Transcripts For KQED Nightly Business Report 20240622

17 months. 215,000 positions were added in july, with the Unemployment Rate steady at 5. 3 . Wages ss nudged up just slightly while the share of americans participating in the labor force remains stuck at a 38year low. But experts say the overall report is proof the recovery is chugging along and likely keeps the Federal Reserve on track for its first Interest Rate hike since 2006. Hampton pearson has more on the numbers and what they mean for main street and wall street. For the first seven months of this year job growth has been wide spread averaging 212,000 jobs per month. Health care continues to lead up 436,000 for the year including 28,000 last month. Retailers have added 322,000 new employees as Consumer Spending picks up. And it was another strong month for professional and Technical Services up 27,000 topping 301,000 for the year. Those booming auto sales help manufacturing have its best month of the year. Workers hours increased, but wage growth remained stagnant. Overall, a steady job market for the obama white house. It was very much on target. You just look 15 of the last 17 months this economy is created over 200,000 jobs. Its just months after months you know keeps adding to those jobs thats broadly been bringing the Unemployment Rate down. The washington, d. C. Area is experiencing many of those same trends rebounding from the recession. In fact the region is experiencing the biggest year over year growth in jobs since the economy stalled here two years ago. Nearly 70,000 new jobs have been added to the regional economy in the last 12 months with hightech and health care leading the way. The 4. 8 Unemployment Rate is below the national average. We dont really have gains in federal employment in d. C. And the d. C. Area but we do see the private sector making up for that and indeed its really been a boom economy in d. C. In the recent years. Todays headline job growth fits the fed criteria for further improvement in the job market prompting most economists to say a september rate hike is very much on the table. Do you think this is one more sort of steady step along the way towards the fed likely hiking in september . I think its more likely than not, and i dont think its quite a done deal. We have five weeks of data. If weve learned anything a lot can happen in five weeks. Septembers jobs report can be decisive as the Central Bank Moves closer to the biggest change in Interest Rate policy in nearly a decade. For nightly Business Report, im Hampton Pearson in washington. And look whos here to discuss todays big jobs report the man you just saw in hamptons piece. Welcome to you, Michael Hanson senior economist at bank of america. Good to have you with us. I take it that youre in the camp that believes it is probably a little more than likely that the fed will raise rates in september. There was nothing in this report that changes your mind on that is there . No if anything it probably nudged the fed closer to a september rate hike. The one thing soft was wages, but payroll growth has been strong Unemployment Rates getting close to the level the fed starts to think the market is getting tight, so it very much leaves september in play. How strong is Economic Growth overall, and are we at a sort of level that we should just get accustomed to 2. 5 to 3 a year . Yeah 2. 5 to 3 is probably above the longterm trend, given the fundamentals of the economy right now. Its enough to probably keep job growth for a while in the 200,000 range and probably not to get to 4 or 5 any time soon unfortunately. If you watched the debates last night, jeb bush said that he thinks a target we should aim for is 4 in the economy. He said he confessed that is an aspirational target. Is it a practical one . It would be tough. I think it would be difficult, given some of the changes in fundamentals for example, we have a declining labor force and thats weighing on growth. I think weve seen a number of factors post the financial crisis slow down the pace of growth a bit and may take a while to turn around. I was speaking earlier today to Steve Leishman our economics reporter and i was asking him about why Labor Force Participation is as stubbornly low as it is. How do you explain . A good chunk of it is demographics. Baby boomers are a big part of that. Obviously, moving into retirement age, you see some younger workers also have a tendency to stay in school longer. Therefore, on average people arent coming to the labor force as much as they used to. Not, of course retiring themselves theyll come back eventually, but not at the earlier stage. Lets go back to the question of Interest Rates. Youre of the view of september, but do you believe then they will be moving Interest Rates up pretty regularly, most meetings if not every meeting . And how steeply . Yeah well the fed said they are going to be gradual, but thats not a promise, its a forecast. The fed has emphasized data dependence were going to have to wait and see. Given the fact trend growth is slower and the case that wages and inflation arent rising quickly, i think the fed can very much be farnt, which probably means quite less often than every meeting. Is a patient pace of Interest Rate hikes in any real sense a major danger to peoples portfolios quickly . I dont think so because the fed is going to hike as the economy gets better. We dont want things to fall back. That would be bad for portfolios. Thank you for being with us appreciate it. Bank of america, merrill lynch. With Cyber Attacks, employers are looking hard now for workers who can protect them. In the latest in our series where the jobs are, Mary Thompson looks at the worlds growing need for Cyber Warriors from semantics Global Operations center in herndon, virginia. In the war against cyber criminals, 30yearold Richard Hobson is one of the newest recruits. What i like best is it doesnt feel like a job. A former welder hobson now interns at morgan stanley, having completed a threemonth Training Program called semantics cyber career connection. Were looking for any vulnerabilities, any threats that can compromise personal information and data thats highly regarded to the organization. Costing businesses an estimated half billion a year Cyber Attacks show no signs of slowing down and thats fuelling growth in a sector semantic estimates will have 6 million jobs by 2019 but only 4. 5 Million People to fill them. The markets hot right now. Every time you open up a newspaper, theres another Cyber Security attack going on. The higher demand means higher salaries. Burning Glass Technology says on average Cyber Security jobs pay 84,000 a year. Thats 9 more than your typical i. T. Job. Still, these positions are tough to fill. Burning glass ceo matthew cigelman says thats because candidates need technical chops and a deep knowledge of the industrys selfdefense Like Health Care retail or finance. About 84 of Cyber Security jobs require a college degree. 70 of them require multiple years of experience in a field that really didnt exist multiple years ago. So to build a pipeline of workers, semantics head of Human Resources is looking beyond the walls of Higher Education and expanding sp 3, focused on training minorities and women. 80 of them have g. E. D. Or equivalent degrees, so its a workforce you wouldnt normally have access to. Hobson is among 31 graduates who take courses, including Ethical Hacking and security plus. Changed my life in many ways. And for semantic its changing the way it develops workers to fill critical Jobs Available now and in the future. For nightly Business Report, im Mary Thompson in herndon, virginia. To read more about the growing need for Cyber Security professionals, head to our website, nbr. Com. Well the jobs report and expectations for a rate hike weighed on the market this day, sending the Dow Jones Industrial average lower for the seventh straight session the longest such losing streak since august 2011 one of the bumpiest months of the past decade. Dropping to 17,373. Nasdaq fell a dozen, and the s p 500 was off a half a dozen. For the week all the major averages were lower by more than 1 . As you see there. Crude prices fell, settling in at 43. 87 a barrel that is a new multimonth low. The dow component American Express helped offset some of the pressure from the jobs report and oils decline today. The stock rose more than 6 on heavy volume on word that the activist hedge fund value act took a 1 billion stake in the firm. In a statement, American Express says it respects value act and has been speaking to them as it does with other big investors. Still ahead, stocks that can escape the heat from the hot dog. Our market monitor coming up. Saber says its systems were hacked. Bloomberg news also reporting American Airlines was examining whether its network was breached. It is believed to be the work of the same hackers that targeted anthem back in february and the u. S. Governments Personnel Office in june. Renew era for the global trade, we recently told you about all the business being done at the major u. S. Ports, now across the globe the suez canal, which flows 8 of the worlds sea trade just got bigger. It could mean a smoother passage for the shipping industry and the fragile egyptian economy. It was a historic day for egypt, complete with pomp and pageantry and a Major Political victory for the countrys president. A new suez canal 22 miles long carved out of the egyptian desert in just under a year at a cost of 8. 5 billion, all financed by the egyptian public. But with analysts already speculating that the governments figures are overly optimistic a potential winfall of as much as 13. 5 billion in increased revenues over the next five years, its the Economic Zones plan for around the canal that the government hopes will rake in the longterm cash. And its that longterm investment and job growth that egypt so desperately needs. As gulf governments begin to tighten the pursestrings, the pressure is on president cece to perform. You can almost see the economic engine starting to rev up. Deals announced in march with the likes of bp and start and a look at the guest book in suez leaders from the gulf africa russian Prime Minister nedmay shed light on where the president is hoping to find Strategic Partners for investment next. Earlier this week the Obama Administration reaffirmed a commitment to deliver eight f16 aircrafts suspended indefinitely after the overthrow of former president mohamed morsi. Secretary kerry delivered the good news but was notably absent today. While the presence of so many leaders from the gulf comes as no surprise given the major monetary commitments over the last few years just to keep the country in the black. President hollande and russian Prime Minister do have a growing cooperation thats translating into new economic and military deals. When you speak to egyptian officials, they do say this is all about maintaining economic stability over the long term but they also speculate this is as much as about realignment as it is about financial opportunity. For nightly Business Report, im hadley gamble on the banks of the suez canal. Hersheys sales are flat for the first time in years and thats where we begin. The maker of reeses Peanut Butter cups saw volumes slip in north america because of price increases and weak demand from china. The company also cut its Sales Forecast for 2015. Shares fell more than 2. 5 to 89. 73. Saw its profits and sales slip in the latest quarter. The auction house blamed currency headwinds and losses from the sale of a single painting. Shares tumbled 7. 5 today to 37. 49. Cablevision had subscriber growth in its most recent quarter, managing to Beat Estimates on the top and bottom lines. Still shares ss slipped on this down day for the market, finishing 25. 82. Capital one financial in talks now to acquire general electrics Health Care Finance unit. The deal will likely top 10 billion. G. E. Finished at 25. 79. Capital one fell slightly to 80. 82. Warren Buffetts Berkshire hathaway fell weaker results in its insurance operations. A shares didnt move much in after hours trading but declined in regular session to end the day at 215,000. You probably notice a theme this Earnings Season Companies are blaming the strong dollar for dismal quarterlies. Currency was the most popular topic discussed this earnings season by s p 500 companies. This weeks market monitor has some smart ways to protect your portfolio from currency upheaval. Last time he was on in january his picks were national grid. Its off 7 . Jpmorgan which is up 22 , and the biggest of all, google which has jumped 29 . Jamie cox joins us now, hes managing partner at harris financial group. Mr. Cox, welcome. Good to have you with us. Thank you, tyler. Nice to be with you. We just mentioned so many earnings reports, particularly revenue reports, reference currency headwinds, and that is why revenues for a lot of companies seem to have come up short. Is that your view or are they using this as a fig leaf . I think its true. Constant currency most of the picture looks better for most companies, so i dont think thats an egregious statement this particular quarter because the dollar did spike going into both the first and Second Quarters. I think companies have a legitimate nonweather related reason to complain about their earnings. Do you think the dollar will likely strengthen from here or roughly stay where its been the past few months between about 105 to the euro and 110 . I dont see that it goes up much further than this. Were all anticipating Interest Rate risings in the third or Fourth Quarter and i think markets have already priced that in. Unless they raise rates faster than what we think, the dollar is where its going to be for some time. Nice to see somebody from my home state of virginia. Lets talk about a couple of your picks and why you think they are rather more insulated from currency headwinds. Lets start with Rockwell Automation a stock that has been moving below its moving average in recent days. I guess you see this as a buying opportunity. Why . I do. Rockwell has been undergoing a major transformation in its system over the last three years and finally were starting to see them divest businesses that are low margin like their seat business and some of their car interiors, and they are actually introducing businesses like their stop start batteries. In europe weve been using stop start batteries quite some time and we think that stop start batteries will be part of the general population of cars. Management is giddy about that. I think its going to be a major headwind. Lets move quickly to a second pick little out of order, that is Johnson Controls which has a kind of similar story about automobile interiors and the like. Thats true. In addition i think both rockwell and in this particular company, what you have is an opportunity for integration of systems. They were early pioneers in the revolution where they took offline systems to bring the data online for management to use. Now these companies are actually downselling security and thats where they are going to make money. Underutilized and talked about. Final one quickly precision castparts. What do they do and why do you like them . Airplanes. Think about the number of airplanes sold. Castparts is absolutely the place to be if youre thinking the airplanes are going to be sold around the globe, you know youve seen enormous numbers of airplanes bought. Precision castparts is a place you want to be if you believe that story. Jamie, thank you very much. Jamie cox with harris financial group. Coming up how one entrepreneur was able to battle the odds open a Mortgage Company at the height of the housing crisis and turn it into a multibillion dollar business. Dow component cisco reports quarterly results. Dudley and Dennis Lockhart are going to be giving some speeches and on the data front, retail sales are out. Very important one there. Producer price index at the key read on inflation and also the Industrial Production numbers. That is what to watch next week. Well the high stakes game of House Flipping has always been around but now the practice of buying and selling a home in the same year is solely for profit is getting a whole lot riskier, but also more lucrative. Diana olick has our story. Taking a house from this to this takes a lot of cash but in todays competitive housing market, it is a necessity for investors who hope to make big profits flipping homes. The market has gotten tougher, and so its not for novices. You have to know what youre doing, and you have to be able to do a good job. You have to have an eye for detail but with that comes reward which is a better reward. Chris harrison put nearly 400,000 into renovating this washington, d. C. Home. After buying it for 700,000. Its currently listed at just over 1. 4 million. Its a calculator risk. The numbers in this neighborhood are very strong. The days on the market are short. Higher home prices have pushed a lot of flippers out of the business. Made up just 4. 5 of sales in the Second Quarter of this year and thats down from a year ago. Growth flipping returns, however, increased to nearly 36 , up from 24 a year ago. Investors are now making an average 71,000 before renovation costs up from 50,000 a year ago. Todays buyers want not only turn Key Properties they also want the high end finishes so for flippers that means more cash up front and more risk to return. Were actually seeing a lot of flippers getting out of the business. I know one flipper thats getting into Home Remodeling now because he doesnt want the risks associated with flipping anymore. So if youre in it you need to proceed with caution, you know do the high end deals. Flips on the lowest end of the market are actually losing money. Likely because of the renovation costs. Flippers are seeing some of the greatest returns in the 2 to 5 million range and regionally nevada and florida still see the most flips because they have the most distressed homes, but chicago, dayton and baltimore are giving flippers the best return. If youre in the flipping business now, you have to know what youre doing. Its not for somebody who sees hgtv and thinks i can get in and flip. Flipping today takes more patience, more time and ever more cash up front. For nightly Business Report, im diana olick in washington. To read more about House Flipping and the risks and rewards involved head to our website, nbr. Com. Well from House Flipping to home finance. The young entrepreneur just 29 at the time decided to open a Mortgage Business aimed specifically at home buyers not refinancers, just before the financial crisis hit in 2008. You probably think that wasnt a very bright idea, but it was and is. That young entrepreneur is Casey Crawford former professional Football Player in charlotte, north carolina. This is fantastic. Dramatic unexpected turn arounds are Casey Crawfords thing. As a Football Player he wasnt drafted out of college, but he managed to spend two years as a tight end with the nfls carolina panthers. Then he got cut, but wound up signing with the Tampa Bay Buccaneers in 2002, a season that ended with a super bowl victory. I need to set up a call with the head of sales crawford began to flip homes while he was still playing football. It was the early 2000s and real estate and the real estate bubble were blowing up. I think i heard donald trump say this and hes probably right, the only way to be wrong in real estate at that time was to not buy something. Crawford was doing so well that he quit football after the super bowl. It worked out fine until 2007 and 08 when bad loans began to kill off giant lenders like countrywide, American Home and wachovia. Evil. Theyve been defined by greed. They are defined by lack of integrity, by putting families into loans they couldnt afford. Despite the chaos, though crawford sensed an opening. He wanted to build a Mortgage Business that would help keep people within their means. Think about warren buffett, time to get in the market is always in the midst of chaos, when the blood is running in the streets. Of course, he didnt know how to start a mortgage bank, so he did what anyone would do he googled it. Jumped on google how to start a mortgage bank. A year later in september 2008 crawfords Mortgage Company, about 20 people opened for business. We had a full 30 days before october of 2008 just a whole financial world totally comes collapsing down. I spent about 60 days sucking my thumb in a closet trying to explain to my wife why this was a good idea a year earlier. Slowly things did get better. In 2009 they did about 180 million worth of loans. Now the companys called movement mortgage. Its 2,200 employees, yes, 2,200 expect to do more than 7. 5 billion worth of business this year. Movement is building a new headquarters just across the state line in south carolina. When it opens next year crawford says hell create 600 new jobs. The jobs alone can turn into life changing opportunities, but movement isnt leaving charlotte altogether. Movement foundation is offering us something i have never seen. Colin pinckney runs the Harvest Center one of several nonprofits that will begin sharing a new office space called the Movement Center in charlotte this month. Crawford hopes the center can become a sort of onestop shop for the people who depend on the services theyll find there. They dont just need food they dont just need job training Just Mental Health services they need a whole suite of products and the problem often they find them all over town. Thats really difficult if you dont even have a car to get to all these places. I think thats going to be important, not just for our city but across the nation. A privately funded scalable model for nonprofits across the country, imagine that. Instead of leaving a trail of foreclosures behind a Mortgage Company trying to build a better city a turn around indeed. Great business minds in the United States would really get passionate about solving the problems in the u. S. And not leaving that to the federal government i think wed transform communities across the United States. Interesting fellow. Well weve mentioned before how nonbank lenders have so quickly grown into a significant force in the Mortgage Business from about 11 of loan volume in 2011 to 37 last year. These Companies Say they are simply setting customers straight on how much house they can truly afford and trying to do it before they ever begin looking at homes. And that folks, is nightly Business Report for friday evening. Im tyler mathisen. Thanks so much for watching. Have a great weekend, everybody. Well see you back here on monday