Transcript: Nightly Business Report – March 31, 2016

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

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR:  Turbulent quarter.  An
ugly start, a calm finish.  But there was one sector that stood out during the past three months for all                                                                          the wrong reasons.

Labor shift.  Net job growth in the past decade has come from contracting
gigs.  And that`s changing a lot more than just how we work.

Coming soon.  What one movie theater is doing to win you back.

All that and more tonight on NIGHTLY BUSINESS REPORT for Thursday, March
31st.

Good evening, everyone, and welcome.  Sue Herera is off tonight.

Well, ball games are never won in the first quarter but they can often be
lost there.  And for the first half of this year`s first quarter, it sure
looked like the investing game for 2016 was over.  Tipped off stocks did
with their worst start to a year ever.  Correction territory for the Dow
and the S&P 500, almost a bear market for NASDAQ.

But then, like that Texas A&M basketball team last week, a furious,
miraculous comeback.  Oil prices rose, recession fears receded, China
settled down, and stock investors started hitting three-pointers.  Well,
today, the first quarter ended and you as the coach of your portfolio
should feel relieved that the game didn`t get away from you.

Those big early declines for the S&P and Dow, they`re gone.  Those indexes
are now both near their highs of the year back in positive territory after
posting their second straight quarterly win.  This the final day of Q1
ended quietly.

The Dow Jones Industrial Average lost 31 points to 17,685.  NASDAQ rose
fractionally.  The S&P 500 was off 4.  As for the NASDAQ, it remains
negative for the year but by less than 3 percent.  A three-pointer in the
second quarter and the NASDAQ gains all even for the year.

The quarter`s most glittering performance, gold.  Best there in 30 years.

Bob Pisani at the New York Stock Exchange had a front row seat to all the
action this quarter.

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT:  The quarter ended on a
quiet note but there were plenty of fireworks along the way.  The S&P ended
essentially flat for the quarter.  But not before a roughly 10 percent
decline from the 1st of January to mid-February on concerns about a
recession.  Now, that never materialized but it gave everyone a scare.

One factor driving the turnaround in stocks was a weaker dollar and large
gains in oil which boosted commodities across the board.  Metals and mining
stocks, for example, are up 39 percent this year.  And gold`s up 16
percent, its biggest quarterly gain in 30 years.

But the news was not rosy for the biotech sector.  The NASDAQ biotech ETF,
a basket of biotech stocks, down 23 percent year-to-date.  Many of the
biggest names seeing a slow-down in sales and earnings after years of
torrid growth.  So, momentum investors have been getting out.

Another problem for biotech is the issue of drug pricing.  High-priced
drugs have drawn the ire of many groups including Congress and that`s an
issue highlighted for the whole Valeant fiasco.  It`s unlikely there will
be wholesale government intervention in drug pricing but with the election
coming up and the possibility drug companies could become punching bags for
politicians, many investors are just sitting on the sidelines.

For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock Exchange.

(END VIDEOTAPE)

MATHISEN:  So, while biotech stood out for all the wrong reasons, it was
the opposite story for industrials amazingly.  That sector went from
laggard to leader with shares of big manufacturers outperforming the
broader market, raising hopes that their profits will follow.

But can this industrial comeback be believed?

Mike Santoli takes a look.

(BEGIN VIDEOTAPE)

MIKE SANTOLI, NIGHTLY BUSINESS REPORT CORRESPONDENT:  The stock market is
warming to the idea of an industrial revival.  Shares of big American
manufacturers have been a roll.  Industrial stocks as a group are up some 4
percent year-to-date compared to a flat S&P 500 index.  And since
industrial giant 3M (NYSE:MMM) reported upbeat results two months ago, the
sector is up 14 percent, more than twice the gain in the S&P 500 since
then.

Meantime, the largest U.S. industrial, GE, has climbed to an eight-year
high.  The question now, is it simply fleeting rebound for a bruising 2015
for industrials?  Or is factory activity truly poised for an upswing?
Economists are starting to see some fresh cause for optimism.  A key gauge
of manufacturing due on Friday is projected to show the first monthly
expansion since last summer.

Goldman Sachs (NYSE:GS) economists this week suggested manufacturing is
indeed turning a corner, pointing to higher freight volumes and firmer oil
prices.

The pullback in the U.S. dollar has also eased pressure on American
producers to sell goods overseas.  Of course, any manufacturing rebound
would likely be fragile, given slowing auto sales and a possible rebound in
the dollar.  At least for now, though, investors are willing to bet that
the worst is over for the industrial economy.

For NIGHTLY BUSINESS REPORT, I`m Mike Santoli at the New York Stock
Exchange.

(END VIDEOTAPE)

MATHISEN:  In Washington, a meeting of the leaders from two of the world`s
largest economies, in fact the two largest, President Obama and Chinese
President Xi Jinping, pledged to cooperate on some major global issues,
including the North Korean nuclear threat, human rights and cyber security.
John Harwood joins us now from Washington.

John, welcome.  Were the leaders able to narrow their differences on cyber
security?  Of course, a topic of supreme interest to businesses.

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT:  I don`t know that
there`s evidence they narrowed differences.  President Obama going into the
meeting said they were going to have candid discussions on those issues
among others that they disagree on.  The main focus of trying to reach
agreements today was on the nuclear issue.  But as part of the regular
dialogue, White House aides call it high-tempo engagement with the Chinese,
those subjects come up on a regular basis.

MATHISEN:  Any breakthroughs on other issues?  It sounds like they weren`t,
but the nuclear one is obviously very pressing, particularly in the Korean
peninsula.

HARWOOD:  The two sides did say they were going to accelerate their work on
climate change.  This is something that they cooperated on leading to that
Paris agreement last year.

They also said that on nuclear security, they were going to hold annual
bilateral meetings.  They held one in February to talk about this issue.
They discussed it again today.  They`re going to make that a regular thing.

This is all part of the administration`s attempt to pivot U.S. foreign
policy to Asia and nuclear security is of shared interest to both sides
because of that volatile regime in North Korea.

MATHISEN:  Turning quickly to politics, John, Donald Trump met with GOP
party leaders in Washington today.  What did they discuss?

HARWOOD:  This was not a meeting set up about the — Donald Trump`s
statement that he might not support the Republican nominee if it`s not him.
This was about the convention.  We could be facing a brokered convention,
fights over delegates.  It`s about how that would work.  Also about general
election coordination, because remember, Donald Trump still is the front
runner in the race.  He thinks he`s going to be coordinating with the
Republican National Committee this fall.  We`ll see if voters give him the
chance to do that.

MATHISEN:  All right, John, thanks very much.  John Harwood in Washington.

Also in Washington was Canadian Prime Minister Justin Trudeau.  In an
interview, he was asked about his country`s economy and being the U.S.`s
largest trading partner, whether he would be open to renegotiating the
North American Free Trade Agreement, which has been a contentious issue
this election cycle.

(BEGIN VIDEO CLIP)

JUSTIN TRUDEAU, CANADIAN PRIME MINISTER:  I think we have to understand
that trade is ultimately good, not just for our countries but for our
businesses and for our workers.  We know that engaging with the world in a
constructive, positive way leads to good jobs and good growth.  I`m not
worried that we`re going to suddenly reopen NAFTA or other trade deals.
The challenge once you reopen it a little bit, they all tend to unravel.
It`s too important for both of our economies to continue to have a strong
trading relationship.

(END VIDEO CLIP)

MATHISEN:  And a report today showed the Canadian economy grew by the most
in three years in January, driven by a rebound in the manufacturing sector.
Latest data being interpreted as a sign the economy may be emerging from
the weight of the commodity rout.

Reagan National Airport in Washington, D.C. was one — is one of the ten
airports across the country where service workers set up picket lines and
walked off the job today.  The protesters say they are being grossly
undercompensated and on the eve of the monthly jobs report tomorrow,
they`re demanding higher wages.

Hampton Pearson has our story.

(BEGIN VIDEOTAPE)

HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT:  The protesters are
workers hired by private contractors to work as wheelchair attendants,
baggage handlers, and sky caps for the airlines.  Many of whom earn less
than $4 an hour plus tips.

The 24-hour strike is the first time workers at Reagan national have tried
to make the traveling public aware of their desire for higher wages and
better working conditions.

MELAT TAMERAT, AIRLINE WHEELCHAIR ATTENDANT:  We get paid $2, some people
get paid $3, and $6.75, which is not fair to us.  In these living costs, we
cannot afford to be getting paid $2, or $3.  We want $15 today.  We demand
to get it.

PEARSON:  Help is on the way.  It`s all part of a nationwide organizing
campaign by the Service Employees Union.

JAIME CONTRERAS, SEIU UNION MEMBER:  The strike today is part of a national
push by airport workers standing up with other underpaid workers in the
fight for 15.  That`s a movement, and to do whatever it takes to have a
union, dignity and respect on the job.

LIESMAN:  Minimum wage critics say the real goal is to boost union
membership.

MICHAEL SALTSMAN, EMPLOYMENT POLICIES INSTITUTE:  For years, the SEIU has
realized that there are segments of some of these service industries that
they think they have an inroad in.  So, fast food is one of those.  I think
contracted airport workers are another.

LIESMAN:  For now, the major airlines are keeping their distance from the
labor dispute.  A statement from their trade association says, we continue
to believe that the appropriate way to address minimum wages is at the
statewide or national level.

The airlines also emphasizing contingency plans, minimize the impact of
today`s walkout on the traveling public.

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

(END VIDEOTAPE)

MATHISEN:  Jobless claims rose for the third straight week.  The number of
workers who applied for unemployment benefits, a proxy for layoffs across
the economy, increased 11,000.  That is the highest level since the end of
January.  But it is still consistent with a strengthening labor market.

Well, the government`s monthly employment report will be released tomorrow.
Expectations are for a 213,000 person increase in nonfarm payrolls.  The
unemployment rate forecasted to remain right where it`s been at 4.9
percent.

Economists on average expect a modest rise in average hourly earnings.

Well, despite what the job data tell us, tomorrow, new research out today
says that temporary and contract workers were the drivers of job growth in
the labor market over the past decade.  According to a “New York Times
(NYSE:NYT)” article, Americans using alternate work arrangements rose to
9.4 million from 2005 to 2015.

Neil Irwin, senior economics correspondent and author of that article,
joins us now.

Neil, good to have you with us.

This is a study that came from a couple of very prominent economists.  Tell
us what the numbers said.

NEIL IRWIN, NEW YORK TIMES SR. ECONOMICS CORRESPONDENT:  Yes, the key idea
is that ten years ago, 2005, only about 10 percent of American workers had
these different independent contractor, freelance, on-call, different
arrangements that aren`t a traditional job.  That had risen to almost 16
percent by 2015.  So last year.

So, that`s a really remarkable increase in a short time.  So, that`s a sign
that the very definition of what is a job seems to be shifting beneath our
feet.

MATHISEN:  So, of all the job growth that has taken place since the end of
the recession, is most of it from people who have contracting or temporary
gigs?  Or not?

IRWIN:  Yes, more than that, more than 100 percent actually, 9.4 million is
the gain in these types of alternate, you know, nontraditional jobs,
independent contracting, and so forth.  Total job growth or total growth in
employment in that same span, 9.1 million.  That means that essentially
more than 100 percent of the jobs gained over the 2005-2015 period were in
these unconventional kinds of arrangements.

MATHISEN:  So, I guess employers like this because it keeps people off the
permanent payroll, but there are strong implications here aren`t there for
benefits and all of the things that typically come with a full-time, on-
payroll job, whether it`s a pension, rare, or workers` comp, or lots of
other things?

IRWIN:  Yes.  I think what we sometimes forget: a job in a traditional
sense is not just about the paycheck.  Part of what you`re getting with the
job is a kind of understanding that your employer will take care of you in
certain ways.  Whether it`s, you know, a sick leave if you get sick, health
insurance, retirement funds, workers` comp, jobless benefits.

So, those are things that kind of protect you.  It`s a form of social
insurance that employers provide in the modern economy.  And these less
conventional independent contractor type of arrangements are often missing
those layers of protection if you`re an employee.

MATHISEN:  Now, if you work for a temporary services firm, however,
sometimes you can get some of those benefits from that firm, correct?

IRWIN:  That`s right.  And also, the Affordable Care Act, Obamacare, has
changed the equation a little bit.  It`s made it easier if you`re one of
these independent contractors living from gig to gig as a freelancer,
whatever it may be, you do have a pathway to get health insurance that`s
more clear than it was a few years ago.  That said, there`s a lot of stuff
traditional employers do that you`re not getting if you`re kind of running
around independent.

MATHISEN:  How many of these contractors are Uber drivers, Neil?

IRWIN:  You know, not as many as people think.  There`s all this buzz
around the gig economy and apps, whether that`s Taxscribe, Uber is the big
one.  This research from Alan Krueger and Larry Katz at Harvard, it`s
actually suggested it`s only 0.5 percent of the workforce are in these gig-
related, app-driven jobs.  That`s compared to 16 percent are in some kind
of independent contractor arrangement.

MATHISEN:  Interesting.  Neil, thank you very much.  Fascinating story
about the changing workplace.  Neil Irwin with “The New York Times
(NYSE:NYT)”.

Well, five top female members of the U.S. Women`s National Soccer Team
(NASDAQ:TISI) have filed a federal complaint, charging the U.S. Soccer
Federation with wage discrimination.  The filing alleges the women earn far
less than their male counterparts on the men`s national team, despite
winning on the field and higher anticipated income.  According to the
complaint, female players earn sometimes as little as 38 percent of what
the men earn on the national team.

Still ahead, the challenges now facing an industry that is usually a strong
performer even when others falter.

(MUSIC)

MATHISEN:  The head of American International Group (NYSE:AIG) sees an
opportunity to shed his company of the too big to fail designation.  But
following yesterday`s court ruling that threw out MetLife`s systemically
important able, AIG`s CEO says he would prefer to work with regulators
rather than taking them to court.

(BEGIN VIDEO CLIP)

PETER HANCOCK, AIG CEO:  I`ve been watching this case closely.  It`s
obviously not over.  It will get appealed.  So, we`ll watch how it
progresses in the higher courts.  And much of the ruling is sealed.  So,
we`ll wait to see what emerges when that gets unsealed.

(END VIDEO CLIP)

MATHISEN:  AIG, as you probably recall, took a $182 billion bailout from
the government when it was near collapse in 2008.  That was the driving
force behind the systemically important designation.

Meantime, GE Capital says the government should drop its too big to fail
tag on it since it has significantly reduced its size.  The unit filed a
formal request with the Financial Stability Oversight Council to have the
label removed.  GE Capital is exiting consumer and leveraged lending and
has reduced its real estate debt and equity holdings.

Hindsight as they say is 20/20.  Today, we learned that 20 years ago,
General Electric (NYSE:GE) was presented with the opportunity to buy Apple
(NASDAQ:AAPL) for just $2 billion.  Today, it is worth $600 billion.

In an interview, former NBCUniversal chief Bob Wright described what
happened during a meeting with then Apple (NASDAQ:AAPL) CEO Michael
Spindler.

(BEGIN VIDEO CLIP)

BOB WRIGHT, FORMER NBCUNIVERSAL CEO:  He gave the pitch in 1996 and he kind
of broke down during the presentation.  He was telling us that the stock is
killing them, the investors were on his back, he can`t get this thing
rolling.  The consensus in the room was, we can`t do — we can`t do
anything with this.  This is way outside of our game.  We were not a
Silicon Valley company or an orientation at that point.  And it was —
there was no supporters at all.

(END VIDEO CLIP)

MATHISEN:  That meeting occurred the year before Steve Jobs returned to
Apple (NASDAQ:AAPL) and, of course, transformed the company.

Well, Anbang is walking away from Starwood Hotels, and that is where we
begin tonight`s “Market Focus.”

The Chinese insurance company pulled its $14 billion bid for the hotel
chain, citing, quote, “various market conditions.”  Marriott and Anbang
have been vying to take over the hotel and resort company.  Marriott`s more
than $13 billion takeover offer still stands.  Shares of Starwood fell
sharply in after-hours trading on the news as you see on that graphic
finishing the regular session down a tick at $83.43.  Meanwhile, Marriott
down following the news after closing off slightly at $71.18.

McDonald`s (NYSE:MCD) wants to expand its presence over in Asia.  Within
five years, the fast food chain plans on adding more than 1,000 franchise-
owned restaurants in its mainland China market and additional locations in
Hong Kong and South Korea.  McDonald`s (NYSE:MCD) currently has more than
2,000 company-owned restaurants in Asia.  Shares fell a fraction to
$125.68.

Chipotle apparently wants to get into the burger business.  The fast food
burrito chain said it filed an application to trademark the name “Better
Burger.”  The company says the move into making burgers is a growth seed
idea.  Shares sprouted 1 percent  to $470.97.

The fitness tracking company Fitbit has shipped 2 million units of its
latest devices which were launched just this month.  The figure surpassed
the company sales expectations.  That news sent shares higher.  Fitbit
spiking 13 percent to $15.15.

The watch maker Movado is raising its quarterly dividend by 18 percent to
13 cents a share, and it is also launching a $50 million share buy-back
program.  However shares fell on weak earnings guidance for the year.
Movado ticked 9 percent lower at $27.53.

Well, consumer spending makes up two-thirds of economic activity in the
United States and despite questions about the lower-end consumer, the
higher-end has held up pretty well, until now.

Courtney Reagan at a conference in New York City tells us why some
executives are growing concerned.

(BEGIN VIDEOTAPE)

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT:  It`s an exclusive
group, typically operating in quiet secrecy.  But today, luxury brand
executives came together at the French American luxury symposium in New
York City to talk about the challenges facing the industry.

Luxury is defined by a number of factors, including exclusivity, heritage,
and, of course, price.  But today`s consumer and current macro economic
influences are challenging the industry.

Participants at today`s conference, companies like Oscar de la Renta and
Tiffany (NYSE:TIF) and Co, and most expect to see sales grow between 3
percent and 5 percent this year, even in the face of several factors that
could derail growth.

ALEX BOLEN, OSCAR DE LA RENTA CEO:  Tourism is particularly challenged.
And I think that the price of a barrel of oil, currency fluctuations, and,
of course, those two are related.  But, also uncertainty in the world,
whether it`s uncertainty about traveling due to fears of terrorism,
uncertainty about a presidential election.  Uncertainty is bad for our
business.

REAGAN:  Much like other consumer groups the categories that wealthy
consumers are spending on is shifting, more toward experiences.  According
to consultancy firm Bain and Company, worldwide luxury sales in hospitality
outpaced overall luxury sales growth last year, making it that much harder
to convince even affluent consumers to spend money on material things, as
some who know the industry well think the showcasing of luxury goods lacks
excitement.

RON FRASCH, CASTANEA PARTNERS OPERATING PARTNER:  I think retailers have to
make their stories more interesting, have a little more vision.  The brands
need to be a little bolder in their confrontations with the department
stores about how consumers are shopping.

REAGAN:  And while high prices for true luxury items like Hermes and Chanel
are accepted among affluent, Frasch does think it takes decades of history
to earn that privilege.  Meaning some brands` prices are just too high.

For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan in New York City.

(END VIDEOTAPE)

MATHISEN:  And coming up, you won`t believe what may be coming soon to a
theater near you.

(MUSIC)

MATHISEN:  Here folks is what to watch tomorrow as we reported the
employment report for March is due out before the opening bell.  Everybody
watches that one.  Auto sales for March also will be released.  And we will
hear from the president of the Cleveland Fed, Loretta Mester, known to lean
in favor of rate hikes, but only on April Fools` Day.

That`s what to watch tomorrow.  Just kidding, April Fools` Day.

Daily fantasy sports operators DraftKings and FanDuel are suspending
contests on college sports indefinitely in all states.  All contests will
end after this weekend`s college basketball games.  This voluntary decision
is part of an agreement with the NCAA.  Both of those companies, meantime,
fighting numerous legal battles in the other states that argue the contests
are games of chance and not of skill.

While regulators are looking at the fast-growing financial tech sector,
which is disrupting the traditional financial services industry, in a
speech today, the comptroller of the currency said his department is
considering new rules that would encourage innovation, but at the same time
prevent undue risk to the financial system.  The companies that have been
creating more efficient payment systems and lending platforms include SoFi,
OnDeck, Apple (NASDAQ:AAPL), and Google (NASDAQ:GOOG).

While a separate report from Citigroup (NYSE:C) says the rise of technology
in the financial services sector could result in a 30 percent decline in
banking jobs across the U.S. and Europe.  That`s about 2 million employees.
It could potentially lose their jobs to startups.  The report describes the
industry as being at a tipping point and it is in the early innings of a
transition.

Well, the future of movie theaters has also been called into question.
While total box office figures have been increased in recent years, thanks
to higher ticket prices, the number of tickets sold in the U.S. has been on
the decline.  That`s because people have more options than ever when it
comes to in-home entertainment.

But as Julia Boorstin reports, one theater is going to great lengths to
reverse that trend.

(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT:  This is the cutting
edge of movie theaters.  The three-screen panoramic theater with surround
sound, called the Barco Escape, launching tomorrow at this Regal Theater
owned by AEG in downtown Los Angeles.

There are new laser projectors, immersive surround sound speakers, and the
lobby is outfitted with fast-changing high-def displays.

TODD HODDICK, BARCO ESCAPE CEO:  We need to raise the bar.  We need to do
something that is so compelling that people put down the iPad, leave the
couch, and actually go to the cinema.  This is why we created Barco Escape.

BOORSTIN:  There`s been an explosion of alternatives to movies, including
more premium content available at home, from Netflix (NASDAQ:NFLX), Amazon
(NASDAQ:AMZN) Prime, HBO and others.

So, theaters are grappling with the fact that the number of movie tickets
sold in the United States has declined 7 percent since 2009.  And the
threat posed by home entertainment will only continue to grow.

Sean Parker`s working on a new company called Screening Room to allow
people to watch movies at home, the very day they debut in theaters.  Plus
nearly half of all U.S. homes are projected to own a 4K TV by the year
2020.  That`s why AEG, which owns and operates sports and entertainment
venues all around the world, is investing in the most high-tech
experiences.

This new Barco Escape technology joining the 4D theater here with seats
that move, wind and smells piped in, which AEG says has been a huge
success.

SHELBY RUSSELL, AEG SENIOR VICE PRESIDENT OF MARKETING:  If we can provide
an immersive experience that there`s a demand for it, people want that.
There`s a young generation of moviegoers that want to be brought into the
movie more.

BOORSTIN:  And this triple screen behind me is accessible enough that
moviegoers all across the country will soon be able to try it out.  It
costs theaters just about twice what it would cost to install a regular
screen.  And Barco`s in talks with all the theater chains to roll it out to
1,000 locations in the next three to five years.

So, the more your living room feels like a theater, the more high-tech
movie theaters will become.

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

(END VIDEOTAPE)

MATHISEN:  And that is NIGHTLY BUSINESS REPORT for tonight.  For Sue Herera
and all of us here at NBR, thanks for watching.  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) 2016 CNBC, Inc.

 

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