Transcript: Nightly Business Report — June 22, 2015

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

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Greece lightning. The indebted country offers a new plan to avert default, signaling a deal may be near, sending stocks higher around the globe.

Home sweet home. Existing home sales surge, and some say prices will surpass the peak set in the last housing boom. But is it a bubble?

Swift response. The pop star that brought the biggest company to its knees.

All that and more tonight on NIGHTLY BUSINESS REPORT for Monday, June 22nd.

Good evening, everyone, and welcome. I`m Sue Herera. My partner Tyler Mathisen is on assignment tonight.

We begin this evening with Greece where a deal on that country`s debt is closer than ever. Athens today submitted new proposals that will reportedly increase taxes on businesses and the wealthy.

Speaking in Brussels earlier today, the head of the Eurogroup said this was welcome news.

(BEGIN VIDEO CLIP)

JERDEN DIJSSELBLOEM, EUROGROUP CHAIRMAN: All of this with a view of, if possible, reaching agreement later this week and using the Greek proposals as basis for that. But the work can start immediately as far as we`re concerned.

(END VIDEO CLIP)

HERERA: As the Eurogroup focuses on the specifics of the proposal, back in Athens, Michelle Caruso-Cabrera spoke to a Greek official about the urgent need for an agreement.

(BEGIN VIDEO CLIP)

CONSTANTINE MICHALOS, GREEK CHAMBER OF COMMERCE PRESIDENT: I`m sure that Prime Minister Tsipras realizes what will happen to the country if he doesn`t come back with a solution. I`m not saying that the solution is what the Greek economy needs at this moment, but at least it will keep us standing up. This is a national crisis, Michelle. It`s the worst that we faced since the Second World War.

(END VIDEO CLIP)

HERERA: That concern is shared by many others in the Greek capital.
Michelle Caruso-Cabrera has more now from Athens.

(BEGIN VIDEOTAPE)

MICHELLE CARUSO-CABRERA, NIGHTLY BUSINESS REPORT CORRESPONDENT:
Protests again today, demanding the government reach agreement for a bailout deal. Without a deal, these people fear Greece may leave the Euro.

UNIDENTIFIED FEMALE: I`m really worried about the situation, how it has ended up so far. Things are going from worse to worse.

UNIDENTIFIED MALE: I think we should be worried because we have no place anywhere else to go. We`ll be on our own here.

UNIDENTIFIED FEMALE: We love our country and this is the reason why we want to stay in Europe.

CARUSO-CABRERA: But the country is divided. Last night, these protesters told us it would be better to leave the euro, rather than give into more demands that require Greeks to pay higher taxes and for public sector employees to work longer before retirement.

UNIDENTIFIED MALE: It`s better (INAUDIBLE) away from the E.U. and this union.

UNIDENTIFIED FEMALE: We don`t want more authority. It`s enough.
Enough is enough.

CARUSO-CABRERA: And is it OK to leave the euro?

UNIDENTIFIED FEMALE: We don`t leave Europe. Europe will leave us.

CARUSO-CABRERA: After withdrawing 5 million euros from the banks last week, Greek citizens kept at it over the weekend, activity continuous at the Athens ATMs, as depositors grew increasingly frighten that without a deal, the European Central Bank will stop supporting Greece`s banks and they will be cut off from their money.

UNIDENTIFIED MALE: We`re nervous. We don`t know what happen next day. We stay in the euro. We go out for the euro. That`s the situation.

CARUSO-CABRERA: On the outskirts of Athens, in the port town of Peddamma, 52-year-old Theodore Solomos is a shipping engineer. Before the crisis, he was making a lot more money.

THEODORE SOLOMOS, SHIPPING ENGINEER: 2009, if you work 12 months per year, it`s about 19,000 to 20,000.

CARUSO-CABRERA: In a year?

SOLOMOS: In a year. It is about 5,000 to 6,000.

CARUSO-CABRERA: Thousand per year.

SOLOMOS: Yes.

CARUSO-CABRERA: Per year.

SOLOMOS: Per year, because it is only three months work.

CARUSO-CABRERA: The working class is tired. The business class terrified.

Time is running short to negotiate this bailout agreement. Greece needs to pay the IMF 1.5 billion euros by June 30th. So, they`ve got to get that 7 billion euro installment of bailout money before then in order to make that payment. If they don`t, if they default on the IMF, it`s quite possible that`s the day the ECB would stop supporting the Greek banks. That would mean shut down of the banking system. It could potentially be even more catastrophe for the Greek economy.

For NIGHTLY BUSINESS REPORT, Michelle Caruso-Cabrera, Athens, Greece.

(END VIDEOTAPE)

HERERA: Well, the potential for a deal, though, sent stocks higher with NASDAQ composite and a small cap Russell 2000 hitting new highs. By the close, the Dow Jones Industrial Average rose 103 points to 18,119, the NASDAQ gained 36 points, and S&P 500 added 12 points.

Now the U.S. economy, in housing, which saw sales of previously owned homes surged in May. The phase of existing home sales increase more than 5 percent last month, hitting their strongest sales pace since late 2009.

And as sales rise, so do prices. That prompted the chief economist for National Association of Realtors to predict prices could surpass the peak set back in the last housing boom. But is that a healthy thing?

Diana Olick reports.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Housing demand is increasing, but there are just too few homes for sale, and that is putting upward pressure on prices. The median price in May, $228,700. Compare to the highest monthly price ever back in July of 2006, the peak of the housing boom, $230,400, just 1,700 bucks more.

The realtors` chief economist, however, says that we are not in a housing bubble.

LAWRENCE YUN, CHIEF ECONOMIST: Demand keeps it up from the bubble, but demand cannot continue to rise if the prices continue to rise.

OLICK: It`s a tricky argument to make. It`s not a bubble because there`s so much demand, even though at some point, buyers won`t be able to afford what they want.

YUN: Right now, we are in a mismatch, but it`s not a condition where prices would come down because of the housing shortage. So, as we have more supply, it will lead to attaining home price growth.

OLICK: So, the argument goes, if home builders ramp up production and more sellers put their homes on the market, all will be well. After all, May still beat expectations, up overnight 9 percent from a year ago even amid those higher prices.

NELA RICHARDSON, REDFIN ECONOMIST: No, we`re not in a bubble, but we are in a place where prices are going to expand. The reason why it`s not a bubble as of yet is just way too much cash in the market. People are not as leveraged up as they were eight years ago. And so, that decreases the likelihood that everything will apart.

OLICK: So, no bubble because we have lots of cash, tight credit conditions, and unbreakable demands — nothing like the last housing bubble, except, of course, for those historically high prices.

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

(END VIDEOTAPE)

HERERA: John Silvia joins us now to talk more about the housing market.

Good to see you, John.

JOHN SILVIA, WELLS FARGO SECURITIES: Good to see you.

HERERA: John is chief economist at Wells Fargo (NYSE:WFC) Securities.

So, let me start with the question about whether or not you see this market as frothy or in a bubble environment.

SILVIA: No, I think on a national scale, Sue, it certainly is not a frothy environment. And what we see, of course, when you look at housing price indexes, it varies significantly by metropolitan area. Clearly, some areas are very, very strong and actually prices are higher than what they were at the peak, and that includes places such as, you know, Texas or in California, some of the East Coast areas, some in New York.

But on general for the national scale, no. There`s nothing like the price bubble that we saw before.

HERERA: So, if the market is not in a bubble formation, how much higher do you think home prices can go on a percentage basis? Because we`ve seen some pretty significant increases.

SILVIA: Yes. I think what you`re dealing with as commentators mentioned earlier, a fairly restricted supply. So, you`re still seeing something like 3 percent to 5 percent home price gains on average for the year ahead.

Again, that`s contributed nationally. But clearly, in some markets, as you might suspect, Sue, there`s really a problem of just building any home because density is really high, land values are really expensive. And so, you do have a clustering of very consolidated areas, very high prices.
But on average, a lot of Americans are just not like that. So, 3 percent to 5 percent is probably a good number to go with.

HERERA: How much of this increase that we`ve seen both in home prices and also in demand, John, comes because interest rates have been slowly creeping a little bit, or maybe people are anticipating that the Fed will move on rates. So, this may be a more affordable time to finance than it would be say in the fall.

SILVIA: Yes, I think you`re right on that, Sue. There`s a little bit of a jump ahead, people anticipating, especially now in the springtime that interest rates will go up. And it is a good time to finance right now in terms of buying that home.

So, I think there`s anticipatory demand. But that will probably moderate it. And again, I think it`s more consistent with more moderate price gains and home sales, probably as we get into the fall.

HERERA: Final question quickly, John, when do you the Fed will move on interest rates?

SILVIA: Well, our expectation is in September. So, I think a lot of home buyers right now anticipating higher interest rate increase, probably will be buying right now. So, you may see the big strength in 2015 as right now in anticipation of that higher interest rate.

HERERA: All right. John, thank you so much. Pleasure to see you as always.

SILVIA: Thank you, Sue.

HERERA: John Silvia with Wells Fargo (NYSE:WFC) Securities.

The takeover battle in the health insurance sector is intensifying.
Anthem reiterated its support for a $47 billion cash and stock bid for Cigna, even after Cigna rejected its latest offer, calling it inadequate.
In an effort to build support among Cigna shareholders, Anthem webcasted a conference with Wall Street analysts to discuss terms of the deal. If finalized, the combined company would create the largest latest health insurer in the U.S. based on enrollment. Shares of both Cigna and Anthem rose more than 3 1/2 percent.

Meantime, Aetna (NYSE:AET) is reportedly interested in Humana (NYSE:HUM). “The Wall Street Journal” reports that Aetna (NYSE:AET) recently made an offer to Humana (NYSE:HUM), which has put itself up for sale. The report didn`t cite though how much Aetna (NYSE:AET) offered.
Shares of Aetna (NYSE:AET) rose more than 3 percent. Humana (NYSE:HUM) slumped 6 percent.

There was also buyout talk in the energy sector. Natural gas pipeline company Williams rejected an unsolicited $48 billion bid from Energy Transfer Equity (NYSE:ETE), which is an oil and gas pipeline company.
Williams` board said the offer was too low and that it`s pursuing other alternatives. Shares of Williams soared almost 26 percent, hitting a new high on the takeover offer, and Energy Transfer Equity (NYSE:ETE) fell almost 5 percent.

In Washington, the Supreme Court sided with a California raisin farmer. The justices today ruled that it was unconstitutional for the government to claim control of a portion of the raisin crop, striking down a federal raisin price support program. As we reported back in April, the farmer was challenging a 66-year-old program that lets the government take raisins away from farmers to help reduce supply and increase market prices.

Well, when you think of farming, you probably don`t think of Newark, New Jersey. But that`s exactly where green, leafy vegetables are being grown. And it`s not just Newark, but also other cities across the country that are using new technology to create what could be the next big thing in food production.

Morgan Brennan is in Newark with more.

(BEGIN VIDEOTAPE)

MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: This is the research lab of Aero Farms, a 10-year-old startup developing the world`s largest vertical farm in a former steel mill in Newark, New Jersey.

The $39 million project back by the state, Goldman Sachs (NYSE:GS) and Prudential Financial expects to yield 2 million pounds of kale, arugula and other salad greens per year, without soil or natural sunlight.

The concept, converting urban buildings into high tech grow houses that use artificial lighting, hydroponic and climate control to increase crop productivity to 70 times greater than field farmers.

DAVID ROSENBERG, AERO FARMS: On average, we`re growing in 16 days what otherwise takes 30 days in a field, using 95 percent less water, 50 percent less fertilizer, zero pesticides, herbicides, fungicides.

BRENNAN: And there are other benefits as well, it cuts down on transportation cost and spoilage, since these companies supply local stores and restaurants.

Take Green Sense Farms, a two-year-old vertical farm that supplies Whole Foods and other retailers in the Chicago area.

ROBERT COLANGELO, GREEN SENSE FARMS FOUNDER & CEO: By being able to get your food to your customers quicker, it is more nutritious and more importantly, we can grow year-round.

BRENNAN: But there are drawbacks. Vertical Farms are limited in what they can grow, since space is constrained. The concept has been around for years. But because it`s capital-intensive and energy costs can be very high, it was never economically viable. Two things are now changing that.

Shifting taste as consumers increasingly seek out locally sourced all natural foods and new technology that`s lowering cost dramatically. LED lighting, one of the largest expenses, has become more efficient. Green Sense, for example, works with Phillips Lighting, which created a division dedicated just to this concept.

Green Sense and other farms use lots of blue and red diodes, two colors that optimize photosynthesis and require less energy than standard yellow lights.

GUS VAN DER FELTZ, PHILLIPS GLOBAL DIR. OF CITY FARMING: The energy use is low. They have a very long lifetime.

BRENNAN: Here at Aero Farms, the company has also been collecting big data, 10,000 data points per harvest cycle. That information that allows it to grow mustard greens according to color, texture, and taste. And the product does — taste good.

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan in Newark, New Jersey.

(END VIDEOTAPE)

HERERA: Still ahead, why the next frontier in medicine is not what you`d think.

(MUSIC)

HERERA: A day before a Washington hearing on Takata`s defective air bags, a U.S. Senate committee report says the company may have put profits before safety. Internal e-mails indicate that the company may have halted safety audits for financial reasons. The company`s defective auto part has been linked to more than 100 injuries and at least eight deaths because it can violently explode.

Apple (NASDAQ:AAPL), one of the biggest most powerful companies in the world, was brought to its knees by a pop star, but not just any pop star, 25-year-old Taylor Swift. After writing a public letter to the tech company about a recent policy involving royalties for artists, Apply quickly changed its tune.

Julia Boorstin has more.

(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Taylor Swift wielding her power is the world`s biggest pop star. When she spoke to her fans, 59 million Twitter followers, 71 million likes on Facebook (NASDAQ:FB), Apple (NASDAQ:AAPL) listened.

Swift writing on her Tumblr page, “To Apple (NASDAQ:AAPL), Love Taylor”, an open letter criticizing Apple (NASDAQ:AAPL) Music for not paying writers, producers or artists for Apple (NASDAQ:AAPL) Music`s he three-month free trial period, explaining that`s why she`s holding back her multi-platinum album, “1989”, from Apple`s new subscription service launching June 30th.

Swift writing, “We don`t ask you for free iPhones, please don`t ask us to provide you with our music for no compensation.”

SLAVA RUBIN, INDIEGOGO CEO: Apple (NASDAQ:AAPL) has, what, around
$200 billion of cash, they should be able to spend a little bit of money.
We don`t have to call in rich uncle yet.

BOORSTIN: Responding to pressure from Swift, Apple (NASDAQ:AAPL) quickly changed its tune. Apple (NASDAQ:AAPL) Media chief Eddy Cue announcing the company`s change of policy on Twitter last night.

Tweeting, “Apple (NASDAQ:AAPL) Music will pay artists for streaming, even during customers` free trial period,” and, “We hear you @taylor wift
13 and indie artists. Love, Apple (NASDAQ:AAPL).”

This Swift and rare about-face for Apple (NASDAQ:AAPL) just ahead of its launch could help mitigate damage from Swift`s public attack on the tech giant.

RUBIN: I think there`s potential for this to be come out as a net positive if they can represent, hey, we pay the artists right away. We made a mistake. We`re the people that pay the artists.

STEPHEN WITT, “HOW MUSIC GOT FREE” AUTHOR: I think it`s great for artists. Taylor Swift`s move here is very smart. She`s been playing hard ball with all of the music streaming services and somebody has to do that.
She has a lot more bargaining power than the average musician. So, I think this will have follow-on effects throughout the industry.

BOORSTIN: Now that Apple (NASDAQ:AAPL) capitulated, we`ll see if Swift changes her mind and decides to include her album in Apple
(NASDAQ:AAPL) Music. No answer from Swift yet.

For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Los Angeles.

(END VIDEOTAPE)

HERERA: A cautious outlook weighs on Sonic`s report and that`s where we begin tonight`s “Market Focus”.

The drive-in restaurant chain saw its sales and profit rise in its most recent quarter. The hike its yearly forecast, but the new numbers didn`t quite meet Wall Street`s estimates. Shares were lower initially in after-hours trading. By the close, the stock rose 2 1/2 percent to $34.22.

Advanced Micro Devices (NYSE:AMD) is reportedly weighing a breakup or a spinoff. The chipmaker denied the report. Still, “Reuters” cited sources saying the firm is holding preliminary discussions about breaking the company into two entities, or spinning off a business. Shares were 1
1/2 percent higher to $2.62.

An update on Twitter`s CEO shuffle. The company`s board said it`s looking for a CEO with a full-time commitment to running the company. This could be a message to founder and current interim CEO Jack Dorsey, since he`s also the chief of the mobile payments startup Square. The board has hired a firm to help it find a permanent CEO. Shares were off a fraction to $35.55.

General Mills (NYSE:GIS) is the latest food company to get a little healthier. Today, the maker of cereals like Lucky Charms and Coco Puffs announced it`s getting rid of artificial flavors and colors from all of its cereals by 2017. The food company didn`t say how much that upgrade will cost, but says consumers won`t foot the bill. Shares were a few cents higher to close at $56.57.

Medicine`s next frontier. Researchers are looking into things that live on us and in us to treat some very harsh bacterial infections.

Meg Tirrell has more.

(BEGIN VIDEOTAPE)

MEG TIRRELL, NIGHTLY BUSINESS REPORT CORRESPONDENT: For centuries, we believed bacteria could only be bad for us. But more recent research has shown that trillions of bugs that live in and on our bodies can actually be integral to our health.

DIRK GEVERS, JANSSEN GLOBAL HEAD OF MICROBIOME INSTITUTE: There`s ten times more bacterial cells than live on us that we actually have human cells. It turns out there`s more and more so link between those organisms that live in us and some of our health state or disease state.

TIRRELL: It`s called the “microbiome”. And companies are starting to mine it for its potential in all kinds of diseases from rheumatoid arthritis to diabetes to cancer.

Earlier this year, health giant Johnson and Johnson formed a Microbiome Institute. It`s partnering with smaller companies and academic labs to develop new medicines.

SUSAN DILLON, JANSSEN GLOBAL: The science of the microbiome is at an inflection point where we should start to see translation from the basic science to new medicines, new diagnostics, that are really going to change the face of human health.

TIRRELL: One way medicine is already putting it to work, if their treatment of C. difficile, characterized by the CDC as a superbug. It`s often associated with use of antibiotics and it affects as much as 500,000 Americans every year and kills about 29,000.

Registered nurse, Natalie Gurvich, was diagnosed four years ago, after taking a course of antibiotics for strep throat. When it returned earlier this year, traditional medicine didn`t help.

NATALIE GURVICH, FMT PATIENT: I realize next time I take antibiotic eve if I recover this time, I would have 65 percent chance of developing C.
dif again and I didn`t want to be a hostage to this condition.

TIRRELL: In April, Natalie underwent what`s known as FMT, fecal microbiota transplant, a procedure shown to have 90 percent cure rate for C. difficile infections.

DR. CATERINA ONETO, GASTROENTEROLOGIST: It involves the infusion of a one person`s fecal material, fecal suspension that we make, into another person`s gastrointestinal tracts.

TIRRELL: Dr. Caterina Oneto says patients often start feeling better almost immediately and Natalie says the procedure worked for her. Dr.
Oneto is about to start a clinical trial of FMT in irritable bowel syndrome, partnered with Yale and Montefiore Medical Centers, a nonprofit open biome.

Startup company Seres Therapeutics is working on the same problem.
It`s developed a pill that aims to do the same thing, restore balance within the microbiome that eliminates C. difficile. The company has filed to go public. Its ticker, MCRB. The microbiome has already gained steam in medicine and now it`s about to debut on Wall Street.

For NIGHTLY BUSINESS REPORT, I`m Meg Tirrell.

(END VIDEOTAPE)

HERERA: And Meg will have more tomorrow on how the microbiome is being used to make consumer products like deodorant and soap. If you want to read more about it, head to our website, NBR.com.

Coming up, second acts. You might no guess what some older American workers are doing to make extra money in their retirement. We have that story, next.

(MUSIC)

HERERA: Here is what to watch tomorrow. We have the report on durable goods orders, an important economic indicator, another read on the housing market with home sales, and data on the health of the private sector in manufacturing is due out. And that`s what to watch tomorrow.

Some older American workers are looking for ways to supplement their incomes, but they`re not getting traditional jobs. Instead, they are joining the fast growing sharing economy.

Kate Rogers (NYSE:ROG) has more.

(BEGIN VIDEOTAPE)

KATE ROGERS, NIGHTLY BUSINESS RESPORT CORRESPONDENT: As the American work force ages with workers over 65 outnumbering teens for the first time since 1948, according to AARP, some retirees are finding new work in the sharing economy.

Take 69-year-old Judith Gordon in Phoenix, Arizona. Gordon read about Uber in an ad on Craigslist and intrigued by the opportunity driving presented.

JUDITH GORDON, UBER DRIVER: I applied. I love the ad. And I was accepted, but I didn`t take the application for three months because I was in limbo, not sure whether I wanted to be a driver. So, I had a dream, it said to me, I can make a lot of money. So, I went down, picked up my phone, started driving right away.

ROGERS: Gordon now drives as much as 50 hours a week, calling Uber her past time. She says she can makeup to $850 a week as driver partner.

GORDON: I do love meeting new people. Every rider is a new person with a new personality and new things to talk about, and it is actually exciting.

ROGERS: The AARP says about one-third of the American work force is now over age 50. Uber`s driver demographics aren`t far off from that stat.
In a report released earlier this year, Uber said 25 percent of its driver partners are also over the age of 50.

Information about driver demographics from companies like Uber and Lyft mainly, how many drivers total they have is scant. This as law suits played out in California courts over whether drivers of both companies are employees or independent contractors.

For drivers like Don Eason, a 64-year-old retired entrepreneur, employee status doesn`t matter. Eason began driving for Uber nearly nine months ago. He read about the ride hailing startup in the news and was intrigued.

DON EASON, UBER DRIVER: Well, it sounded too good to be true actually. I just told my wife, I said, I`m going to drive a cab. She laughed, and she said you won`t last a week because you hate to drive. I told her, well, I`ve never been paid for it. Let me see what happens.

ROGERS: Now, he`s hooked, driving up to 35 hours a week.

EASON: For somebody that`s retired and for times I drive, I found out the best time for me was weekdays, not at night, not on weekends. And for whatever reason, it worked for me, I make enough money that supplements our income so that we can more vacations every year. That`s the whole gist of this — me and my wife going vacations.

ROGERS: Uber competitors Lyft and Sidecar declined to break out their specific driver demographics. But Lyft says it`s seeing an increase in drivers over 50 and Sidecar says drivers average ages 35 to 45.

For NIGHTLY BUSINESS REPORT, I`m Kate Rogers (NYSE:ROG).

(END VIDEOTAPE)

HERERA: And finally tonight, former Fed Chair Ben Bernanke is, quote, “appalled that Treasury wants to demote Alexander Hamilton`s position on the $10 bill.” Bernanke says that while featuring a woman is a fine idea, it should not come at Hamilton`s expense, since he was the first treasury secretary and help strengthen the financial system.

And last week, we asked you what you thought about change. Here`s the
results: 76 percent of you said leave the $10 bill alone, 19 percent said to change the bill to feature a woman, and 5 percent said you were indifferent. We`ll keep you posted.

And that does it for NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera. Thanks for watching. Have a great evening, everybody, 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) 2015 CNBC, Inc.

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