.

MATHISEN: After all, it`s teachers like Cortez and Ido Leffler`s mom who
can inspire students to put themselves into the equation when it comes to
solving the products of the future.

LEFFLER: It doesn`t matter what widget you`re selling. If you`ve got a
cause that everybody is fully committed to, then you`re able to do things
that really translate to magic.


MATHISEN: Yoobi even caught the attention of the entertainer usher. He
chipped in and helped design a new line and also participated in one of
Yoobi`s giveaway events at a different school in Los Angeles. More and
more companies and more and more customers want their purchase to be linked
to a purpose.

And coming up, a four-year computer-science degree. We`ll introduce you to
the entrepreneurs who can teach you how to code in four months.


MATHISEN: The non-profit Kauffman Foundation is out with its annual report
of entrepreneurial and small-business activities in 2015 for 40 metro
areas. Portland, Oregon, starts the top five. San Francisco came in
fourth, Providence, Rhode Island, takes the third spot, Boston was the
runner-up, and New York City lands atop that list.

Well, in education, a home run for graduates might be a degree with little
or no debt and a solid job, right? Well, sometimes, it feels like putting
those things together is virtually impossible. And that`s why the subjects
of our next story, one an Ivy Leaguer who made it through Harvard business
School and the other a college dropout, decided to do something about
creating an affordable education that really pays off.


MATHISEN: Jen Eisenberg is a software engineer at Paperless Post. That`s
the online stationery stop. She helps write the instructions or the code
that make the web site function. A computer science major? Not Jen. That
foray lasted one semester.

JEN EISENBERG, PAPERLESS POST: I realize I couldn`t build anything
tangible. It starts with theory and algorithm.

MATHISEN: Instead, Eisenberg majored in linguistics, but spent the summer
before her senior year of college learning the basics of coding at the New
York City`s Flatiron School.

fewer computer science majors from college today than we were 20 years ago.
That`s crazy. The Internet happened.

MATHISEN: Adam Enbar helped start the Flatiron School and he didn`t study
computer science either. After college, he wondered if his education was
really worth the hundreds of thousands of dollars he and his family spent.

ENBAR: I didn`t feel like I had any real skills. The college degree used
to be the best investment somebody could make and that`s not really the
case anymore.

MATHISEN: He began working at a venture capital firm, looking for ways to
invest in fixes for higher education. He didn`t find much until he heard
about Avi Flombaum, a college dropout who was teaching people code and
helping them get jobs.

instruction. Computers are stupid. They don`t know anything. We just
teach them everything.

MATHISEN: Flombaum taught himself to code as a New York City teenager. He
dropped out of college to write software for a hedge fund. Later, he
cofounded his own web based business. But on the side, he began teaching
others to code at meet-ups, workshops and coffee shops. Students thanked
him for changing their lives.

FLOMBAUM: I was like, wow, this teaching thing was really amazing, like
that was a profound amount of impact to have on someone.

MATHISEN: So, Enbar sent a tweet, and they met up for coffee.

ENBAR: He`s telling me about his hobby, all the while my mind is melting.
Like you are doing what most in education in America can`t do.

MATHISEN: Enbar figured they should start their own school.

FLOMBAUM: And I was like, no one is going to come to our school.

MATHISEN: Within days, though, Flombaum changed his mind. They leased
space, bought desks, and for $40,000 total, opened the Flatiron School in
October of 2012.

FLOMBAUM: Having vocabulary, how to give very clear instruction is a
science in itself.

MATHISEN: Only 6 percent of the applicants are accepted into Flatiron`s
four-month program. It costs $15,000. But 99 percent of the graduates,
nearly 500 in less than three years, have jobs. Average pay, more than
$70,000 a year.

TIFFANY PEON, CONSTANT CONTACT: My increase in salary was something like
40 percent.

MATHISEN: Tiffany (NYSE:TIF) Peon studied music business management in
college. Now, she`s a software engineer at an online marketing firm.

PEON: I was a musician, a theater kid, it really doesn`t matter what type
of person or what kind of background, as long you want to learn it.

MATHISEN: Which is why Enbar and Flombaum see a future where coding like
reading, writing, arithmetic is a basic tool that can open the door to

FLOMBAUM: We just need to create a new way to teach people this stuff, in
a new kind of paradigm that doesn`t require a four years and a master`s
degree in linear algebra in order to take your first computer class.


MATHISEN: Flatiron students range in age from about 17 to 50, and flatiron
even has an online program called “learn” which guarantees every graduate a
job or their money back. The founders believe most jobs will eventually
entail some level of coding, and that`s why it`s not just for computer-
science geeks anymore.

Well, here`s a twist. Our next story is about a startup that wants to help
other startups, clean up, literally. A lot of small businesses are looking
to solve real-world problems using modern technology, but most don`t have
the time nor the staff needed to do the basics, like keeping the office
clean or re-stocking supplies or finding a plumber.

That`s why two New York City entrepreneurs provide iPads equipped with a
system they built to help take care of the physical space.


MATHISEN (voice-over): In just four months, Jose Lara has been promoted
from operator to supervisor at Managed by Q, a startup aiming to take care
of the office space using a web-based iPad app.

Q, remember the character that supplied James Bond`s high-tech toys? In
the office, Q brings a techie solution to cleaning, restocking supplies or
finding a handyman, and Jose Lara is hoping Q can be a career builder, not
just a job.

In its opening last April, Q has hired 175 employees. Wages start at
$12.50 an hour and Q is taking cues from the likes of Starbucks
(NASDAQ:SBUX) and Traders Joe`s, providing benefits.

JOSE LARA, MANAGED BY Q SUPERVISOR: A lot of the jobs that they had, it
wasn`t providing none of that. When it comes to Q, they`re getting paid at
a higher rate than they would normally, and now, they`re getting benefits
on top of that.

MATHISEN: Cofounder Saman Rahmanian and Dan Teran quickly realized hiring
their own employees rather than contracting out makes it easier to train
them, easier to offer them incentives and easier for clients to communicate
with them.

At their homes in Brooklyn, both had issues with all of the above.

SAMAN RAHMANIAN, CO-FOUNDER, MANAGED BY Q: The service was terrible. I
had no experience in maintenance, but as a board member of my building, I
knew what type of experience and service I would want.

DAN TERAN, MANAGED BY Q COFOUNDER: We are having the exact same pinpoint.
The space needs to be run and the way it`s done and unique in every case,
and often like pretty broken and fragmented.

MATHISEN: Developing the site was the easy part. Rahmanian has been doing
that since he was a preteen in the early 1990s. He met Teran while both
worked at a New York business incubator pre-hype. They pitched the idea to
about 20 residential buildings, but found no buyers until another pre-hype
business signed on.

WHITNEY DONALDSON, BARK & CO.: The schedule was here and different people
from the handyman to the cleaner, like all the different players you need
to help keep an office running smoothly.

MATHISEN: Whitney Donaldson (NYSE:DCI) was managing the office, among
other things at Bark & Company, one of thee many thousands of small
businesses in New York City which tend to be tech-friendly and

RAHMANIAN: Companies want to focus on running their business.

TERAN: Nobody gets into business to run an office.

MATHISEN: Getting face time with Q is probably easier for its 200 clients
than it was for James Bond.

UNIDENTIFIED MALE: Starting today, every one of you guys can download the

MATHISEN: There`s also a brand new phone app Q operators used it to check
schedules and find directions to their next job.

Q won`t win on price at $25 an hour. They`re on par with other New York
services. Instead, Q is about setting a new standard for its employees and
for its customers.

RAHMANIAN: We have actually added a technology layer that makes the
relationship to the cleaner more personal. They can provide feedback and
say this was great or this was not so great.

TERAN: It`s transparency and its communication, and when it doesn`t exist,
it becomes increasingly painful, where like a generation ago, people would
just assume that`s the way it is. You know, it`s not just the way it is.


MATHISEN: You know it by now. Apps are changing everything. After
doubling its client base in New York City in just six months, businesses
like Uber and Bucketfeet called Q to help them keep their Chicago offices
neat and tidy back in the spring of 2015.

And that does it for this special edition of NIGHTLY BUSINESS REPORT. I`m
Tyler Mathisen. We`ll see you tomorrow.


Nightly Business Report transcripts and video are available on-line post
broadcast at 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
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Business Report is not and should not be considered as investment advice.
(c) 2018 CNBC, Inc.


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