Transcript: Nightly Business Report – August 4, 2016

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

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Market catalyst? Investor
attention is squarely on tomorrow`s employment report and whether it will show what many                                                                                       economists are starting to believe. That job growth is
slowing.

New normal? Why Americans just are not eating out like they used to.

Location, location, location. You take a picture. You post it on social
media, but are you also revealing personal information that you`d rather
keep private?

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Thursday,
August 4th.

Good evening, everyone. I`m Sue Herera. Tyler Mathisen is off tonight.

The job market has been a bright spot in an economy that has seen
lackluster growth. Employers have been creating jobs at a healthy clip for
years, but today, just one day before the July employment report is set to
be released, there were two setbacks for American workers. First-time
applications for unemployment benefits rose by 3,000 last week to a
seasonally adjusted 269,000. We also learned today that there was a rise
in layoffs last month and tomorrow we may get answers to some pressing
economic questions.

Hampton Pearson has more.

(BEGIN VIDEOTAPE)

HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Sagging energy
prices drove layoffs higher in July, a 19 percent increase over June. Out
placement firm Challenger, Gray and Christmas says the cuts came from large
employers.

JOHN CHALLENGER, CHALLENGER, GRAY & CHRISTMAS: Those big oil companies,
ConocoPhillips (NYSE:COP), made a big cut this month, as well as the
equipment companies like Halliburton (NYSE:HAL) continue to cut jobs as
they react to the real amount of business that they have got to handle.

PEARSON: Despite the setbacks, leading economists still see a labor market
healthy enough to support economic growth for the rest of the year without
the volatility of the last two months. There was June`s blockbuster growth
of 287,000 jobs, following a near wipeout in May when employers added just
11,000 workers to payroll. The consensus forecast called for payrolls to
increase by 179,000 jobs with the unemployment rate falling to 4.8 percent.

MICHAEL GAPEN, BARCLAYS ECONOMIC RESEARCH: This would be a second strong
jobs report following the weak reading in May, and we think it would give
the federal reserve comfort about the state of labor markets and its
outlook on the U.S. economy.

PEARSON: Monetary policy-makers will have tomorrow`s July report plus
another one for august before their next policy meeting in mid-September.
That data will help determine if the Fed raises rates or changes course.

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

(END VIDEOTAPE)

HERERA: While investors wait for the next Federal Reserve meeting, the
Fed`s counterpart in England made an historic move, cutting its main
interest rate to its lowest level ever, and the Bank of England didn`t stop
there.

Geoff Cutmore reports now from London.

(BEGIN VIDEOTAPE)

GEOFF CUTMORE, NIGHTLY BUSINESS REPORT CORRESPONDENT: There were a couple
of firsts in this report from the Bank of England today, the first time
we`ve seen interest rates cut in seven years but also the first time we`ve
seen such a dramatic reduction in growth expectations. They are now
talking about 0.8 percent GDP growth for full year 2017, and that`s a very
radical departure from the previous forecasts of 2.4 percent.

That goes some way to explaining why we had more than just an interest rate
cut at this meeting, 70 billion pound sterling of stimulus introduced in
the form of a corporate and guild bond-buying program. That will go some
way perhaps in calming jitters around what the post-Brexit U.K. economy is
going to look like.

Mr. Carney was asked several times in the press conference whether they
thought helicopter money might be a good idea or whether U.K. rates may
indeed have to go negative, he said he`s no fan of negative rates. But the
bank has signaled that rates are likely to go lower again before the end of
the year.

This is Geoff Cutmore at the Bank of England for NIGHTLY BUSINESS REPORT.

(END VIDEOTAPE)

HERERA: Britain`s vote to leave the European Union is not only prompting
the bank of England to make big moves, but if might also deter British
tourists from taking that vacation here in the U.S.

And as Aditi Roy reports, American businesses are playing close attention.

(BEGIN VIDEOTAPE)

ADITI ROY, NIGHTLY BUSINESS REPORT CORRESPONDENT: It`s travel season in
the U.S., and that means the British are coming. The U.K. sends more
overseas visitors to the U.S. than any other country. Last year, the
Commerce Department says Brits spent more than $4.5 billion in the U.S.

Now with Brexit looming and the sterling weakening against the dollar, some
are worried that the U.S. may be too pricey for the U.K. tourists.

But in the travel industry opinions seem to be mixed. In its earnings call
today trip adviser is saying Brexit is partly responsible for softness in
June and into July.

But Intercontinental Hotels says it expects currency fluctuations to have
only a small impact on its results and last week American Airlines told
analysts on its call that while they haven`t seen any short-term impact of
Brexit on the company`s revenue they expect currency changes to have a
negative effect on the airlines, adding that down the road, it`s the
business traveler that they will be watching more closely.

Looking forward, the Travel Trans Index which gathers data from airlines,
hotels and travel sites says international travel will be slightly lower in
the next six months. The U.S. travel association says that historically,
the growth in tourism from the U.K. has been tied to currency changes
between the two countries and that could have some in the travel industry
watching the exchange rate closely.

For NIGHTLY BUSINESS REPORT, I`m Aditi Roy.

(END VIDEOTAPE)

HERERA: So, what will all of this, Brexit`s impact on tourism in the U.S.
to the rate cut by the Bank of England and tomorrow`s much anticipated jobs
report mean for your investment portfolio?

Kevin Caron is a portfolio manager with Stifel`s Washington Crossing
Advisors Group, and he joins us now.

Good to see you again, Kevin. Welcome back.

KEVIN CARON, STIFEL`S WASHINGTON CROSSING ADVISORS PORTFOLIO MANAGER: Good
to see you, Sue.

HERERA: Let`s start first of all with what the Bank of England did. One,
were you surprised? And do you think they will have to do more?

CARON: No. I think this was delivered pretty much on script. The Bank of
England needed to do two things. They needed to assure markets that they
were there to support what might be a weak economy. And by the way, we
haven`t had a lot of data to judge the path of the economy.

HERERA: Yes, exactly.

CARON: And then they also couldn`t do more than the market expected
because the — the country`s also somewhat concerned about a weak sterling.
So, the market got today I think exactly what it was looking for.

HERERA: You know, how long do you think it will be before we get some
concrete data about the Brexit vote effect on either consumers or the
economy. It could be some time, I would think.

CARON: Yes, I think it`s going to take some time, and there are a couple
of different parts of this. You will get some data on GDP within the next
couple of months, and in the near term, we`re going to be looking at some
various surveys, et cetera, to get a gauge of things.

But you have to also understand that nothing really has happened yet
economically. There may be a shock to psyche. There`s some planning that
has to be made in terms of what the future looks like, but in the last few
weeks not too much has actually changed as a result of the — as a result
of the vote.

HERERA: Here at home where does this put the Fed, because if indeed they
do decide to raise rates maybe in September, they are going in the opposite
direction of most central banks around the world?

CARON: Yes, and that`s a bit of a trick because what the fortunate thing
that we have here is that we`ve got an economy that`s doing much better
than other placed. We`ve got an unemployment rate that`s coming down.
We`re going to be looking at the jobs number tomorrow. You mentioned it
earlier in your segment.

We`re also going to be looking at the inflation rate and the Fed will be
looking at the inflation rate which appears to be stabilizing. If you look
at where we are, annualized the last few months in core inflation you`re
above 2 percent. So, inflation, employment, they look pretty good. Not
much slack in the economy.

That would suggest the Feds should be raising interest rates, but that`s
not where the rest of the world is. You look at Europe, just about every
major economy there has negative short-term interest rates, and that`s
creating some potential for volatility in currencies.

HERERA: So, are you changing your portfolio mix at all, and for those at
home where would you put money to work given the backdrop we just set up?

CARON: Yes. Well, not much has changed because we`ve been advocates of
staying with the dollar, staying with the U.S. economy because we think
we`re the best game in town. We think the growth here is the best, as I
mentioned and having a strong dollar to boot isn`t so bad.

So, we`re staying with that posture in terms of sectors. We do like health
care. There`s been a little bit of underperformance as a result perhaps of
the election coming up. We think there`s some good balance sheets and
values to be had there.

Industrials, the same thing, and I would even say that gold is something
that we put back as a small position in portfolios earlier this year,
basically as a hedge and we think the valuation has gotten somewhat better.

HERERA: All right. Thanks for the advice, Kevin. We appreciate it as
always.

CARON: Thanks for having me.

HERERA: Kevin Caron with Stifel`s Washington Crossing Advisors.

Well, stocks were pretty quiet following the Bank of England`s rate cut and
ahead of July`s job report which some hope will provide the market with
more clarity.

When all was said and down the Dow Jones Industrial Average just about
three points to 18,352, the NASDAQ added six and the S&P 500 up
fractionally. As for oil, domestic crude rose more than 2.5 percent.

Still ahead, why a troubling trend may be brewing in the restaurant
industry.

(MUSIC)

HERERA: It was a lackluster quarter for Viacom (NYSE:VIA). Profits
tumbled at the media company, but results were better than what analysts
had been expecting, and that helped send shares higher. But its quarterly
results are being overshadowed by a vicious and very public fight between
Viacom (NYSE:VIA) CEO and the company`s controlling shareholder.

Julia Boorstin reports.

(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: This is one of the
most unusual board room battles we`ve seen in years. Viacom`s founder and
controlling shareholder Sumner Redstone is trying to fire his protege and
longtime friend Viacom (NYSE:VIA) CEO Felipe Dauman. While Dauman is
arguing that Redstone is incompetent to fire him.

This morning, Viacom (NYSE:VIA) reporting modestly better than expected
earnings, Dauman defending the company, saying the results were impacted by
underperformance of the “Teenage Mutant Ninja Turtle” sequel that its
network showed sequential improvement and completed a successful ad print.
But Dauman is under fire for his management of Viacom (NYSE:VIA).

ERIC JACKSON, SPRINGOWL ASSET MANAGEMENT: There`s still enormous heat on
Philippe Dauman. They pre-announced a bad quarter a few weeks ago, so they
marginally beat those lowered expectations. If you compare what they did
this quarter to a year ago period, it`s obvious that this company is still
in difficult position.

BOORSTIN: These mixed results come on the heels of reports that talks to
settle Redstone and Dauman`s legal issues fell apart. Now, the question of
who controls Viacom`s future, Dauman or Redstone, will be decided by judges
in three states in October. A Massachusetts judge will hear Philippe
Dauman`s suit over Redstone`s mental competence. A Delaware judge will
hear lead independent director Fred Slarno`s suit to block his, Dauman and
three other directors` dismissal from Viacom`s board.

And in California, a judge will hear Redstone`s action to validate his
decision to replace Viacom (NYSE:VIA) directors. Viacom`s earnings call
Dauman acknowledging that these legal battles have been an overhang at the
stock and pushed to sell a stake in paramount. But now he says he`s
optimistic.

PHILIPPE DAUMAN: Last week, courts in Massachusetts and Delaware rejected
motions to dismiss, allowed discovery to proceed and scheduled trials to
take place in October. We view these favorable court rules as positive
steps that move us ahead to a resolution.

BOORSTIN: Redstone`s national amusement issuing a statement today taking a
job at Dauman, saying, quote, “Dauman is the third highest paid CEO in the
United States and among the worst as measured by pay for performance,
including his pre-negotiated golden parachute, he stands to receive almost
half a billion dollars for a tenure that has seen the market decline of one
of the nation`s greatest media companies.”

As the barbs continue to fly, it`s clear the battle for Viacom (NYSE:VIA)
is far from over.

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

(END VIDEOTAPE)

HERERA: The owner of Burger King and Tim Hortons (NYSE:THI) reported an
unexpected fall in revenue. Restaurant Brands International says
unfavorable exchange rates along with slowing sales at existing locations
weighed on its quarterly results. But those lower sales were offset by
cost cuts, and that helped send shares of the parent company Restaurant
Brands higher on the session.

But it`s been a tough second quarter for other restaurants and fast food
chains as well. Consumers have been going out to eat less in part because
of cheaper grocery prices.

And as Susan Li reports, some say this is the new normal for that sector.

(BEGIN VIDEOTAPE)

SUSAN LI, NIGHTLY BUSINESS REPORT CORRESPONDENT: Whether it`s burgers,
burritos or fried chicken, Americans are not eating out like they used to.
Lower prices at the pump, aggressive value deals and even new menu items
are not enough to get more people into restaurants. This is what`s being
called the new normal in the meals business.

The NPD Group has been tracking sales receipts for the industry for
decades, and they say the foot traffic stalled in March this year, just
before U.S. consumer confidence started to wane. The sector is now growing
slower than historical trends. NPD forecasts industry traffic will only
grow an anemic half a percent each year for the next six years.

PETER SALEH, BTIJG MANAGING DIRECTOR: We`ve never been able to find a
strong correlation between movement in gas prices and same-store sales of
traffic. There`s a lot of other factors. So I`m not convinced that the
gasoline prices really played much of a factor as much as wage inflation
and growth in jobs.

I think those are the two factors that investors should look at.

LI: Living costs are going up faster than wages, which is hurting consumer
confidence. Also high college debt being paid for by both students and
parents and the millennials` lack of disposable income all contributing to
a slowdown in restaurant visits. And there`s another factor keeping
average folks from ding out according to McDonald`s (NYSE:MCD) CEO Steve
Easterbrook on the company`s earnings call.

STEVE EASTERBROOK, MCDONALD`S CEO: There is a widening gap between food
away from home and food at home where the commodity decreases have been
passed by the grocer and the food at home is — there`s value to be had for
families there, whereas with others there is a price inflation environment.

LI: McDonald`s (NYSE:MCD), Burger King and Chipotle have all seen a
slowdown in sales growth and this year`s second quarter, but things may be
turning around.

SALEH: They have seen the sales slowdown for sure. It`s been, you know,
kind of clear from the first quarter into the second quarter. So, it`s
there, but, again, you know, it made — it may reverse itself. There is
some evidence that we`ve had an improvement in the month of July, you know.
Maybe even — it might be slight but we`ve seen an improvement in the month
of July. So who knows if this is going to continue.

LI: The NPD Group paints a more pessimistic picture with sales set to grow
even below the years since the global financial crisis.

For NIGHTLY BUSINESS REPORT, I`m Susan Li.

(END VIDEOTAPE)

HERERA: A shore drop in attendance hurts SeaWorld`s results, and that`s
where we begin tonight`s “Market Focus”.

The theme park operator said fewer tourists from Latin America and an
overall downturn in the Orlando market, which is home to its biggest park,
contributed to a nearly 8 percent drop in visitors. Revenue for the
quarter also fell, missing estimates while profit rose and was in line with
targets. SeaWorld also cut its yearly profit guidance. The shares plunged
13 percent to $12.88.

Kellogg`s revenues fell below expectations as the maker of Eggo Waffles and
Frosted Flakes saw continued weakness in its cereal brands. But the food
giant did post a jump in profit thanks to cost-cutting. Kellogg (NYSE:K)
also raised its yearly earnings outlook. Shares were higher by more than a
percent to $82.42.

MetLife (NYSE:MET) will cut $1 billion in costs by the end of 2019, and job
losses will be part of that plan. The news follows a disappointing
earnings report from the nation`s largest life insurer in which quarterly
profit fell 94 percent. MetLife (NYSE:MET) shares fell nearly 9 percent to
$39.54.

LinkedIn (NYSE:LNKD) reported higher than expected revenue thanks to an
increase in premium subscriptions and sponsored content. The professional
networking Web site also beat analyst profit estimates earlier this month.
The software giant Microsoft (NASDAQ:MSFT) announced that it would buy
LinkedIn (NYSE:LNKD) for about $26 million in a deal that is expected to
close this year. Shares were flat, following the earnings and closed the
regular down 25 cents to $192.01.

Nike (NYSE:NKE), the world`s biggest sportswear-maker is getting out of the
golf business. The company says it will stop making clubs, golf balls and
golf bags so it can focus on its shoe and apparel business. But is this
move by Nike (NYSE:NKE) another blow to the game of golf where the hits
just seem to keep on coming?

Will Gray is associate editor at the golfchannel.com and he joins us now.

Good to see you, Will, and welcome.

WILLIAM GRAY, GOLFCHANNEL.COM ASSOCIATE EDITOR: Thank you. Good to be
with you.

HEREREA: What impact do you think this will have on the space with Nike
(NYSE:NKE) exiting?

GRAY: Yes, certainly interesting timing given the golf season is right at
basically its peak time, but I think that it`s going to create an
opportunity for the other equipment manufacturers in golf in terms of the
long-term health of the game. I don`t think that Nike (NYSE:NKE) getting
out of the equipment space is necessarily going to have a huge impact.

Remember, they are still going to be very involved into golf. There`s
going on to the soft goods side and you`ll see plenty of swooshes on
golfers, both on the men and women`s side.

HERERA: Yes. Who do you think it will benefit? I mean, we saw Calloway
Golf and its stock move sharply higher today.

GRAY: Yes. Calloway certainly had a big first day of trading after the
Nike (NYSE:NKE) announcement. But a company that I have my eye on is PXG.
It`s run by Bob Parsons. They`ve only been making golf clubs for the last
year or two, but they are really in a position to make a big splash. They
have had a couple of big names on the PGA Tour they have signed this year.

I think that when you`re looking at where Nike`s athletes and golfers could
sign in the future, PXG could be a very intriguing destination.

HERERA: Yes. You know, this follows Adidas saying in May that was also
going to exit that part of its business because it`s been an underperformer
and this part of the business was an underperformer for Nike (NYSE:NKE).
But what does that say about the state of golf and the state of the game?

GRAY: Yes. I think the state of the game. People are still playing golf.
We saw last year 2.2 million people tried golf for the first time. That`s
the most and the highest number since basically Tiger Woods came on to the
scene.

The decision by TaylorMade and Adidas to kind of part ways or for
TaylorMade to be sold really shows that golfers are going to move into an a
la carte model where you`re not necessarily going to see as many players
going head to toe with all apparel and all clubs. You can see a deal like
Jordan Spieth has where has Under Armour (NYSE:UA) for his apparel and he
has Titleist clubs.

HERERA: Yes. The game itself, one of the things that I hear is that it
takes a long time to play the full — you know, the full 18 holes. Is golf
itself looking at its business model for lack of a better word and — and
perhaps making some changes to help the game?

GRAY: Yes, for sure. I think creativity is the key. We`re seeing
companies now propose six-hole game, nine-hole matches, things like that.
We`ve seen foot golf on the rise, where you`re playing a game of soccer on
a golf course.

But overall golf is still moderately on the rise. The National Golf
Foundation did a study last year rounds were up almost 2 percent. This
year in June, they are already up about 3 percent. Junior golf
participation is on the rise from 2.4 million in 2011 to 3 million in 2015.

So, while this kind of could seem like a negative for the golf industry as
a whole, participation does seem to be at least slightly on the rise.

HERERA: On that note, Will, thanks so much. Will Gray with the
golfchannel.com.

GRAY: No problem. Good to be with you.

HERERA: Coming up, why a simple photo posted online could reveal simple
personal information you`d rather keep private.

(MUSIC)

HERERA: Startup activity is rebounding, and there`s a new demographic
taking the lead when it comes to opening new businesses.

Kate Rogers (NYSE:ROG) has more.

(BEGIN VIDEOTAPE)

KATE ROGERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: A new report from the
Kauffman Foundation finds levels of entrepreneurship among both women and
millennials are on the rise this year. The startup activity report for
2016 finds that the gender gap is closing in entrepreneurship with women
now making up 40.6 percent of new entrepreneurs compared at men at 59.4
percent.

Millennials ages 20 to 34 accounted for 25 percent of new entrepreneurs.
That`s up from 24.7 percent last year. But this number is still well below
what it was in 1996 when the index started at 34.3 percent. Researchers
point to student debt as a big factor in this slow growth trend.

Another good sign, more startup founders are consider opportunity
entrepreneurs meaning they are launching businesses because they see
opportunities in the marketplace to do so, not because they are employed
and doing so out of necessity. Women are also more likely to be
opportunity entrepreneurs than men.

Now, overall the startup index climbed in 2016 for the second year in a
row. That translates to about 550,000 new entrepreneurs each month during
the year. This data though shows a different trend than a recent report we
highlighted on this show tracking slower growth in U.S. startups. However,
the Kauffman Foundation measures entrepreneurship different than other
researchers and doesn`t actually count you as a business owner until you
quit your full-time job.

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

(END VIDEOTAPE)

HERERA: Posting and sharing photos online is something many of us do
without hesitation. Yesterday we told you how businesses are tracking your
public updates as a way of increasing awareness of their brands, but
there`s more to it. Your posts may seem innocuous, but they could actually
be leaking sensitive information about you or your business.

And according to the experts, you don`t need to be an experienced hacker to
find it.

Andrea Day has the story.

(BEGIN VIDEOTAPE)

CHRIS HADNAGY, CEO, SOCIAL-ENGINEER INC: I think people don`t know is just
how dangerous it is.

ANDREA DAY, NIGHTLY BUSINESS REPORT CORRESPONDENT: A simple photo posted
online, but this one right here has a secret they may not want revealed.

HADNAGY: If the photo you upload has GPS data embedded in it, so if I just
take those coordinates and you pop them into something like Google
(NASDAQ:GOOG) Maps.

DAY: According to security expert Chris Hadnagy, your confidential meeting
location could be compromised and that`s not all.

HADNAGY: What organization you`re visiting, what business you`re in, what
kind of contracts you`re working on, which is a really serious matter.

DAY: It`s called geotagging where your location data is automatically
embedded in photos, and if you leave your smartphone satellite location on,
could you handing out your exact location with every post on social media.

HADNAGY: You can easily follow someone like that completely around the
globe wherever they are.

DAY: The info leak potentially exposing your business secrets and personal
life, too.

Hadnagy takes the coordinates from this photo and puts them into Google
(NASDAQ:GOOG) maps. Seconds later, finding the city, neighborhood, even
the exact house where the shot was taken.

HADNAGY: They can geo locate your house. They now know because of
Facebook (NASDAQ:FB) you`re overseas and your house is unattended.

DAY: And across the country, criminals are using social media and
geotagging to target unsuspecting victims. This man in California, Arturo
Galvin (ph) accused of finding his 33 burglary victims through photos
posted on Instagram.

Most of his alleged victims were students. Investigators say he used the
GPS coordinates in pictures to track where victims lived and then came by
to grab electronics, wallets and more. Galvin pleaded not guilty and is
awaiting trial.

HADNAGY: That some stranger can find a picture on the internet and be able
to geolocate our home. Social media is a great tool but it can also be a
huge, huge danger.

DAY: And he says geolocations are being used in new apps in ways every
day, like the wildly popular Pokemon Go.

HADNAGY: It`s just a game but it uses your geolocation data as part of the
game.

DAY: And he says the amount of information that hackers can find is
anything but a game.

HADGANY: They can find out where you are and what you`re doing at any
point in time. You can take a risk on your contracts, your business
negotiations.

DAY: So, how can you reduce the risk? Well, it`s actually pretty simple.
Just turn off the location access in your camera app. Go into settings to
make the change and remember that most devices come with this automatically
turned on.

I`m Andrea Day for NIGHTLY BUSINESS REPORT.

(END VIDEOTAPE)

HERERA: And that is NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera.
Thanks for joining us. Have a great evening. 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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