Transcript: Nightly Business Report — July 13, 2015

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

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Wall Street rallies and it has Greece to thank, as stocks posed their best three-day rallies since February.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Fragile deal. Greece and its creditors may have reached an agreement. But did it come at a price too steep? And did Germany`s demands go too far?

HERERA: Drowning in debt. The one thing millennials have now that earlier generations did not — massive amounts of debt. Tonight, we start a three-part series called “Millennials and Money” on NIGHTLY BUSINESS REPORT for Monday, July 13th.

MATHISEN: Good evening, everyone, and welcome.

A deal in Greece, stability in China and a stock market rally here on Wall Street. Investors breathed a sigh of relief when they woke up this morning. The word that Greece and its creditors have reached a deal on a fresh bailout. Now, this deal takes the worst-case scenario off the table and eases the fear that the country will leave the currency union in Europe in the near term.

That was enough to allow investors in Europe and the U.S. to vote with their wallets and send stalks higher. By the close, the Dow Jones Industrial Average rose 217 points to finish at 17,977. NASDAQ gained 73.
The S&P 500 added 23 points.

HERERA: But despite the deal between Greece and its creditors, there are still a number of uncertainties surrounding the country`s long term material financial fate. And this deal came at a very high price, including tough conditions no one is sure is the country`s leaders can actually fulfill.

Michelle Caruso-Cabrera report tonight from Athens.

(BEGIN VIDEOTAPE)

MICHELLE CARUSO-CABRERA, NIGHTLY BUSINESS REPORT CORRESPONDENT:
Greece is still in the euro zone but just barely. After an all night negotiating session in Brussels, the country emerged with a worse deal than one Greek voters rejected a little more than a week ago.

Pension reform, which will force Greeks to retire later and contribute more to their retirement. Higher sales taxes on many products. Reforms to the labor markets and product markets.

And a brand new requirement — Greece must transfer ownership of $50 billion worth state assets to an independent fund. Those assets will be sold over time to help recapitalize Greece`s creaking banks and to pay back some of what Greece owes to the rest of Europe.

Greek Prime Minister Alexis Tsipras told reporters the deal will persuade markets that Grexit is no longer an option.

But before Greece any new money, Tsipras and the Greek parliament must pass and implement tax reform in the next 48 hours. Only then will finance ministers meet to begin the process of creating a full bailout program.

And the situation in Greece is dire. The euro zone estimates the country will need more than $80 billion in euros in support over the next three years. That`s on top of the $240 billion they`ve already been awarded in two previous bailouts. Hence, why other leaders want proof of performance first.

JEROEN DIJSSELBLOEM, EUROGROUP PRESIDENT: A lot of that trust was lost and it has to be rebuilt. It still has to be rebuilt.

CARUSO-CABRERA: The most immediate question on the minds of Greek citizens and businesses, when can the banks reopen. The answer, likely not until they get a fresh round of investment and billions of euros worth to recapitalize them. That`s likely not going to happen until the deal is finalize and the Dutch finance minister said today that`s going to take at least a month. Greece still has a very tough road ahead.

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

(END VIDEOTAPE)

MATHISEN: Greece owes Germany the most amount of money of any country in the euro zone and that partly explains why Germany was flexing its muscles throughout the talks and didn`t back down during the marathon negotiations over the past weekend.

But as Steve Liesman tells us from Berlin, many critics say Germany went too far.

(BEGIN VIDEOTAPE)

STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: If it wasn`t clear already that German Chancellor Angela Merkel had claimed the title “Iron Lady of Europe” from Margaret Thatcher, the weekend`s hard line negotiations with Greece left no doubt. She went into the talks demanding Greece either agree to severe economic reforms or leave the euro common currency, and that Greece backed first, and she won.

ANGELA MERKEL, GERMAN CHANCELLOR (through translator): It has to be adopted by the Greek parliament, by Wednesday, before we can actually task our parliament to look at the matter.

LIESMAN: But the question is whether Merkel went too far. Criticism of the deal exploded in social media with the #thisisacoup used hundreds of thousands of times across Europe and the U.S. Some said that Merkel undermined decades of trust built up across Europe, especially by threatening a Grexit.

SIMONE PETER, GREEN PARTY CO-LEADER (through translator): I am accusing the chancellor that she, Mr. Schaeuble and (INAUDIBLE) created a dangerous situation by floating the idea of a temporary Grexit.

LIESMAN: But Merkel has shown in her ten years for office that her ear for domestic German politics is finely tuned. “Not One Cent” more screamed the cover of the conservative focused magazine this weekend.

UNIDENTIFIED MALE: We pay, we pay, we pay and they do nothing.

LIESMAN: If the Greek parliament and the prime minister can deliver, the deal Merkel crafted virtually guarantees that the German parliament to be hauled back this Friday from summer vacations, will reluctantly support tens of billions of euros more in aid for Greece.

If it all works out despite the criticism, if Greece and the euro zone are saved intact, and if Merkel can maintain her domestic popularity, then the new Iron Lady of Europe will surely have proven her mettle.

For NIGHTLY BUSINESS REPORT in Berlin, I`m Steve Liesman.

(END VIDEOTAPE)

HERERA: And investigators could wake up to another deal tomorrow morning, if late day reports are correct. NBC News and the associated press are reporting that there are indications the nuclear deal between Iran and world powers is coming together and could be announced overnight.
The oil markets are paying very close attention because an agreement could potentially lift Western sanctions on Iranian crude exports. Today, the price of West Texas crude settled down 1 percent to $52.20 a barrel.

MATHISEN: And the Organization of Petroleum Exporting Companies or OPEC is raising its forecast now for global demand growth this year. In its monthly report, the cartel also said it expects demand growth in 2016 as well. OPEC also said it anticipates that the market will be more balanced next year as China uses more oil and the supply from the North American shale deposits grows more slowly.

HERERA: Meantime, the average price of gasoline has dropped 2 cents over the past two weeks to a national average of $2.83 a gallon, according to the Lundberg Survey. But don`t tell that to Californians. Gas prices in that state are spiking, despite the overall downward trend.

Jane Wells in Los Angeles explains why.

(BEGIN VIDEOTAPE)

JANE WELLS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Gas prices in California are closing in on $5 a gallon again. Here it`s $4.95. In some places, it has topped $5 a gallon. This — it isn`t even over yet, they`re telling us.

Prices on average on Friday were $3.66 a gallon according to Gas Buddy. They`re now $4.08 a gallon, though I can`t find that it cheap anywhere. That`s an 11 percent change in one weekend. And we`re expecting to see them go higher this week.

What`s the deal? Well, nobody is sending their oil to California it is not worth it on the pricing until now. And we can`t make enough of our own. Inventories are at a troubling level, according to Tom Kloza at Oil Price Information Services. Plus, there are refinery issues to make California special blend of gas and Exxon-Mobil refineries still recovering from a February explosion.

Spot prices have tripled from their lows last winter. Kloza says he`s never seen a six-month swing like that.

What will happen next? Well, there are two ships bringing oil to California right now. It takes about three weeks to get through the refining process. The high prices we`re seeing now will encourage others to begin shipping their oil here, bringing it into the state.

Kloza says we should see prices start to drop anywhere between five days and five weeks and in five months, California gas prices should be a dollar lower than they are now, though still higher than the national average.

For NIGHTLY BUSINESS REPORT, I`m Jane Wells in Los Angeles.

(END VIDEOTAPE)

MATHISEN: Wow!

But regulators say there is no single reason why the treasury market was hit with extreme volatility last October. In a joint report issued between Treasury Department, the Federal Reserve and other agencies, a number of factors were cited that may have contributed to the so-called bond market flash crash, including the growing role of high frequency trading.

Peculiar moves in the bond market are closely watched because bonds are perceived as safer than stocks and other investments. Today, the yield on the ten-year treasury rose above 2.4 percent.

HERERA: And from bonds to stocks. Earning season starts in earnest tomorrow and investors will be watching what many of the big name companies say. But their results and their forecast come at a time when many of the stock prices have fallen sharply from their highs, despite the recent market upswing.

Dominic Chu takes a look at why investors are approaching this earning season with caution.

(BEGIN VIDEOTAPE)

DOMINIC CHU, NIGHTLY BUSINESS REPORT CORRESPONDENT: There`s a reason why many investors are still scared about what`s happening in the U.S.
stock market. Sure, it looks like the problems in Greece have calmed down for now as have the concerns over the Chinese market.

Even though we managed to bounce after the reason pull back, an increasing number of individual stocks are still showing signs of weakness.
Over half the members of the large cap Russell 1000 index have fallen by 10 percent or more since highs over the last year. That means over 500 larger cap stocks are in correction or even bear market territory. Among them are companies like railroad operator CSX (NYSE:CSX), computer chip giant Intel
(NASDAQ:INTC) and oil services giant Schlumberger (NYSE:SLB). All three of those companies are slated to report earnings later on this week.

And some experts think there`s a reason to proceed with caution.

BURNS MCKINNEY, NFJ INVESTMENT GROUP: Given the earnings growth this year is expected to be a more muted, any where in zero percent to 2 percent right now, that would also point to more muted stock market returns over the next six to 18 months.

CHU: Not everyone is as optimistic about corporate earnings growth, and the overall picture for U.S. stocks could be helped along by the sense that America is a safer market to be in, at least on a relative basis.

JONATHAN GOLUB, RBC CAPITAL MARKETS: There are two key reasons request the market is likely to do well in the six to 12 months. The first one is that earnings are poised to surprise in the upside, to come in better than expectations. And the second one is as the fed renormalizes its rate, it should actually convince investors that business conditions are renormalizing as well, which should be a big positive.

CHU: Ultimately, it`s going to be more of a balancing act for investor portfolios and about evaluating risk tolerances and the context of an overall financial plan. Still, with as many stocks there are in relative downward trends, caution is going to be an investing theme going forward, especially with earnings season getting into full force this week.

For NIGHTLY BUSINESS REPORT, I`m Dominic Chu.

(END VIDEOTAPE)

MATHISEN: Still ahead, the nation`s largest cable company is doing something no cable company has done before. But will it win over the cord cutters?

(MUSIC)

HERERA: The nation`s largest cable operator Comcast (NASDAQ:CMCSA)
(NYSE:CCS) is looking to cash in on cord cutters. The company is offering its own streaming service for its broadband customers. Unlike other services like Netflix (NASDAQ:NFLX), the new venture is being offered by a mainstream cable company and that`s an important sign for a rapidly industry.

Julia Boorstin takes a look.

(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: With Comcast
(NASDAQ:CMCSA) (NYSE:CCS) shares trading at a 52-week high, the nation`s largest cable operator is looking to cash in on demand for alternatives to cable, with Comcast (NASDAQ:CMCSA) (NYSE:CCS) Stream, a new Internet delivered TV bundle for broadband-only subscribers.

TUNA AMOBI, S&P SENIOR ANALYST: I think it comes down to, you know, being proactive and kind of somewhat defensive in the face of competition from online video offerings.

BOORSTIN: For $15 a month, Comcast (NASDAQ:CMCSA) (NYSE:CCS) Xfinity Internet customers can add on a bundle of broadcast networks plus HBO, and the cloud DVR. Unlike traditional cable bundles, there are no commitments, equipment, fees. Users can sign up and download the app.

Comcast`s new app is launching in Boston, Chicago and Seattle this year, before rolling out the Comcast (NASDAQ:CMCSA) (NYSE:CCS) entire footprint in 2016. This puts Comcast (NASDAQ:CMCSA) (NYSE:CCS) into direct competition with Dish`s Sling TV as well as Verizon`s slim down bundle.

AMOBI: There is something to be said about the scale that Comcast
(NASDAQ:CMCSA) (NYSE:CCS) offers on the broadband side. So, definitely, I think that will play in their favor. And also the ability to, I think, quickly ramp up the content offerings. It will be another potential advantage over time, given the breadth and depth of the relationship that Comcast (NASDAQ:CMCSA) (NYSE:CCS) has.

BOORSTIN: But Comcast (NASDAQ:CMCSA) (NYSE:CCS) new services is limited, not just because it is not including any cable channels other than HBO. Subscribers won`t be able to stream directly to their TV sets and they can only stream to their other devices within their homes.

And then, there is the question of whether it could steal customers from Comcast`s bigger, higher cost bundle, an issue Amobi says the company is clearly watching as it carefully rolls out this new offering.

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

(END VIDEOTAPE)

HERERA: And Comcast (NASDAQ:CMCSA) (NYSE:CCS) is the parent company of CNBC, which produces this program.

MATHISEN: And we begin tonight`s “Market Focus” with a nearly $16 billion energy deal.

Marathon Petroleum`s master limited partnership will merge with MarkWest Energy Partners (NYSE:MWE) (NYSE:EPL) in a cash and stock deal.
MarkWest splits natural gas into other fuels. The combined company will have a market cap of more than 20 billion bucks. Marathon Petroleum popped nearly 8 percent to $58.78. MarkWest Energy surged almost 14 percent to $68.09.

Depomed announcing today that it has taken steps to defend itself from a hostile takeover about a week after Horizon Pharma went public with its nearly $2 billion buyout plan. According to a filing, Depomed adopted a shareholder rights plan that would be triggered if a group or person takes a more than 10 percent stake in the firm. Depomed was one 1 higher to $30.51. Horizon Pharma fell nearly 3 percent. It closed at $34.97.

The consumer products company Jarden (NYSE:JAH) Corp has reached an agreement to buy the privately held disposable dinnerware company Waddington Group. The nearly $1.5 billion deal to buy a lot of plastic forks. It`s expected to expand Jarden`s product offerings. It already owns brands like Crockpot and Yankee Candle. Shares rose almost 5 percent to $54.78.

HERERA: Well, the fight for retail domination just escalated. Last week, we told you Amazon (NASDAQ:AMZN) will host a huge sale called Prime Day, similar to Black Friday. Well today, Wal-Mart (NYSE:WMT) said it will launch a rival sale on Wednesday. Wal-Mart (NYSE:WMT) rose 1 percent to $73.88. Amazon (NASDAQ:AMZN) was up almost 3 percent to $455.57.

U.S. antitrust regulators are looking into Apple`s new streaming music service, that`s according to a Reuters report. Apple (NASDAQ:AAPL) takes a
30 percent cut of all in-app purchase for digital goods and some streaming companies are complaining that Apple`s cuts forces them to charge more in the App Store, therefore eroding their profit margins.

Still, Apple (NASDAQ:AAPL) was about 2 percent higher to close at $125.66.

Starbucks (NASDAQ:SBUX) is leading a multi-company initiative to hire
100,000 young low-income minority workers over the next three years. Other companies involved include Alaska Air, CVS (NYSE:CVS) Health, Microsoft
(NASDAQ:MSFT) and Wal-Mart (NYSE:WMT). Starbucks (NASDAQ:SBUX) says that while some new hires will replace employees who leave, the majority will be new entry-level positions. The stock rose 2 percent to $55.70.

MATHISEN: America, in case, you haven`t noticed is getting older. In fact, within two decades, people over age 65 will outnumber those under 18.
So, not only change the face of America but will strain family finances, a topic that was discussed today at the 2015 White House conference on aging.

In his speech, President Obama says saving for retirement has become increasingly difficult for many Americans.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: A lot of folks out here who work really, really hard. But at the end of the day, just still don`t have enough of a nest egg. In today`s economy, preparing for retirement has gotten tougher.

(END VIDEO CLIP)

MATHISEN: Here to discuss how families and financial services firms that served them need to adopt is Andrew Sieg. He`s head of global wealth and retirement solutions at Bank of America (NYSE:BAC) Merrill Lynch.

Andy, welcome. Good to have you with us.

ANDREW SIEG, BANK OF AMERICA MERRILL LYNCH: Tyler, thank you.

MATHISEN: You know, it used to be that people lived 12, maybe 15 years in retirement. And now, increasingly, they`re living 20, 25, even 30 years in retirement. That`s a big savings gap. How do you suggest that people make up for it?

SIEG: Well, it`s a big savings gap. By the way, Tyler, that`s why today`s conference at the White House was so well-timed, actually. This is a moment that we need to think about a framework to support the aging of the baby boomers, 10,000 baby boomers a day are reaching age 65. They`ve got a lot of topics they need to think about. Money is certainly one of them.

But there are also families look very different today than they have in the past. People are making decisions about when to leave work, when to potentially go back to work. And health care looms extremely large for most families, because long term care could drain everyone`s piggy bank, essentially.

HERERA: You know, the other issue, Andrew, is that a lot of people feel that there`s no way they can save enough for retirement, so increasingly they just don`t save. Or they`re trying to pay the bills that they have to pay now.

SIEG: Well, I think your point is exactly right. It is critical that workers get involved in workplace savings programs very early in their careers. The best way to save is to do it in an automatic way, the signing up for a 401(k) plan for example. If there are millennials who are watching tonight for a millennial, paying down your student debt and getting out from underneath it as quickly as possible, that`s a version of saving and I would argue, by the way, that investments in education, in human capital are a form of saving as well.

And for those who are in retirement, we`re seeing a very strong trend that work does not end at age 65. Many, many Americans are looking at work today as something that`s going to stretch on into the late 60s and into their early 70s. And it is something they want to do, frankly, not something they`re being forced to do financially. They view it as positive news.

MATHISEN: One of the thing that many families including my own have faced in recent years, and I know that you and the financial services industry more broadly are contending with, is the decline in cognitive ability that accompanies ageing which makes decision making tougher. It means that you really have to be very careful in your planning and the setting up of trusts.

What do you recommend to families there?

SIEG: Well, Tyler, great question, because if you look at Americans over age 85, 45 to 50 percent are suffering from Alzheimer`s or another form of cognitive decline, dementia and so on.

So, this is a key topic. First, families need to talk about these topics. In many cases, Alzheimer`s or another situation thrust themselves upon a family and they`re really not prepared. You need to think clearly about how financial decision making is going to pass from one family member to another. From the perspective of financial services firms, we`re doing a lot to try to better train advisers and to work with regulators about how to handle all of the topics of flow from cognitive decline.

But as you can imagine, there are concerns the clients have around privacy and we`re all in a much better position. Families have spoken early and often. If couples have discussed how they`re going to essentially have a living will for their finances.

MATHISEN: Very good advice. Andrew Sieg, we appreciate it. Andy is with Bank of America (NYSE:BAC) Merrill Lynch.

HERERA: And coming up — Andy just mentioned the millennials and they are a growing influence. And today, they make up the largest portion of U.S. workers. But there`s one thing that sets this generation apart. The first part of our series, “Millennials and Money” is next.

(MUSIC)

MATHISEN: Here is what to watch tomorrow, folks. Earnings from Dow components Johnson and Johnson and JPMorgan (NYSE:JPM) will be at the top of a long parade. Retail sales are out, an important gauge of spending.
Also on the data front, import and export prices has a read on business inventories, and that, folks, what to watch Tuesday.

HERERA: Union officials and Detroit`s auto executives begin contract talks today. General Motors (NYSE:GM) CEO Mary Barra kicked things off with bargaining that will determine labor costs for Detroit`s big three and the nearly 140,000 factory workers at those firms. The issues that they will be hammering out include health care, pensions and whether to restructure the current two-tier wage system.

MATHISEN: Airlines collected a record amount of money from extra fees last year. Revenue from checked bags, changed reservations and a host of other add-ons jumped to about 20 percent to an all time high — are you ready for this? — $38 billion. That`s according to a studio by IdeaWorks Company, and CarTrawler. The companies that collected the most, United, followed by American, U.S. Airways and Delta.

HERERA: The nation`s largest public pension fund fell just short of its annual return target. This is the CalPERS, the California Public Employees Retirement System, deals with a slowdown in the markets and weak private equity returns. Nonetheless, it`s three and five-year targets far exceeded expectations. CalPERS is an important bellwether for how other large pensions will perform across the country.

MATHISEN: Now to those millennials, those folks born in the early 1980s, to the early 2000s. Today, we start a three-part series looking at this generation. Millennials currently make up the largest portion of U.S.
workers, by the way, and some estimates say they will make up half the workforce in the next five years. By that time, they`re expected to spend nearly a trillion and a half dollars a year.

But, right now, as Sharon Epperson tells us, this group is saddled with massive amounts of debt.

(BEGIN VIDEOTAPE)

SHARON EPPERSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Twenty-seven- year-old Brannon Will is no stranger to debt.

BRANNON WILL, 27-YEAR-OLD: I have debt both from college, student loans, and I have some credit card debt.

EPPERSON: Like many in his generation, he had to borrow money to finance his college education. The average millennial in their early 20s has about $13,000 in debt. By their late 20s, that figure triples to $47,000.

And the overall debt load for older millennials jumps to almost $70,000, according to data from iQuantifi.

Financial adviser Douglas Boneparth says the ramifications of student debt are far-reaching.

DOUGLAS BONEPARTH, LIFE AND WEALTH PLANNING VICE PRESIDENT: It is saddling a generation, the older end of the generation.

EPPERSON: The growth in student loans is crowding out other times of debt, according to research from TransUnion.

In the last decade, the different times of loans people carry has changed significantly, especially for younger borrowers largely due to student debt. Ten years ago, student loan debt accounted for about 13 percent of total debt for young adults, ages 20 to 29. By the end of last year, it had jumped to 37 percent for that age group.

WILL: I do feel like my debt sets me back in the grand scheme of thing as far as buying a home or whatever the case may be. I think it is a priority to get it taken care of now.

EPPERSON: Many borrowers are unaware of several options to help them pay off their loans, like income-based repayment plans, which calculates a borrower`s monthly loan payment based on their salary. But Boneparth says while these plans can help free up cash flow, borrowers may take longer to pay off student debt. Negotiating for higher pay may be a better strategy.

What could earning an extra $5,000 a year mean for a new grad today?

LAUREN LYONS COLE, CERTIFIED FINANCIAL PLANNER: That can add up to half a million dollars in extra earnings over the course of your lifetime.
So, it`s far easier than cutting coupons or trying to budget. It`s a really good way to impact your bottom line.

EPPERSON: With a new job, Brandon Will has been able to increase his monthly student loan payments. He is eager to move on to the next stage of his life. But he knows it will take time.

WILL: Within the near future, I would like to have the student loans paid off. I would like to have the credit cards paid off. And be in a great position where in the near future, I may be looking to, you know, buy a home, focus on the other things as I further my life.

We`ll see. We`ll see what happens. I don`t know for sure.

EPPERSON: For NIGHTLY BUSINESS REPORT, I`m Sharon Epperson.

(END VIDEOTAPE)

MATHISEN: Because of the massive debt levels many millennials have become savers and are planning for the long term earlier than other generations. That`s good.

But there`s one thing that`s holding them back financially. Find out what it is tomorrow in the second part of our series, “Millennials and Money”.

HERERA: Look forward to that.

MATHISEN: They are everywhere, these millennials. They`re all around us here.

HERERA: They are, especially around here.

MATHISEN: Yes.

HERERA: That does it for NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera. Thanks for watching.

MATHISEN: And we like them. They`re very nice.

HERERA: They are very nice.

MATHISEN: I`m Tyler Mathisen. Have a great evening, everybody.
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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