Transcript: Friday, November 7, 2014

NBR ThumANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and
Susie Gharib, brought to you in part by —

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BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Solid but not
spectacular. The economy created steady jobs growth last month, but is it
enough?

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Motor City reprieve.
Detroit`s restructuring gets a green light. So what happens now?

GRIFFETH: And big hitters. This week`s market monitor has a few
names that he thinks could get you up to 20 percent in the next year.

All that and more tonight on NIGHTLY BUSINESS REPORT for Friday,
November 7th.

TGIF, everybody. And good evening. I`m Bill Griffeth, in for Tyler
Mathisen.

GHARIB: And I`m Susie Gharib. Good evening from me as well.

A record close to a record week on Wall Street. The Dow and S&P 500
closed at new highs again.

But investors today turned to the big report on the job market. Now,
it wasn`t stellar and some analysts are calling it a goldilocks report.
Not too hot, not too cold. It showed steady improvement, with 214,000 new
jobs added. But that was less than expected. Now, the unemployment ticked
down to 5.8 percent and past two months revived higher.

The big disappointment for American workers, though, wages. Average
hourly earnings were up just 3 cents in October.

As Hampton Pearson reports, President Obama made the most of the
numbers.

(BEGIN VIDEOTAPE)

HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
At a White House cabinet meeting, President Obama said it`s the hard work
of the American people that has driven the unemployment rate to its lowest
level since the beginning of the recession and produced the best-based
overall jobs growth in more than a decade.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The unemployment rate
fell again. Our private sector has now added 10.6 million new jobs over
the last 56 months, and this is the strongest jobs growth that we have seen
since the 1990s.

PEARSON: So far this year, employers have been hiring on average
nearly 230,000 workers per month. Today, at a jobs fair outside Baltimore,
aimed at hiring veterans, both job placement professionals and job seekers
were cautiously optimistic.

STEVE KAWAKAMI, NORTHROP GRUMMAN TALENT ACQUISITION: I think that
there`s certainly opportunities there, if nothing else, even irrespective
of the economy just because of the shift in the generational focus of our
workforce and, you know, desire to bring on board new folks who had the
latest background in technology skills.

PEARSON: But stagnant wages remains the biggest shortfall. Average
earnings have risen just 2 percent over the last year. October saw job
growth in nearly all sectors. The unemployment rate went down for all of
the right reasons. More workers found jobs and returned to the labor
force.

And leading economists say the pace of hiring in better paying jobs is
picking up.

DIANE SWONK, MESIROW FINANCIAL: We`re seeing more broad base gains in
manufacturing. And those professional services hiring full time instead of
just temporary workers on things like accountants, engineers, consultants,
management. That`s something that we lost dramatically during the
recession and we`re now trying to see consistent gains back.

PEARSON (on camera): Job growth with better pay is the biggest
challenge facing the economy. The latest jobs report tells us the
foundation is there. The question is, can the private sector keep the
momentum going?

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

(END VIDEOTAPE)

GRIFFETH: Well, stocks waivered throughout this Friday, following the
jobs number. But in the end, both the Dow and S&P hit new all-time highs
today, all three of the major averages, a matter of fact, have been up for
three straight weeks now. Today, the Dow was up by 19 points in some late
buying, NASDAQ fell by 5 and the S&P 500 was up a fraction.

For the week, the Dow was up 1 percent. The NASDAQ and the S&P were
up just fractionally. But, hey, a gain is a gain, right?

GHARIB: That`s absolutely right.

Lindsey Piegza is joins us now for more analysis on today`s jobs
report. She`s chief economist at Sterne Agee.

Lindsey, nice to have you on the program tonight.

LINDSEY PIEGZA, STERNE AGEE: Thank you for having me.

GHARIB: All right. What`s it going to take for American businesses
to hire more?

PIEGZA: Well, that is the number one question. And, unfortunately,
what we see certainly while today`s report was positive, it`s far from
stellar, and that really is the tone of the jobs market at this point. We
continue to see the American economy bouncing along. But until I think we
start to see reform in terms of uncertainty, tax policy, health care costs,
these are the barriers and burdens that businesses big and small continue
to point to when we ask why aren`t you hiring?

It`s certainly not a balance sheet issue at this point because
corporations are awash in cash, billions of dollars sitting on the
sidelines. But when we post the question, why haven`t you hired, they
continue to point to uncertainty, tax policy, and health care costs.

GRIFFETH: Lindsey, I know as an economist, you`re not that impressed
with the jobs data lately. But from the market perspective, you have to
think they like this — the kind of job growth we`re getting right now.
Certainly, we`d love to have everybody working. But if you go too strong
each month, that`s more likely that the Fed is going to be raising rates
sooner rather than later which the market doesn`t look forward to, right?

PIEGZA: I think this is a pretty positive report for the market.
Now, it came in under expectation but still even at 214,000, this was the
ninth consecutive month of above 200,000, enough to keep that moving
average, right around the 240,000 pace.

But really, I think what the market was looking at was further decline
in the unemployment rate. And it was a decline for the right reason. Now,
certainly, we did see 500,000 Americans drop out of the labor force, but
household employment actually increased by that amount and more leading to
that one-tenth reduction.

So, certainly, a positive sign that we`re slowly getting the labor
market back on track, enough to keep momentum in the market, but not enough
for us to really force the Fed`s hand at this point.

GHARIB: What does all of this mean for the economy? You have a
pretty mild forecast for growth for the rest of this year. You`re coming
in at 1.6 percent of GDP growth for this year. Two percent for next year,
which are both lower than what many of your colleagues in the economics
profession are forecasting.

What is it going to take to get the economy to pick up a little bit
more?

PIEGZA: It all comes down to jobs creation and income growth. And
that really is the third piece of the employment report that we saw this
morning. We are not seeing any type of wage pressures. Meaning, the top-
line job creation, while positive, is not sufficient to lead to income
growth. We`re still seeing stagnant average hourly earnings at 1.9
percent.

This was the pace that we`ve seen since 2010. So, if we`re not
putting more money in consumers` pockets, that`s a limited ability then
once we top out taking on new credit, eating into savings, and the
temporary price reprieve from lower energy prices, if we don`t see that
top-line growth in terms of income, consumers are very limited and that`s
going to drag down the opportunities for growth then, going into 2015.

GHARIB: All right. Lindsey, thank you so much. Lindsey Piegza with
Sterne Agee.

PIEGZA: Thank you.

GRIFFETH: Elsewhere, Pepsi has lost another top executive, this time
company president Zein Abdalla is leaving at the end of next month. Brian
Cornell left Pepsi last summer to take over Target (NYSE:TGT). Both men
were seen as possible successors to chair and CEO Indra Nooyi. By the way,
she has yet to announce plans to retire any time soon.

GHARIB: Also on the jobs front, more jobs cuts coming at JPMorgan
(NYSE:JPM). The bank says it will cut 3,000 more jobs than previously
expected. The layoffs will come into the retail banking division. Here`s
what we`re talking about is credit card, merchant services and mortgage
units. With those cuts, JPMorgan (NYSE:JPM) will slash 27,000 jobs from
its consumer bank over the last two years.

GRIFFETH: So, where should those former employees and many others
look for work? Well, since the beginning of this year, we have been
looking at where the jobs are, examining the skilled labor gap that many
businesses say is hindering their growth.

This month, Mary Thompson finds that jobs are everywhere, as a matter
of fact, as long as you`re schooled in technology.

(BEGIN VIDEOTAPE)

MARY THOMPSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
For 32-year-old Justin Woo working as the software developer for PayPal
fulfills two dreams, he does what he loves, while working in a business he
sees bringing social goods.

JUSTIN WOO, SOFTWARE DEVELOPER: These technologies haven`t changed
for like 30, 40 years. And PayPal itself is on the cusp of changing the
world using payments.

THOMPSON: Woo joined PayPal last year, after winning the Seattle-
based hackaton sponsored by the San Jose-based firm.

WOO: I was shocked. I was surprised. I felt like crying.

THOMPSON: Hackathons like this one in Las Vegas, one of many tools
PayPal now uses to recruit the hundreds of technologists it perennially
needs.

JAMES BARRESE, PAYPAL CTO: They get to learn more about our products
and our company and we get to see what they are able to produce.

THOMPSON: To meet the needs of companies like PayPal, the country
needs to produce more technologists. The need is only expected to grow.
The Bureau of Labor Statistics says from 2012 to 2022, the U.S. will add
700,000 IT-related jobs.

BARRESE: We want to hire software engineers. We want to hire product
managers. We`re looking for people who might have specialty in mobile
engineering.

THOMPSON: Chief technologist James Barrese notes the market is
increasingly competitive as PayPal isn`t alone in looking for talent.

(on camera): Companies of all sizes across all industries needs
technologists and that could put smaller companies at a disadvantage
because they can`t compete with the pay bigger companies can offer.

(voice-over): The BLF says IT jobs can pay anywhere from $50,000 to
$120,000 a year. That`s a price that may be out of reach for smaller
companies.

Companies see tech industry trade group CompTIA says will pay a price
for not having top talent.

ELIZABETH HYMAN, COMPTIA VP FOR PUBLIC ADVOCACY: It translates
directly to their customers and how competitive they can be with those
competitors.

THOMPSON: The solution might be in programmers like Peter Ma, a
veteran of five startups who prefers to work on his own.

PETER MA, HACKATHON PARTICIPANT: I`m simply not as productive as a
full-time employee, versus a contractor. As a consultant, I can get fired
any time if I don`t provide values.

THOMPSON: Though Ma`s skills have probably never been more valuable
to business.

For NIGHTLY BUSINESS REPORT, I`m Mary Thompson in Las Vegas.

(END VIDEOTAPE)

GHARIB: Coming up, Detroit gets a new lease on life. So, what`s next
for the Motor City?

(MUSIC)

GRIFFETH: A new challenge to the Affordable Healthcare Act is heading
to the Supreme Court. The justices will decide whether that law authorizes
federal subsidies that help millions of low and middle-income people afford
their health insurance. Opponents of the law say those subsidies are
illegal. An appeals court upheld the IRS rules that allow for those
subsidies. So, now, it`s up to the high court.

GHARIB: It`s a new model in Detroit. The beleaguered city has a new
lease on life. A federal judge today approved the city`s plan to
restructure and emerge from the largest municipal bankruptcy in history.

Scott Cohn has the story.

(BEGIN VIDEOTAPE)

SCOTT COHN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): The
ruling achieves what few thought were possible a few months ago, a city on
the rise — $7 billion in debt wiped out, more than $1.5 billion in new
money for city services, blight removal and new development, some of it
financed by the city`s largest creditors.

MIKE DUGGAN, DETROIT MAYOR: It was pretty remarkable day.

COHN: The city`s perpetually troubled pension system is back on
ground with only modest cuts for retirees and all got done without selling
a single work of art from the city`s treasured collection at the world
renowned Detroit Institute of Arts.

For Michigan Governor Rick Snyder, the former business executive who
orchestrated the process and cruised to re-election on Tuesday, it`s a good
week.

GOV. RICK SNYDER (R), MICHIGAN: If you go back to July of last year,
people had many different concerns and very few people believed we could
see a successful conclusion, let alone a conclusion in this time frame.
It`s here today.

COHN: But getting here has not been easy. The city`s employee union
bitterly opposed the bankruptcy filing arguing the state constitution
guaranteed their pensions. Bondholders and the companies that insured the
bonds said they were forced to give up millions of dollars to save the art
collection which they argued should be sold.

The solution? What came to be known as the grand bargain, more than
$800 billion in private donations and state aid to shore up the pensions
and save the art, transferring it to a private trust.

Arthur O`Reilly negotiated for the museum.

ARTHUR O`REILLY, DETROIT, INSTITUTE OF ARTS ATTORNEY: This is an
historic day for Detroit. It`s an historic day for arts and culture in the
United States. The city now has a new lease on life. It has an
opportunity to lay the foundation to become, again, another great city in
America.

COHN: Judge Steven Rhodes said the settlement borders on the
miraculous, with the exit from bankruptcy, he said, now is the time to
restore democracy to the people in the city of Detroit.

(on camera): But restoring the city itself could take years.
Detroit`s finances maybe fixed, but there`s still widespread poverty and
decay. Nonetheless, the case sets a course for Detroit and maybe for
dozens of other American cities in the same boat.

Scott Cohn, NIGHTLY BUSINESS REPORT, Detroit.

(END VIDEOTAPE)

GHARIB: General Motors (NYSE:GM) CEO Mary Barra had this to say about
the ruling, “Judge Rhodes decision is historic and a validation for
everyone who`s been committed to Detroit, working together, we can
transform the city and you can see clear progress in the restoration of
downtown. The entrepreneurs who are flocking here, the massive building
projects getting under way and the work being done to improve education,
neighborhoods, and city services.”

GRIFFETH: Well, it was a pretty good quarter for Warren Buffett`s
Berkshire Hathaway (NYSE:BRK.A) and that`s where we begin tonight`s “Market
Focus”.

The company`s operating earnings beat Wall Street`s estimates, rising
by 29 percent. Berkshire earnings of more than $4.5 billion in a quarter.
Class B shares were slightly higher to $143.61 and — just for fun, if you
want to dabble in the class A shares, they cost a mere $215,000 a share and
they were higher today as well.

It doesn`t seem like things are getting any better at Abercrombie &
Fitch (NYSE:ANF). The teen retailer saw its shares drop 12 percent in its
third quarter. That was even more than analysts had been expecting. It
blamed slower mall traffic and said sales were even weaker towards the end
of the quarter. Shares tumbled more than 16 percent to $29.50.

Investors got a chance to react to guidance from Gap (NYSE:GPS). The
retailer posted disappointing October sales figures, but investors were
more optimistic because of its outlook. The company will not report
results until later this month, but it`s expecting its profit to top
consensus because of cost cutting and a tax benefit. Shares were 2.5
percent higher to $38.83.

Meanwhile, Sears (NASDAQ:SHLD) is exploring a new plan to raise cash
as it has been struggling to return to profitability. The retailer this
time is considering selling up to 300 of its stores to a real estate
investment trust or a REIT, which it would than offer to shareholders
through a rights offering in order to raise money. That all according to a
regulatory filing. Shares surged by 31 percent, adding $10 a share, to
close at $42.81.

GHARIB: Cheerios maker General Mills (NYSE:GIS) lowered its profit
and sales guidance for the year. The packaged food maker blamed weak food
industry trends and slow growth in emerging markets. The stock fell more
than 3.5 percent to $51.36.

Humana (NYSE:HUM) also saw its shares fall after it posted weaker than
expected third quarter results. The insurer blamed expenses related to the
health exchanges and higher specialty drug costs. That stock was down
$9.29 to close at $130.58.

Intercept Pharmaceuticals plummeted on safety issues regarding its
experimental liver drug. Trial results showed the treatment may have some
negative side effects like increasing bad cholesterol levels, meaning more
studies may be needed. It also posted a wider than expected third quarter
loss. Shares fell 30 percent to $172 and change.

And Transocean (NYSE:RIG) hit investors with news that it will take a
$2.8 billion charge when it reports its third quarter results. The driller
explained that demand for its rigs is falling. Shares fell a fraction to
$29.71.

GRIFFETH: Tonight`s market monitor is a true blue bull. He says he
feels the average investor is just too bearish right now. He is Phil
Orlando, the chief equity strategist at Federated Investors (NYSE:FII), and
manager of the Federated Global Allocation Fund.

Phillip, always good to see you.

PHIL ORLANDO, FEDERATED INVESTORS: Bill, thanks for having me back.

GRIFFETH: So, what leads you to believe that the average investor is
too bearish right now? And why do you think that is?

ORLANDO: Well, if you just go back three weeks ago, the stock market
was down 10 percent or so on October 15th. The VIX, the volatility index,
it spiked up to 31, treasury yields, it spiked down to 1.86 percent, and
stocks were trading at 14 times forward earnings.

In our view, that was completely out of whack, and we thought there
were three catalysts that would play out over the next three weeks that
would reverse that statistically cheapness. We thought third quarter
corporate earnings would be better than expected, we thought the third
quarter GDP growth would be better than expected and we thought the
Republicans would do a pretty good job in the election on Tuesday night.

We`re three for three on that, and now, stocks are 10 percent higher.

GHARIB: All right. And now, you got a couple of stocks for
investors, Phil, that maybe will encourage them to become a little more
bullish.

Let`s go down your list. At the top of your list, TJX Companies
(NYSE:TJX). Tell us why you like this one. Trading now at $64.

ORLANDO: Sure. TJX is one of our favorite retail stocks. We`re
expecting a good Christmas.

But this is a stock that typically doesn`t do well during Christmas.
Typically, it might actually trade off 2 percent, 3 percent, 4 percent.
So, we think the stock is worth $75 looking out over the next year. So,
the point is, that if we get a couple of percent tradeoffs here in the next
couple of months, that`s a good stock to put away.

GRIFFETH: We have a couple in the transportation sector. I`m going
to guess that I know why. But I`m going to let you say it, one is rail and
the other is aerospace company Boeing (NYSE:BA). Why do you like Boeing
(NYSE:BA) right now?

ORLANDO: Boeing (NYSE:BA) has got a five-year backlog, literally a
half a trillion dollars, with the 787. Now, the stock is weak because
crude oil prices are down. They dropped from $110 to $75 a barrel.

I can assure you, Bill, crude is not going to be at $75 a barrel
forever. This plane is very fuel-efficient. I think this stock will be
back in the $150 neighborhood over the next year.

GHARIB: OK. And tell us about CSX (NYSE:CSX). That`s another one of
the transportation companies that you like.

ORLANDO: So, transportation, rails in general are an economic play,
as the U.S. economy continues to do well over the course of the next year.
We think there will be more volumes. We think transportation companies,
particularly Chessie, will enjoy some movement of pricing, and if you look
at Chessie`s valuation compared to other major rails, it`s a lot cheaper.

So, we think that combination will drive the stock up to the $40
neighborhood over the next year.

GRIFFETH: Two things, though, you don`t think oil will remain at $75.
Meaning, you think they`re going to go higher. That wouldn`t be good for
CSX (NYSE:CSX), and CSX (NYSE:CSX) and other transportation companies are
already doing very well right now. Are we getting in at too high a price?

ORLANDO: Well, it`s really a function of what are the different items
that a company like CSX (NYSE:CSX) moves across the country.

Now, one of the things that they move is coal, for example. And coal
movers have been under pressure over the course of the last year because of
what`s been going on in Washington. Well, as a result of Tuesday night`s
activity, we suspect that there will be less pressure on coal going forward
and that pressure on the stock will likely lift.

GRIFFETH: All right. Phil Orlando of “Federated Investors
(NYSE:FII)”, always good to see you. Thank you for joining us tonight.

ORLANDO: Thanks, Bill.

GRIFFETH: You bet.

GHARIB: And coming up next, two people trying to make “Made in the
USA” a little bit easier. That`s next.

(MUSIC)

GHARIB: A new development in those faulty airbags made by Takata, the
Japanese auto parts maker. “The New York Times (NYSE:NYT)” says the
company deliberately destroyed test results after finding defects in some
airbags. Reportedly, this happened back in 2004 after an inflator in a
Honda exploded, spewing metal fragments and injuring the driver.

Meanwhile, Honda just added hundreds of thousands of vehicles to its
airbag recall. They are older versions of its most popular models,
including the Accord.

GRIFFETH: Here`s some evidence that domestic “Made in the USA”
manufacturers are still growing. Sixteen percent of large manufacturers,
those with at least $1 billion in revenues annually, are bringing jobs home
from China, this according to a recent survey by the Boston Consulting
Group. That`s a 20 percent jump from a year ago and more than double the 7
percent doing so back in February of 2012.

But it hasn`t always been easy to find a factory here at home. As
Tyler Mathisen tells us tonight, that`s changing now, thanks to the folks
that came up with our later bright idea.

(BEGIN VIDEOTAPE)

TYLER MATHISEN, NIGHTLY BUSINESS REPORT (voice-over): Matthew Burnett
created watches for big name designers and for his own line, all made in
China where large orders get priority, shipping times are counted in months
and quality control issues can be very costly.

MATTHEW BURNETT, MAKER`S ROW CEO & CO-FOUNDER: This is a
manufacturing error, less than 3,000 watches, about $35,000 worth of lost
merchandise. I couldn`t take it.

MATHISEN: So, he started over, making leather goods in New York City.
Quality control was easier. And turnaround times quicker.

But finding domestic manufacturers, the people who actually make
things in the USA, wasn`t easy.

Enter a friend, Tanya Menendez, who eventually left a job at Goldman
Sachs (NYSE:GS) to work with Burnett in Brooklyn.

TANYA MENENDEZ, MAKER`S ROW CO-FOUNDER: It was shocking to see the
way that people sourced. Looking at how businesses run and how inefficient
it was, I thought, there has got to be an app for that. And there wasn`t.

MATHISEN: Instead, brokers sold the list containing the names of
manufacturers, often for thousands of dollars.

BURNETT: $5,000 to $10,000 for any small business and I`m paying
$10,000 for maybe my first run of products.

MATHISEN: To give more people access to that information, they built
a Web site, Maker`s Row — 50,000 entrepreneurs have signed on, along with
about 5,000 manufacturers, mostly apparel and furniture makers. The change
didn`t go over well, with at least one broker.

BURNETT: He came to our office and threatened us to shut down the
site because that was his livelihood.

MENENDEZ: We felt really uncomfortable and it was also really
enlightening for us to understand, like what was going on in the old
industry prior to us coming along.

MATHISEN: One reason manufacturers are so hard to find is that many
don`t have their own Web sites.

MITCH CAHN, UNIONWEAR PRESIDENT: It is very hard to find a domestic
manufacturer using Google (NASDAQ:GOOG).

MATHISEN: Mitch Cahn`s company, Unionwear, in Newark, New Jersey,
makes baseball caps, bags, and a few other novelty items. He says he gets
several calls a day from entrepreneurs who found him on Maker`s Row.

Brooklyn bow tie and necktie maker Gina Bam nearly went out of
business during the Great Recession. She`s practically around the corner
from Maker`s Row, but she wasn`t on the Web, until she joined a few months
ago.

GINA BIHM: The phone calls doubled. I picked up about seven new
customers.

MATHISEN: And with labor costs overseas on the rise, entrepreneurs
are looking for domestic manufacturers.

Ari Klaristenfeld, Alexa Nigro, and Andrew Kessler sell scarves with
built-in carbon air filters called Scough. They made them with their own
hands until they couldn`t keep up with demand. Maker`s Row helped them cut
a two-month search for a manufacturer down to a couple of weeks.

ARI KLARISTENFELD, SCOUGH: We actually found that it was cheaper for
us to manufacture here in the U.S.

MATHISEN: And now with bigger players, like Walmart and Burberry
signing on to look for U.S. manufacturers, Maker`s Row may be on to
something.

BURNETT: These are the kings of industry that we`re looking at here.
When we saw them sign up, we knew it was a much bigger issue that we were
tackling.

(END VIDEOTAPE)

GRIFFETH: That from Tyler Mathisen.

And to help manufacturers get on board, get onboard, Maker`s Row has
partnered with groups and cities like Newark, New Jersey, Los Angeles,
Chicago, and as you saw, Brooklyn in New York. In the future, they hope to
add different types of makers, by the way, beyond the textile and print
manufacturers already on line. What we call —

GHARIB: This goes to our top story about more jobs.

GRIFFETH: Exactly.

GHARIB: If they keep this up, we`ll have more people with jobs.

GRIFFETH: Most jobs are coming from those smaller businesses out
there right now.

That is NIGHTLY BUSINESS REPORT for tonight. Thanks for joining us,
everybody.

I`m Bill Griffeth. Tyler Mathisen is back on Monday.

GHARIB: And I`m Susie Gharib. Have a great weekend. We`ll see you
on Monday.
END

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