Announcer this is nightly Business Report with bouncing back . Consumers rebounded a bit in april. But retail itself remains a mess. What gives . Is the backbone of the american economy, better known as the american consumer, healthy or not . Taking the plunge. Home prices are not for the faint of heart right now. So what do you do if youre looking to buy your first home . Some of the best markets if youre looking to get in. And its the new retirement. Why senior women are making a strong push to be this generations golden girls. All that and more on nightly Business Report for this friday, may the 12th. Good evening, everybody, welcome. Im Bill Griffeth coming to you from the new york stock exchange. Tyler and sue have the night off tonight, so its just you and me, okay . Weve been telling you about the wreck that is retail, and theres another one today. First, there was a bit of a rebound by the consumer in april. Spending rose, albeit less than expected, but it rose nonetheless. Steve liesman takes a look at how this could play out in the economy. Reporter consumers took a worrisome break earlier this year. But new data released today suggested they resumed their spending ways in april, retail sales in april rising 0. 4 , a touch lower than expected but a strong improvement from the prior two months. Consumers bought cars and electronics and health care and personal care items. And most of all, they helped shake off the concern about a weakening economy. Autos, appliances, and building and garden equipment also did well. The trouble for investors, consumers didnt necessarily buy at the stores run by many of the publicly traded retailers. Sales at general Merchandise Stores fell a half point in april. Earnings reports have been mixed. But the nonstore retail category, including the internet, rose by 1. 4 . These Department Stores need to reinvent themselves. Theyre going to look different today than they did a few years ago. And theres not going to be as many of them. Reporter but with plenty of job creation and rising wages, theres little reason to believe consumers wont spend, at least somewhere. Gdp seems likely to jump back to around 3. 5 . It appears the Second Quarter rebound is on track, at least from the early data. That rebound being led by the willingness of consumers to spend a bit more freely. For nightly Business Report, im steve now to todays retail wreck. It was jcpenney. As steve mentioned, consumers spent, but not actually in the stores. Like its retail brethren, penney was dogged by low sales. Courtney reagan has more on this story tonight. Reporter jcpenney rounds out the weeks Department Store d l doldru doldrums. It did post a gain but thats due to a real estate sale and lower expenses. Comparable sales and revenues were disappointing and sent shares to record lows. March and april saw sales improvement after restrained spending and delayed tax refunds. Jcpenney has come a long way since its failed transformation several years ago but still lost more than 5 billion in sales in five years, and is just now closing underperforming stores. Theyre closing 130 to 140 stores. They have the categories like appliances that is a driver. And theyre going to keep looking at their store base. Theyre still in some very good malls and theyre profitable in even some of the lower tier malls. Reporter while there are some categories that are performing decently for the Department Store, womens apparel isnt selling as well as it needs to to help lift jcpenneys sales. The retailer still thinks it can hit full year goals. But experts are skeptical. I hate to say it, but i think the Department Store model is broken the way it was. Reporter he says its broken because the merchandise isnt unique or all that special. Consumers have money to spend. But Department Stores arent offering shoppers what they want. Who is . Amazon. Outlet stores and small unique versions. Next week, big box retailers including walmart, target, and home depot report results, which may paint a different picture of Consumer Spending. For nightly Business Report, im co so why are stores, especially Department Stores, having such a tough time right now . Its because theyre not cheap to run. Its still more profitable for many retailers than selling you the items online. Courtney is back to tell us why here. Reporter this model was built for cnbc by Alex Partners to show the profit differential for traditionally storebased apparel retailer selling a 100 outfit, instore, online, or a combination. A typical 100 clothing purchase instore has associated operating costs like rent and labor of about 28, and around 40 cost for the goods, leaving a profit margin of 32 . That same 100 outfit with the same 40 cost, but bought online and shipped free to a shopper from a fulfillment center, has operating costs of 30. Distribution costs can be four times higher. Overhead, three times more. When shipping and fulfilling individual orders compared to truckloads to stores. For a profit margin of 30 . What if a shopper wants to order online but pick up that 100 outfit instore . Now youre running two channels to fulfill that order. The operating costs jump to 37 . And the profit margin shrinks to 23 . Using stores as Distribution Centers is the least profitable model. Operating costs soar to 48 . Even higher overhead and infrastructure costs to operate the site and the store and ship the goods twice. The profit is now just 12 , 20 Percentage Points below the margin of a pure instore sale. What are all the things weve been hearing about retailer this week . Greg portel joins us, lead partner for a. T. Carneys Consumer Products and retail practice. Greg, thanks for joining us tonight. Thank you. You say that the consumer right now is the strongest part of the economy, and yet weve had so Many Store Closures this year. Bankruptcies by many retailers. And this week was an especially difficult week for Department Stores. Why the dichotomy, whats going on here . The problem isnt so much with the consumer. The consumer tends to get blamed for the inability of many retailers to meet that consumer need. The data would suggest that Consumer Spending is there. The failure comes on the part of most retailers to meet that demand profile. So consumers are spending, its just where theyre spending, and its not with Department Stores right now, right . Absolutely. So what do they have to do . Whats wrong with the Business Model of a Department Store these days . Well, weve done some Interesting Research on the consumer at 250, which is really looking at the Consumer Behavior ten years out. What that will show you is a consumer who is much more into community, authenticity, and experiences, which is very difficult to see in many of the traditional Department Store models. So we hear that many of these Department Stores need to be more online, thats where people are buying. Retail Sales Numbers for april show Department Store sales down 2 , online sales up 1. 4 . You seem to be suggesting its more than just having a presence online for retailers. Theres a couple of different types of consumer profiles. The convenience consumer will be hard for Department Stores to effectively compete for online. Where Department Stores can create an advantage is actually enhancing the shopping experience, giving a reason for the consumers to come and experience the store. Thats whats missing in todays world. Are all the Department Stores created equally . Shall we just paint them with the same brush . Are there some that may do better down the road . What do you think . Well, the Department Stores that are going to do better are the ones that really have a reason for a shopper to go in there. When you look at spot. Dollar stores, dollar general, tjx, theres a clear reason for consumers to go into those stores. When you get to the middle of the retail market, you have to ask yourself, why will a consumer come to this outlet. The traditional retailers lack the ability to draw in the consumer. So you like barnes noble, columbia sport. There are specialty retailers in many cases here. Theyre specialty retailers, they have a defined proposition for consumers. If you think about going into a big box Department Store, theres really little differentiation between one or the other. The Department Stores that break out will be those that really create unique curated experiences for their consumers. So youll look to those higher end stores such as nordstroms, saks, neimans, once they fix some of the economic issues. Very interesting. Greg portel, thanks for joining us tonight. Thank you. Now to the overall market. All that pain in the israeretai five. T cause s p 500 gave back 3 1 2. For the week, all three of the averages were lower, albeit slightly. Meanwhile in italy, treasury secretary Steve Mnuchin got down to business with other finances ministers at the g7 meeting there. He talked about tax reform and trade deals in china. Our report is from italy tonight. Reporter treasury secretary Steven Mnuchin called it a productive day of meetings in italy at the g7 gathering of the worlds most powerful economic officials. I asked him how he planned to explain president trumps controversial America First trade policy. Here is what he said. Were excited about u. S. Trade policies. And i think you probably saw last night we made an announcement of 100day economic plan with the chinese. I think were very happy with how were proceeding. Reporter that agreement increases Market Access for u. S. Beef producers in china and also allows more chicken from china into the u. S. U. S. Ratings agencies and Credit Card Companies are hoping to do more business in that country as well. Now, treasury secretary steven man futunuchin was pressed for timeline for tax reform in the United States. The italian minister is encouraged. I understand there is a very ambitious Tax Reform Program in the United States, and were watching closely what is good for the United States and what would be learned by other countries about tax reform. Reporter mnuchin flashed us a thumbs up. He had onetoone discussions with finances ministers from several countries. Hell return home back to the United States. For nightly Business Report in italy. Fedex, one of thousands of companies and organizations in more than 70 countries, hit by a global cyber attack late today. Fedex said its implementing a quick fix as soon as possible. The attack hit windowsbased systems and used randomware and encrypts data and demands payment to release that data. Britains Public Health system was especially hard hit. Doctors were locked out of accessing patient files. Emergency patients needed to be diverted away from those hospitals. This is believed the vulnerability was discovered when some nsa hacking tools were leaked online in march. For its part, microsoft said today customers who have Antivirus Software and windows updates are protected against this particular attack. Coming up, ranking the best markets for first time homebuyers. Some of the locations may. We all know when it comes to housing, for the most part its a sellers market right now. What if youre a first time home buyer . Where should you be looking right now . Zillow is out with a new report ranking the best markets for first timers. Diana olick takes a look tonight. Reporter todays young buyers are more cashstrapped than previous generations thanks to high levels of student debt and slow income growth. Home prices are rising fast, but new buyers today are more mobile, thanks to technology in the workforce. So choosing an entry market is key. Zillow looked at five metrics to determine which local housing markets would serve First Time Buyers best. Median home values, potential price growth, inventory, the number of listings with price cuts, and the breakeven time horizon for buying over renting. Leading the list, orlando. Low entry price and lots of inventory. Same with atlanta. Las vegas has Strong Economy and population growth. Dallas got in to beat the buy versus rent equation. Cleveland and detroit have low entry prices. Seven of the top ten are lower priced than the national median. But entry price is not everything. Down payment is usually the biggest challenge for First Time Buyers. Not only does it determine how much house you can buy, it also determines the mortgage rate. A 5 down payment in the expensive San Francisco bay area, for example, is larger than 20 down in most of the best markets for First Time Buyers. For nightly Business Report, im diana olick in was sprint and tmobile are reportedly in talks once again. And thats where we begin tonights market focus. Bloomberg news says that sprint and its largest shareholder softbank have entered into talks about a potential merger. They considered a combination in 2014 but that deal faced opposition from antitrust regulators at the time. Now theyre back at it again. Sprint shares rose while shares at tmobile fell fractionally. Astrazeneca says its lung cancer drug during a study trial was shown to significantly reduce the risk of the disease worsening in patients with inoperable tumors. As a result, the Biotech Company says its talking to authorities now about pursuing regulatory approval. Shares jumped 9 on that news to 34. Health Insurer Anthem has thrown in the towel, saying its ended its proposed takeover of rival significacigna after a de judge prevented cigna from exiting the deal. Anthem says it does not plan on paying cigna a termination fee, saying the company failed to fully comply with its contractual obligations. Anthems shares were down a fraction while shares of cigna were down 1 . Deutsche bank lowered its rating on General Electric to an outright sell from a hold, citing valuation concerns and weak earnings. The bank also warned that ge may be forced to cut its dividend as well. Shares of ge fell 2 to 28. 27. They were one of the biggest drags on the dow today. Remember when we told you about 2 million unauthorized customer accounts that wells fargo had created . The bank may have opened a lot more than previously thought. In a court filing, lawyers representing customers told a judge that they believe the bank created 3. 5 million fake accounts. A Bank Spokesperson says the new estimate was a hypothetical scenario and does not reflect actual authorized accounts. Shares of wells fargo down 1 today to 53. 02. And boeing says it has now resumed test flights of its 737 max jet liners. We told you earlier this week that the company had suspended activity due to energy problems. But boeing says it has received a green light from air and safety regulators to fly those planes again. Shares did fall 69 cents to 183. 25. Our market monitor has names of tech stocks that he says are not overbought right now. One of his picks is catching all the blame for the wreck in retail these days that weve been telling you about. This is his first time on the program. He is rob bartonstein. Rob, welcome to the show. Thanks for joining us tonight. Thank you, bill. Good to be with you. Im very anxious to get to your third pick. Lets take these things in order. You like amazon, even though its at alltime highs and people are thinking it just cant keep the growth rate going that its had recently. You disagree, i guess. Yeah, i would strongly disagree that it cant keep the growth rate that its at. If you look at the last five years as the roadmap, amazons been able to develop its Cloud Computing business very significantly. Obviously the prime membership and prime businesses which include their prime video, which is movies and television and other content, as well as music. Their last Mile Delivery service and their Distribution Centers. Amazon is firing on all cylinders. At this stage of the game, its kind of hard to tell in some places where the internet ends and amazon begins. And a lot of people are buying it because of the Cloud Business as well, right . Correct. Yeah, Amazon Web Services is a big component and a big driver of that business. Theyve been able to build that very successfully. Your second pick, not a household name, but its a very intriguing business, tower semiconductor. Tower semiconductor is an interesting story, they work in the semiconductor business, obviously, buying up parts and divisions of companies that have been overlooked or underutilized. They then bring those together, create synergies, and do it very effectively. So they supply semi conductors to the likes of texas instruments, samsung, and intel. That business is going gangbusters. Theyre in the right business at the right time. They reported great earnings on monday. The stock is kind of broken out from its price range above 23 and now we think can hell get into the upper 20s. Okay. Now your third pick. Snap. I had to check to make sure i was looking at what you do like rather than what you dont like. We all know what happened to snap this week, after they reported their first Earnings Report after going public, they lost 18 . Evan spiegel, their cofounder and ceo, lost 1 billion in his holdings. You like the stock at these levels. Why . I really do like the stock at these levels. First of all, these levels now is close to the original ipo price. And theres no way to sugarcoat a 2 billion loss in your first quarter, thats clear. But i think what youre seeing is a company that is obviously in the very early stages. Snap literally has 50 of the eyeballs in america between the ages of 18 and 34 every day for 30 minutes. Those eyeballs are going to turn into revenue for the company over time. And they are youre going to watch snap really develop into an augmented reality platform thats going to drive a lot of revenue obvious the next several years. Well, we will see. I know youre playing the contrarian play there, its interesting to hear you take that side of the trade. Rob, thanks for joining us, good to be with you. Up next, why having a roommate is one of the hottest trends in todays new retirement. Having a roommate in your 20s is commonplace. But did you know the Fastest Growing group out there now looking for a room roomie are o women . Call it golden girls 2. 0. Our jane wells looks at the new retirement from tempe, arizona. Reporter 69yearold marianne and 55yearold roommate moved in together. I work in the nonprofit sector. We dont make a lot of money. Reporter she needed someone to care for her pet if she falls, which has happened. Its frightening thing when you cant get up and theres nobody there. Reporter its great. Mostly. Think of them as the new golden girls. This home in los angeles was used as the exterior for tthe golden girls. But that 80s show is even more relevant today. Sites like silvernet connect people 55 and older looking to share rooms. Thats the site which brought these two together. I like it, its a good idea. Reporter it charges homeowners 29. 99 for three months to find potential roommate matches. Roommates pay the site the same amount for a background check if requested. 70 of the homeowners on the site are women and 55 of the potential roommates are. Turns out she and i are both originally from the midwest. We both like scifi movies. You live by yourself. Youre set in your ways. You dont have to deal with other personalities or issues. Really . Reporter meeghan has learned to deal with mariannes cats and marianne has learned to respect meeghans privacy. Im a cross between the wild child and Rue Mcclanahan and bea arthur. Im bea arthur. Cant you see that . Reporter these days there are a lot of bea arthurs out there. Jane wells, tempe, arizona. A pair of earrings to be sold in switzerland could become the most expensive to hit the auction block. Robert frank takes a look. Reporter they are named artemis and apollo. Like their greek name sakes, they make an unusual pair. Yet these two earrings are likely to become the most expensive ever sold at auction. Sothebys next week is set to auction off a pair of earrings in geneva that together could fetch 70 million. The pink stone is the artemis pink, a 16 carat fancy intense pink estimated to sell for 18 billion. Its brother, apollo, is even more rare, a 14. 5 carat internally flawless blue diamond that was mind in south africa and could sell for up to 50 million. While they were cut into pear shaped stones to match, theyll be sold separately at the auction. Diamond dealers say the buyer could turn either into a necklace or ring or keep them both as earrings. I would love it if they were sold to the same person. Very often when weve sold things separately, they do end up with the same buyer. But it also gives the possibility of somebody who wants the blue or the pink to buy them as well. Reporter color diamond prices have surged in recent years as the worlds super rich look for easily portable and appreciating stores of wealth. The pink star sold last month by sothebys for 71. 2 million, making it the most expensive diamond ever sold at auction. Christies sold the 14. 6 carat oppenheimer blue diamond more 57. 5 million last may. Prices for pink diamonds, theyre up 360 since 2005. And blue stones are up 161 over the same period. That doesnt mean your wedding ring is now worth more. Common colorless or white diamonds have been flat or declining in prices in recent years. For nightly Business Report, im robert frank. And that is our show for tonight. Im Bill Griffeth. Have a great weekend, everybody