Transcript: Nightly Business Report – May 30, 2016

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

And welcome to a special Memorial Day edition of NIGHTLY BUSINESS REPORT.
I`m Tyler Mathisen.  Sue Herera has the evening off.

And while it is still only May, not much left of it at that, this weekend
did mark the unofficial kickoff to summer and while it is normal to be
preoccupied with the weather and vacation, this summer could be a very busy
one for you and your money — from a possible interest rate hike to the
political conventions and a stock market keeping a wary weather high on

And that`s where we will begin tonight, Wall Street.  Dominic Chu takes a
look at the unknowns facing the summer market.


Day comes around, the old market cliche gets passed around, “sell in May
and go away.”  In other words, are you better off taking a vacation from
the markets and enjoying what you can during a summer vacation, like in
summers past, this year, there are a number of reasons why markets could
get a bit jittery.

JOE TANIOUS, BESSEMER TRUST:  I think as we look at head winds or we think
about what the cause markets to falter perhaps in the months to come, not
only is the Fed raising rates, potentially, a source of volatility
depending on if they manage expectations properly.  Of course, the Brexit
vote, the referendum on whether or not Great Britain chooses to stay with
the European union or leaves the European Union certainly a source of
volatility and could become a headwind.

CHU:  A potential interest rate hike from the Fed is probably one of the
biggest unknowns in the market.  No one really knows for certain how it
will be received overall, but many still remember the market volatility
that happened in the weeks following the Fed`s last interest rate hike back
in December of last year.

Now, add on to that what could happen in the United Kingdom if it votes to
leave the European Union, oil price and energy stock worries and whether
corporate profits in America can rebound and you can see why some traders
are staying a bit cautious.  But the story is not all gloom.

KATE WARNE, EDWARD JONES:  The combination of modest economic growth and
rising earnings helps stocks power higher in the past, we think that`s
likely to be the case both in the summer and through the rest of the year.
Investors should stay invested, not sell in May.

CHU:  Last summer, investors grappled with one of the biggest stock market
pullbacks in recent memory.  Oftentimes, the amount of trading that happens
during the summer months really slows down as people take various
vacations.  Less trading volume leaves open the possibility of more
volatility.  And with a list of potential market catalysts in the next few
months, vigilance will be key.



MATHISEN:  Joining us now to talk more about what lies ahead for the
markets and the economy this summer is Richard Weiss.  He`s senior
portfolio manager at American Century Investments.

Rich, welcome.  Good to have you with us.

Let`s take the easy question first, should I sell in May and check back in
after the elections or should I just stay with what I`ve got?  What do you

place winner, the runner-up.  I guess we`d prefer that we position in May
for the coming months and potentially for 2017.

Selling in May indicates that you think the market is going to go down,
you`re not going to make any money and you`re going to stash your money in
cash.  I`m not so sure about that.  I think you can reposition smartly for
the coming economic environment to the extent we`re at an inflexion point
or turning point economically and financially, potentially to reposition

MATHISEN:  So, give me some specifics here.  What is the economic
environment you expect, quickly, and then how do I reposition?

WEISS:  Right, well, fundamentally economically we`re slowing down.  I
don`t think there is any question about that.  The U.S. is looking to grow
at best 2 percent, maybe even 1.5 percent real terms this year, the
international economy, the major ones, less than that.  And we`re not
getting much support either from the government sector, obviously with the
elections in the way or the corporate sector.

So, it really all rests on the consumer and the consumer is very weak,
muddling along at 2 percent rates.  So, what this indicates is we`re
slowing down, we`re likely to turn the corner potentially sometime next
year into recovery, but for now, there is a slowdown.  The way to position
for that is to grab on the early cycles, the early cycle sectors.
Financials is a good one.  We have seen some movement there already.

I think you`ll have plenty of time this summer to buy on the dips and
financials and build a solid portfolio weighted heavily toward the early
sectors be well-positioned for next year when we potentially post-election,
begin to focus on the domestic economy, regroup and recover.

MATHISEN:  Richard Weiss, thank you so much for being with us.  Appreciate
your insights tonight.

Richard Weiss is with American Century Investments.

Well, the class of 2016 is walking into one of the best job markets for
college grads in years.

As Hampton Pearson tells us, recovery from the 2008 recession and a more
skills-oriented economy have employers looking for more and more college


2 million college graduates will have lots of employers anxious to put
their skills to use.  Employers expect a higher 5 percent more graduates
from the class of 2016 than last year, according to a highly regarded
survey from the National Association of Colleges and Employers.

The unemployment rate for college graduates has been cut in half in the
last five years from a high of 8 percent in 2010 to 4 percent last year.

They`re taking about two-thirds of all of the good jobs in this recovery
and the high school people are the last to be hired.  So, it`s been since
about 2010 that things have been getting slowly better.

PEARSON:  In 2015, degree holders earned nearly $49,000 a year versus just
under $24,000 for high school graduates.  But that is offset by the $37,000
in student loan debt on average for the class of 2016.

College job placement experts say it all comes down to a simple rule, what
you make in salary depends on what you take for courses.  With employers
and job seekers putting a premium on jobs in the new economy, in
technology, computers, and, yes, business getting the most attention.

CARNEVALE:  The employer attitude pretty much is we have got the jobs,
we`re having trouble finding the people who really are qualified, which is
why the college wage premium, the value of college over high school, has
gone from 39 percent in the early `80s to 85 percent now, they`re chasing
the best talent with the most money.

PEARSON:  For this generation, the only thing more expensive than going to
college may be the cost of not going.  But the experts say even with an
improving job market, the transition from college to career will be at
least two years.



MATHISEN:  Over the past few years, the concerted effort to hire military
vets is starting to pay off.  Walmart says since it started its “Welcome
Home” initiative three years ago, it hired more than 130,000 U.S. veterans.

But Walmart is not alone.  In fact, the unemployment rate for post-9/11
veterans has hit nearly an eight-year low and did so last month.

But as Dina Gusovsky tells us, while progress has been made, more can be


recipient and retired Army Captain Florent Groberg knows a thing or two
about hard work and sacrifice.

all be grateful for.

GUSOVSKY:  But all of that experience didn`t prepare him for the working

know how to effectively network, how to reach out to individuals in my
field and transition over to corporate America.

GUSOVSKY:  Now, Groberg is partnering with LinkedIn (NYSE:LNKD) to teach
vets about the importance of networking.  He`s also working to try to get
more hiring managers to pay attention to the jobs skills veterans have to
offer.  So far, he`s met with companies like IBM, HP, Google (NASDAQ:GOOG)
and JPMorgan (NYSE:JPM) Chase.

GROBERG:  We are adaptable.  We are flexible.  We`re mission-centric.
We`re dedicated.  We`re loyal.

We`re sponges as well.  We learn quick.  We`re going to make our mistakes,
that`s a fact.  But we`re not going to make that same mistake twice.

GUSOVSKY:  A recent hearing on Capitol Hill focused on hiring veterans
specifically in the technology sector.

REP. BRAD WENSTRUP (R), OHIO:  We`re highlighting the tech industry today.

GUSOVSKY:  Representatives from Microsoft (NASDAQ:MSFT), Uber and Amazon
(NASDAQ:AMZN) were among the folks testifying.

BRIAN HUSEMAN, AMAZON:  Our commitment to the military does not end once
candidates are hired.  Once employed at Amazon (NASDAQ:AMZN), we connect
them with our internal employee network of veterans that we call the Amazon
(NASDAQ:AMZN) Warriors.

GUSOVSKY:  Amazon (NASDAQ:AMZN) pledged to hire 25,000 veterans in the next
five years and Uber said the company had already fulfilled its goal of
employing 50,000 veterans.  There is also a need for veteran candidates in
the health care sector.  Ascension, the largest nonprofit health care
system in the United States recently partnered with the Department of
Veterans Affairs to provide medical services to veterans who may not have
access to a V.A. facility or who have to wait a long time for an

2,000 of our employees who are veterans.  We want to make sure we
understand the true veteran experience.  We understand that veterans have
different needs than some of our other patients.  Right now, in many parts
of the country, the veterans are most vulnerable.

GUSOVSKY:  The unemployment rate for veterans who served on active duty
since September 2001 hovers at around 5.8 percent, higher than the national
average.  And according to experts, about half of veterans leave their
first jobs after the military within one year of transitioning home,
statistics that advocates and veterans themselves are trying to change.

GROBERG:  I think we can be successful in any sector if given the right



MATHISEN:  Summer is the season of travel.  What can we expect on the roads
and at airports over the next few months.  First, some words of wisdom from
our business leaders to recent grads.


SHERYL SANDBERG, FACEBOOK COO:  Build resilient organizations.  If anyone
can do it, you can, because Berkeley is filled with people who want to make
the world a better place.  Never stop working to do so, whether it is a
board room that`s not representative, or a campus that`s unsafe.

LARRY ELLISON, ORACLE EXECUTIVE CHAIRMA:  Remember this, graduates.  When
people start telling you that you`re crazy, you just might be on to the
most important innovation in your life.


Of course, the other possibility is you`re crazy.


MATHISEN:  As the summer churns on, the presidential election will dominate
the news cycle.  Things will really heat up starting in July.  With the
Republican and Democratic conventions, Eamon Javers joins us now to talk
more about this.

Let`s talk about those conventions, Eamon.  This summer, when will we see
vice presidential picks by the two nominees and who are some possibles?

hard to say, Tyler, because this year has been so unlike other years that
we have seen in past election cycles.  But if history is any guide, you`ll
see the vice presidential names start to really float in those weeks before
the July presidential conventions in Cleveland and Philadelphia for the
Republicans and for the Democrats.  So, you might see a drum roll in the
days leading up to that, and then a big announcement just before the

That`s what we have seen in the past.  As for who the candidates are,
because this is such an unusual year, with such unusual candidates, it is
very hard to say who we`re going to see for the vice preside in both
parties.  Typically, they`ll look for some kind of regional balance,
demographic balance, and other things to play against the strengths of the
nominee at the top of the ticket.  This year, though, it is anybody`s

For Donald Trump, for example, would he pick a Senate insider like a Bob
Corker or would he go with Chris Christie, who`s gubernatorial experience,
or would he go with somebody else entirely that we haven`t even thought of
yet.  Those are all possible names that are out there.

And for Hillary Clinton, you`re looking at any one of a number of people
potentially, a lot of folks in the Democratic Party would like to see
Elizabeth Warren, but would Hillary Clinton have two women on the ticket?
Would that be considered a strength or a weakness going into November?

And then what about — a total wild card for Hillary Clinton, Mark Cuban,
the billionaire.  His name has been mentioned.  He certainly hasn`t been
ruling himself out necessarily for that slot.  There are a couple of names
out there and if they want to go with a wild card this year or somebody
insider, an establishment, that`s the big question.

MATHISEN:  A shark, a heart beat away, how about that?

JAVERS:  That`s right.

MATHISEN:  I can`t wait for the debates.  We didn`t have enough of them
during the primary season.  What of the Clinton/Trump debates to be like,
presuming Mrs. Clinton is able to best Bernie Sanders?

JAVERS:  I think the only thing we can say for sure about these debates
coming up this year is that they`re going to be extremely highly rated.
Everyone is going to watch this to see what happens here.

And I think a lot of the conventional wisdom here inside Washington, inside
the beltway is Hillary Clinton will do well in those debates, but Donald
Trump has a way of getting inside your head when you`re on the debate stage
against him.  So, it`s going to be very difficult for Hillary Clinton.

MATHISEN:  Eamon Javers, thanks very much, reporting tonight from

If you were on the road this weekend, you probably weren`t alone.  AAA
expected more than 38 million Americans to travel, go somewhere, majority
hitting the roads.  That will be the second highest Memorial Day weekend
volume on record.

And as Jackie DeAngelis tells us, it is because of one thing.


is coming from cheap gas.  The national average for a gallon of regular is
$2.30 today on AAA`s website, up 16 cents over the last month.  But down 44
cents from this time last year.

Still, not everyone is satisfied.

UNIDENTIFIED FEMALE:  I think gas prices should be even lower, but they`re
not as high as they were last year around this time.  I do drive a lot with
my job and everything, so gas prices are very important.

UNIDENTIFIED FEMALE:  I`m going to drive, I`m going to drive.  If the gas
prices are high, I`m not going to be as happy as I`m driving, but I`m still
going to go where I need to go.

DEANGELIS:  Top destinations for road travel, Orlando, Myrtle Beach,
Washington, D.C., New York, and Miami.

So far this year, Americans have saved about $18 billion on gasoline alone,
where those savings are being spent is still debatable, but one thing is
for sure, cheap gas motivates people to get up and go.

ANTHONY GRISANTI, GRZ ENERGY PRESIDENT:  We came into the summer with a
huge amount of supply for gasoline.  And, yes, we are drawing at record
rates right now for gasoline demand because prices are so low.  But that
demand should be able to be met with the supplies that we do have.

I imagine prices will probably peak in the next two or three weeks barring
any hurricanes, geopolitical problems or things like that.

DEANGELIS:  Crude is up almost 50 percent in the last three months alone.
If the market is starting to level off and stabilize, could we see a
national average back at $2 again?

GRISANTI:  I don`t think it will happen until after the summer driving
season.  What happens with the summer is there is a premium for the
gasoline for it to burn cleaner.  Once we get through that season, in
October, we go back to the cheaper winter gas and I think that`s the point
where you could see $2 a gallon again.

DEANGELIS:  One thing for sure, most consumers aren`t kicking the gift
horse in the mouth.  The cheapest gas in over a decade for this time of
year is nothing to sneer at.



MATHISEN:  This Memorial Day weekend, travelers have probably dealt with
long security lines and lots of different airports around the country, but
in Atlanta, Delta and the TSA hope they have found a solution to make those
lines run quicker for the summer and beyond.

Phil LeBeau explains what they`re doing.


regular TSA security checkpoint, but Atlanta`s Hartsfield-Jackson Airport
has a new system designed to quickly move travelers through security

BILL LENTSCH, DELTA AIR LINES:  If it`s as successful as we believe it is,
I think airports are going to be looking for this technology very quickly.

LEBEAU:  Here`s how it would work — when travelers get to the checkpoint,
there are five stations for five people to but their belongings in bins.
When the person is done, regardless of where they are in line, they push
their bin down the line to the x-ray machine and walk through a metal
detector.  If there`s a problem with their bag, it`s automatically sent to
an area beyond the x-ray machine for further inspection, that way it
doesn`t hold up the line.

And with five people constantly going through one of two metal detectors
the lines should move even if some people are occasionally stopped.

UNIDENTIFIED MALE:  It went fast up to this point, but quicker than the old
way to unload your bags.

UNIDENTIFIED FEMALE:  I didn`t think it was faster.

UNIDENTIFIED MALE:  Seemed to go pretty quickly.  Went through the front of
the line and my bag did get screened, but it only took about ten minutes
all together.

LEBEAU:  With long lines in many airports, the TSA is adding more officers
and more overtime.

Meanwhile, the embattled head of the agency found himself on Capitol Hill
answering questions on how the TSA can relieve security line headaches.

REP. MARK WALKER (R), NORTH CAROLINA:  You`re undergoing an impossible or
trying to take on an impossible task.  That probably doesn`t encourage you
very much today.

REP. CEDRIC RICHMOND (D), LOUISIANA:  Do you think that the number of bags
going through our check points is problematic?

LEBEAU:  Delta spent $1 million developing this security system and now in
its first day in use, there were a few hiccups with TSA agents and
passengers adjusting to the new set up, but nothing major.

If it works as planned, this new system could clear up to 25 percent more
passengers than a standard TSA checkpoint, which would be welcome news for
those travelers tired of waiting in security lines.



MATHISEN:  So what can you expect from your summer travel?

Erik Hansen is senior director of domestic policy with the U.S. Travel
Association, joins us now to discuss.

Erik, welcome.  Let`s start with the TSA and the long lines at the airports
that has been so well — sort of cataloged over the past month or so.  Is
help on the way?  And how soon can we expect things to get better at those

ERIK HANSEN, U.S. TRAVEL ASSOCIATION:  Well, help is on the way.  And
things are already getting better.  Some of the airports like Chicago,
which we`re seeing the longest wait times, are now actually down from where
they were to about 30 minutes, 25 minutes in some cases.

So, things are definitely getting better and I think even more TSA agents
are going to be in the airports soon.  But the problems are really long-
term.  So, we`re go to need to do a lot to make sure that more travelers
are in travel programs and that TSA is using innovative techniques like
Delta developed at Atlanta, so we can start getting people through on a
more consistent basis in a more efficient way.

MATHISEN:  Partnerships of the airlines as in the Atlanta example with the
TSA.  Is the pre-check program really helping?

HANSEN:  It is.  It`s the best way actually.  Not only to improve security,
because we know more about the people who are going through the pre-check
lines, but it is also a way to provide a better experience for travelers.
You get to keep your shoes on, you keep your laptop in your bag and TSA
actually has to devote less resources so staffing the lines.

So, in the long run, that`s really a program that we`re going to have to
amp up.  Unfortunately, TSA is not very good at marketing that program and
getting people to enroll.  So, that`s one thing we can do to make sure more
travelers are using it.

MATHISEN:  If airfares are high, and travel getting to the airport is a
hassle, do you expect more people will drive and take other forms of

HANSEN:  Yes, they`ll drive, or they`ll just stay at home.  We actually
just conducted a survey which found that one in five people who intend to
travel this summer, about 20 percent, if they believe that the process is
going to be too much of a hassle at the airport, they`re going to stay home
or take another mode of transportation.

But when you take another mode of transportation, you stay closer to home,
or if you stay home, you`re going to spend less, and that`s a hit on the
economy.  It could actually mean $12 billion in lost spending, if people
decide just to stay home, and that`s not a state of affairs that we`re
happy about at all.

MATHISEN:  I realize, Erik, that your focus is on the U.S. travel market.
But there are reports that bookings in Europe are a little more sluggish
than they have been because of fears of terror, particularly in the cities
that have been struck by it.

Brussels, Paris, what are you hearing?

HANSEN:  We`re hearing the same thing.  That`s something that we saw after
9/11, travel really ground to a halt.  But also the dollar is strong, which
means that it is going to be a little more expensive to travel to the
United States.

So, what we saw a soft first quarter, I think we`re going to see
international travel pick up to the United States.  I think that`s
something the market will correct itself eventually.  But, you know it
really has softened so far.

MATHISEN:  All right.  Thanks very much, Erik Hansen, with the U.S. Travel

Well, summer blockbusters are a big deal for moviegoers and Hollywood.
We`ll explain why, next.


MATHISEN:  Memorial Day weekend traditionally the unofficial start of the
summer blockbuster movie season.  This year, no different.  The slate of
big name, big budget flicks will keep moviegoers busy right trough Labor

As Julia Boorstin explains, Hollywood is banking on it.


weekend is always a key time for studios to debut franchise films, to
bolster the all important summer season.

In this year, it is no exception, with Fox`s “X-Men: Apocalypse” and
Disney`s “Alice Through the Looking Glass” drawing audiences to theaters.

The summer is packed with big budget blockbusters and a number of sequels,
including Fox`s “Independence Day Resurgence”, and Paramount`s “Star Trek
Beyond”, as well as Sony`s “Ghostbusters” reboot and Universal`s “Jason

And, of course, there are the films targeting families, including
Universal`s “The Secret Life of Pets and “Ice Age: Collision Course”.

rated original comedies, but there`s also family films and, of course,
franchises and superhero movies.  It`s all about the familiar in the summer
that never really changes.

BOORSTIN:  The 18 weeks from the start of May through the end of Labor Day
are so important because that summer season accounts for over 40 percent of
the total year box office.

UNIDENTIFIED MALE:  This is awesome.

BOORSTIN:  The summer is already off to a great start with Disney`s
“Captain America: Civil War” soaring to record highs and Sony`s “Angry
Birds” tapping into a familiar game brand.

UNIDENTIFIED MALE:  I have a family.

BOORSTIN:  Of all the studios, Disney (NYSE:DIS) is best positioned, with
“Finding Dory” from Pixar coming up in June, and Steven Spielberg`s “The
BFG” in July, already drawing rave reviews from the debut in Cannes.  And
family film “Pete`s Dragon” comes in August.

DERGARABEDIAN:  They`re on a roll like no other.  They`re having a year in
2016 like universal had in 2015.  So, Disney (NYSE:DIS), they`re going to
be hard to beat.

BOORSTIN:  This summer is on track to gross about 6 percent more than last
year`s summer season, according to one analyst.  But only about 2 percent
more tickets will be sold with higher ticket prices responsible for the
rest of the increase.

Hollywood Studios hoping big names and familiar brands will make paying for
that trip to the theater worthwhile.

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


MATHISEN:  And, of course, NBCUniversal is the parent of CNBC, which

And finally, the holiday weekend is winding down.  If you`re like millions
of other Americans, there was a barbecue or two on your calendar.  If you
check your grocery bill, you may have found that the tab was a little
lighter for one item in particular this time around.  Beef.

Jane Wells tells us why.


a meat eater.

PAT MCDONAGH, GREEN ACRES MARKETS:  Lots of supply.  Definitely lots of
supply out there.

WELLS:  Finally.  A Midwest drought in 2012 caused nation`s cattle ranchers
to cut back the size of their herds, low supply set beef prices went
skyrocketing.  Ranchers then began rebuilding their herds and consumers are
seeing the results.

ANNEMARIE KUHNS, USDA ECONOMIST:  Beef and veal prices are actually down
5.6 percent since this time last year.

WELLS:  USDA economist Annamarie Kuhns says pork and poultry prices are
also falling.

At Green Acres Market outside Los Angeles, when prices go down, sales go

MCDONAGH:  We work off a certain margin.  So, stuff goes down, we try to
bring it down also.

WELLS:  It is a bun full of good news for the consumer.  Not only more
animals, but it is cheaper to feed them due to a bumper grain crop, cheaper
to get meat to market with lower gas prices.

Then, there`s the strong U.S. dollar, which is hurting exports.  That means
more American meat is going to stay in America this summer.  It`s also
helping imports bringing more outside meat into the country.

All and all, it means a lot more supply for the barbecue and that should
bring down prices.

But it`s not an across the board rebound.  California ranchers still face

JOHN HARVEY, CA (NASDAQ:CA) CATTLE RANCHER:  As you can see, the hills are
brown right now.  And we`re usually green until June.

WELLS:  Rancher John Harvey sold all his cows three years ago and started
supplementing his income with a food truck.  Now, however, he slowly
rebuilds his herd turning optimistic.

HARVEY:  We always are.  We wouldn`t have been in this business to start
with if we weren`t a little optimistic.

WELLS:  As optimistic as shoppers this Memorial Day when finally they won`t
have a cow over the cost of the barbecue.

For NIGHTLY BUSINESS REPORT, Jane Wells, Simi Valley, California.


MATHISEN:  That is it for this holiday edition of NIGHTLY BUSINESS REPORT.
I`m Tyler Mathisen.  Thanks for watching.

Enjoy the rest of your evening.  Remember why we celebrate Memorial Day.
We`ll see you tomorrow.


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

This entry was posted in Transcripts. Bookmark the permalink.

Leave a Reply