Investors Think Fed May Delay Rate Hikes; U.S. Unemployment Rate Falls To 4.9 Percent; Obama: Still Softness In Global Economy; Investors

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BUSINESS-01

Falls To 4.9 Percent; Obama: Still Softness In Global Economy; Investors

Speculate About U.S. Rate Hikes; LinkedIn Shares Nosedive On Growth Fears;

Cheap Oil Drags Nigerian Economy Down; Clinton, Sanders Clash At Democratic

Debate; Technology Heralds "Fourth Industrial Revolution"; WHO Seeks to

Contain Zika Virus Outbreak; Super Bowl 50 and Fears of CTE; Iran Sets Eyes

on Tourism. Aired 4-5p ET - Part 1>

Shasta Darlington, Brian Stelter, Sanjay Gupta, Fred Pleitgen>

economy. The United States has created 151,000 jobs in the month of

January. That was fewer than expected. The World Health Organization has

told CNN that it wants an extra $25 million dollars to help governments

contain the current Zika virus outbreak. Well the W.H.O. declared Zika a

health emergency earlier this week. Super Bowl ads cost $5 million for a

30-second spot. Discussions of CTE rear up again around football. In the

wake of its nuclear agreement with the West and the lifting of sanctions,

Iran is now setting its sights on tourism.>

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[16:00:00] NINA DOS SANTOS, CNN ANCHOR: Trading has come to a close in New York with the Dow off by more than 200 points. It's Friday, February 5th.

(HEADLINES)

DOS SANTOS: I'm Nina dos Santos and this is QUEST MEANS BUSINESS.

Good evening. Tonight's low unemployment but slow jobs growth in the world's biggest economy. The United States has created 151,000 jobs in the month of January. That was fewer than expected.

It also fell far short of the previous month's total. But there was a big plus here. Namely, the fact the unemployment rate itself fell below 5 percent. That means it's now at its lowest level since the financial crisis eight years ago.

And what's more is that wages also rose. The average worker took home about 2.5 percent more than this time last year. Wall Street certainly seemed a little bit uncertain as to whether or not this is a good or bad set of numbers but investors agreed on how to respond.

That has been to sell. The Dow, as I was mentioning before, closed lower than 250 points lower at the end of the trading week. The Nasdaq for its part is off by more than 3 percent.

Investors are now worried that these figures mean that the fed is likely to take them as encouragement that America's economy is strong enough for it to raise interest rates once again.

Joining me now to discuss the implications of the month that was for payrolls and the month that will be going forward is Anthony Chan, chief economist at Chase. He joins us live from New York this hour.

Anthony, good to see you. Thanks for coming on the show. This is a bit of a perplexing report, isn't it? On the one hand, it's worse than people were expecting. It's much weaker than last month's figure.

But it does show some sign of consistency, doesn't it, that things are turning around for America.

ANTHONY CHAN, CHIEF ECONOMIST, CHASE: It really does. What we see here is an employment picture that is improving. In the past, people would argue, there's a lot of people dropping out of the labors force.

But over the last 12 months, you've seen over 1 million people joining the labor force and we are starting to see really strong job creation.

If you are going to pick something that's disappointing in this report is that wages are still not in the 3 percent to 4 percent range that the Fed Chair Janet Yellen wants to see, but it is picking up.

It is now rising at 2.5 percent, and that's pretty strong. So by and large, this is a report that shows pretty good strength, maybe not as much as the market wanted but pretty good.

Now, one of the things that is making the market nervous, they really wanted a number that was strong enough to basically dispel fears of a recession, but not so strong as to suggest that the Federal Reserve is going to go out there and raise rates as aggressively as they project it.

DOS SANTOS: How psychologically important is it, the fact that the unemployment rate is now down below the 5 percent mark?

CHAN: I think it's very important to see that. The most important part of that is that it's not occurring because the labor force participation rate is declining. In fact, it has increased for two consecutive months.

In the labor household survey that's used to compute the unemployment rate, you had over 600,000 new jobs being created. It's true that after you adjust the population, the numbers are a little over 400,000 but it's still a very strong number.

So when you see the unemployment rate number fall below 5 percent and it's not because people are dropping out of the labor force, which they didn't. It is significant. That's why this report tells you there is solid strength out there.

DOS SANTOS: So the next question is obviously do you think that the fed will be raising rates any time soon? Looking at these figures because, as you said, it is a sign of strength, but on the other hand that wage growth isn't really what Janet Yellen wants to see. It's about half of what she wants to see.

CHAN: Well, it is significant in the sense that it shows a lot of strength, but remember the Federal Reserve is not only looking at employment. They're look at a lot of things. They're looking at the global financial markets.

Bill Duntley (ph), the New York Federal Reserve president also said they're looking at where the financial conditions are tightening. You look at the global equity markets.

Look at the U.S. markets selling off today. Look at global markets as they have been also selling off. All those things tell me that would cause the Federal Reserve to pause a little bit.

I think the Federal Reserve is going to raise rates this year anywhere from one to two times. Not the four times they projected earlier. It really tells me the labor market is strong enough to do something. When you look at the entire picture, not strong enough to support Federal Reserve tightenings.

DOS SANTOS: Are these the right type of jobs that America is creating?

CHAN: I think it is. You're starting to see the higher paid jobs starting to gain some traction. You saw, in fact, quite a number of construction jobs. A lot of people thought -- these are high paying, by the way.

A lot of construction jobs last month occurred because of the weather and people said it would fall off. It really didn't fall off.

[16:05:05]Manufacturing, another component that is also relatively speaking a high-paying component. People thought because of the manufacturing services there isn't going to be any manufacturing jobs and yet it was pretty strong.

So you are seeing some really good strength in some of these jobs that are now starting to offer some higher wages, which is, by the way, another reason why the average hourly earnings number ticked up.

Part of it is, of course, some higher minimum wages, but also because some of these so-called higher paying jobs are kicking in. Keep in mind, when the labor market starts getting tighter, you start to see wages picking up and jobs start paying a little bit higher wages.

DOS SANTOS: Yes, you certainly do. Anthony Chan, great to see you as always. Thank you very much for that. The chief economist at Chase.

Now, the U.S. President Barack Obama says that his economy has the strongest and more durable economy anywhere in the world, but he also said that no economy, not even the United States, is isolated from what happens elsewhere around the globe.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: There is softness in the global economy. China's going through a transition. Europe's economy is still slow. A lot of the emerging markets are challenged.

So that's all creating head winds for a lot of U.S. companies who do business overseas. It makes it more difficult to sell exports. We've got to pay attention to this and make some smart steps this year to continue progress.

(END VIDEO CLIP)

DOS SANTOS: Let's discuss some of these challenges that the president mentioned there with Jonas Prising. He is the chief executive of ManpowerGroup, which is the recruitment and temporary staff agency joining us live from Milwaukee, Wisconsin today.

Thank you very much for coming on the show. Are you seeing evidence that the employment market is much stronger in America these days? Give us some examples here because you're really at the frontline.

JONAS PRISING, CEO, MANPOWERGROUP: We could see that the American economy's job machine cooled down a little bit in January but, still, as the previous person on the program said, it's the lowest unemployment rate we've seen in eight years. Wage inflation was robust.

So I think that all in all, the economy is still generating a number of jobs that is sufficient to keep the unemployment rate to come down. So at such, at 4.9 percent, it's a very strong labor market certainly compared to the global situation.

DOS SANTOS: Are you seeing that people are going for fewer temporary jobs as well? Because that's one of the big things you would notice here. It looks as though in this employment report, people are managing to secure more permanent jobs.

PRISING: Well, at this point of the cycle there is still growth in temporary jobs. So that is still growing. Although in the January number, we saw that the growth was only 3.2 percent so it has slowed down a little bit.

But it's still a -- part of the workforce that is increasing. We can see not only in the U.S. but in many parts of the world. As we were talking about earlier, the U.S. is strong, but Europe has also seen, both in the Eurozone and in the E.U., unemployment drop during 2015.

DOS SANTOS: But what an interesting time, where sort of the kids of the '90s who graduated from college, I count myself only just among that cohort there, we are sort of starting to reach peak employment age.

You've got the baby boomers coming offline and the millennials at the other end of the cycle. How do you view the individual prospects rule these different age categories too? Because that also feeds into the earnings perspective, doesn't it?

PRISING: It does speak into the earnings perspective because we have youth unemployment on a global level still at very, very high levels in particular still in Europe. And that unemployment is well above 20 percent where as in the U.S. it is closer to 11 percent or 12 percent.

So unemployment for young people, coming into the workforce is still unacceptably high. There are generational differences. We can see that because the workforce in many parts of the developed world is shrinking and notably Germany and Japan have rapidly shrinking workforces.

In those cases, the availability of workers to be able to drive economies to grow is much, much less today and will continue to shrink quite rapidly.

So it is the case that this is a time when labor markets are affected not only by cyclical business cycles but also by structural changes in the labor markets of which demographics is an important one.

DOS SANTOS: I want to come back to the United States economy in particular. As the CEO of one of the biggest recruitment companies, what would be your message to Janet Yellen and her contemporaries at the fed?

Because obviously if they do decide to raise interest rates once, twice, later on this year because they feel the U.S. economy is strong enough, that will strengthen the dollar. We keep hearing that U.S. companies are saying they're suffering because the dollar is so strong.

[16:10:03]PRISING: I think it's pretty evident that companies that are exposed to the export markets are having a much tougher time with such a rapid increase in the value of the dollar.

And clearly if any rate hikes are strengthening that dollar further or those hikes are coming too quickly, that could put a dent into our growth prospects as the dollar then would spike.

But as we've seen over the last month at least, the dollar has stabilized and actually retreated a little bit and hopefully we can see some balancing between the U.S. growth and maybe European growth picking up slightly in 2016.

So that balance stays where it is today and then companies can adjust and make their decision based on some relative stability.

DOS SANTOS: Jonas Prising, the CEO of ManpowerGroup, thanks for joining us from Milwaukee, Wisconsin this evening.

LinkedIn has helped thousands of Americans find new jobs, but that in turn hasn't helped its share price today, $10 billion, yes, $10 billion in total has just been wiped off the company's value. We'll be live in New York with more on that after the break.

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DOS SANTOS: There's bad days on the markets. There is terrible days on the market and then there's LinkedIn days on the market. Shares of the networking site have been closing more than 40 percent lower.

That's roughly $10 billion worth of value gone in just one single day. Now, LinkedIn admitted on Thursday night that its outlook is pretty lackluster these days. Its forecasts for earnings and sales fell well short of what analysts were actually hoping for.

LinkedIn shares are now having a worst year than even the most troubled competitors. Stocks like, for instance, Twitter and Monster down by around about 20 to 30 percent this year already.

But LinkedIn CFO said it's the global economic conditions out there that are to blame for these problems it's having. In fact, Thursday's report referred to, quote, "pressure in almost every one of their major markets outside the United States."

Perhaps the biggest reason for today's drop is the market deciding that this stock had been massively overvalued before today. Remember, it had been trading at a rather large premium because investors were betting on big growth for the future of this company and now obviously it seems as though they're having second thoughts.

CNN Money's Paul La Monica is live in New York with this and plenty more. LinkedIn, 40 percent down, that is huge. One of the things that's interesting here is it goes hand-in-hand with some other stocks like GoPro that are also falling out of favor. Is people falling out of love with tech or just these companies?

PAUL R. LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: I think the high momentum tech stocks people are definitely falling out of favor. The hard thing to try and ascertain, Nina, is that they went up so dramatically and now they're falling so rapidly.

Is this sell-off an overreaction or not? I'm not so sure. On the face of it, it might be because even though LinkedIn's guidance is not good, their current estimates now for earnings this year is about 15 percent below where Wall Street had them.

So when you look at the math there, you would think maybe a 15 percent or 20 percent drop in the stock makes sense. More than 40 percent, losing nearly half their value. That might be a little excessive.

But as LinkedIn pointed out, there's pressure around the world. And Apple's CEO Tim Cook admitted as much when they reported earnings as well. So if Apple is struggling, I'm sure that, you know, LinkedIn and other secondary tech companies are going to be hurting as well.

DOS SANTOS: Is it really that though or is it that they're facing competition from new people coming into the market like Glass Door for instance?

[16:15:05]LA MONICA: Yes, Glass Door is definitely a big competitor for LinkedIn. I think investors are also wondering if LinkedIn may be overpaid for Lynda, that's with a "y," "l-y-n-d-a," non-line education company.

And then, of course, there's Facebook, which is pretty much competitor to everyone online right now. Facebook is taking the professional market more seriously, as well, and we've seen many companies struggle against Facebook. Facebook is just on fire right now.

DOS SANTOS: Just briefly the markets are having a really difficult Friday. How do you view things as we look forward to next week?

LA MONICA: Yes, I think the sell-off in LinkedIn is emblematic of just investors really being nervous about tech in general. Facebook, despite what I just said, their stock down 6 percent today.

Netflix, Amazon, Tesla, not necessarily tech per se, but their stock really hurting as well. Tesla's going to report its latest results next week so I think a lot of skepticism there.

And then Twitter, which you mentioned earlier, Nina, as one of the struggling companies, they report as well. I think Twitter executives have to really be praying that they don't have a LinkedIn-like reaction to their results next week.

Because the only good thing to say about Twitter right now is that the stock is so hated that maybe any news can be good.

DOS SANTOS: Dear, it's difficult when you're in that predicament, isn't it? Paul La Monica, have yourself a great weekend. Thanks very much for bringing all that to us.

Oil prices are following those markets lower. Today, currently the U.S. brand of West Texas Intermediate or WTI Crude is currently down by over 2 percent at around $31 on the barrel as you can see. Brent crude has also dropped by about 1 percent.

Oil, that cheap of course, as you'd imagine, is causing big troubles for exporting nations like Nigeria. Government economists there say that GDP growth is likely to slow down sharply this year.

They are going for rate of 3.8 percent where as just a few months ago there was talk of a whopping 6 percent growth. Eleni Giokos has more on this.

(BEGIN VIDEOTAPE)

ELENI GIOKOS, CNN INTERNATIONAL BUSINESS CORRESPONDENT (voice-over): Africa's largest economy is running out of cash. Nigeria has been hammered by the low oil price, hurting oil producers and government finances.

KOLA KARIM, CEO, SHORELINE GROUP: Nigeria's earning, foreign exchange earning capacity has just come off the rails by almost 77 percent.

GIOKOS: The oil sector contributes 35 percent to the country's GDP and accounts for 90 percent of export earnings.

KARIM: Think about the price of oil in the summer of 2014 was $114. This year, we're knocking $30. That's a huge dislocation in earning capacity.

GIOKOS: Kola Karim is the CEO of oil company, Shoreline Group. He says we're just a few dollars away from dangerous levels.

KARIM: Anything below 25 is an alarm territory.

GIOKOS: Nigeria can produce up to 2.5 million barrels of oil a day, but it's still a net oil importer because of the lack of refining capacity, and low oil prices don't necessarily mean cheaper fuel.

UNIDENTIFIED MALE: It's too expensive. It's difficult.

UNIDENTIFIED MALE: (Inaudible) individuals whoever is in Nigeria.

GIOKOS: From low oil prices to security concerns, President Muhammadu Buhari's problems don't stop there. He promised to win the war against Islamic militant group, Boko Haram, which is a drain on the country and the budget.

And many are wondering how the government will continue to fund the costly fight. Just this week, Boko Haram attacked a village burning dozens of homes to the ground with at least 65 people dead.

Nigeria is considering asking the World Bank for help to plug a portion of the $15 billion budget deficit created by the collapse in oil prices. This, as foreign investors are waiting for oil prices to recover.

OSCAR ONYEMA, CEO, NIGERIAN STOCK EXCHANGE: Foreign investors in our markup have taken a view that they would like to be on the sidelines. So most of them fell down from our market which has affected our index. The index lost about 17 percent last year and this year so far has lost about 21 percent.

KARIM: A $40 oil is a reality and $50 oil in the not too distance future is the new $100.

GIOKOS: Now Nigerian oil companies like Shoreline are bracing themselves for the new subdued normal. Eleni Giokos, CNN.

(END VIDEOTAPE)

DOS SANTOS: Even if the weather is freezing in the state of New Hampshire, the gloves are definitely off. Hillary Clinton and Bernie Sanders do battle over who would be tougher on Wall Street. That's next.

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[16:21:30]

DOS SANTOS: Well, the U.S. Democratic candidate Bernie Sanders is heading to New York to appear on "Saturday Night Live," but he may get a bit of a frosty reception if he takes a side trip to Wall Street.

The senator from Vermont spent last night's TV debate railing against what he called the billionaire class and slamming his rival Hillary Clinton for her ties to the financial industry. It was a line of attack that Mrs. Clinton decided to address head on.

(BEGIN VIDEO CLIP)

HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: I really don't think these kinds of attacks by insinuation are worthy of you. And enough is enough. If you've got something to say, say it directly, but you will not find that I ever changed a view or a vote because of any donations that I ever received.

(END VIDEO CLIP)

DOS SANTOS: With just days to go before the state of New Hampshire goes to the polls, Bernie Sanders leads Clinton in that state by 2-1.

Jonathan Mann, the host of CNN's "POLITICAL MANN" joins us live from CNN Center with more. First of all, Jonathan, what exactly is progressive? Considering they've dedicated a lot of time in this debate to trying to define that and compete on who is the most progressive candidate. Why exactly does it matter?

JONATHAN MANN, CNN HOST, "POLITICAL MANN": Two nights in a row on national television they were arguing over who's the real progressive. As you say, what does that matter? What does it mean?

In the United States, the word progressive has a long history and it refers to people who were involved in politics who basically have a lot of faith in government's ability to help people and a lot of suspicion about big business's tendency to hurt people.

Progressives going back a long way. Well, they're the people who introduced prohibition. They attempt to get Americans to give up alcohol. They're the people who basically designed the new deal to try to get the United States out of the depression.

Progressives believe in big projects and the government doing big things. The debate between Bernie Sanders and Hillary Clinton is over this. Sanders said he is a progressive. Hillary Clinton is not.

She says she's a pragmatic progressive. She's a progressive who delivers. So in a sense diminishing him as a dreamer who can't achieve the things he's aiming for and promising that she can get more modest goals and she can actually deliver the goods.

That's the split that they themselves are drawing between themselves and in the Democratic Party.

DOS SANTOS: And he also claims that he's non-establishment but that she is establishment. She said, well, I'm the first woman to run for the White House.

MANN: Well, in terms of gender, she's absolutely right, we can't really argue about that. But Bernie Sanders is hammering away at something that she's not in a position to deny. She has made an awful lot money personally, even before she started running for president.

She's made an awful lot of money by giving speeches and enjoying the company of very rich people. "The Washington Post" estimates that she and her husband have made $25 million in the last two years giving speeches.

Another estimate puts it that since Bill Clinton left the White House, they made $125 million. There's no question about some of the details. She was charging $225,000 a speech, $225,000 is five years pay for the average American or the average voter in New Hampshire.

She made that in two hours' time. When Sanders says she's part of the establishment, he's really saying she's not one of us. Bernie Sanders is saying he's representing the people and Hillary Clinton is representing Wall Street.

That's a terrible over simplification, but there's so much money in the Clinton bank accounts, it's going to make people wonder.

[16:25:02]DOS SANTOS: But that's the Clinton personal bank account then we have to consider the issue of the super PACs. The financial bodies that could potentially lobby a future president. And, again, Bernie Sanders is keen to point out, he's the true independent. That's an argument that will go down well in a state like New Hampshire.

MANN: It absolutely will because in the same way that they were arguing over the word progressive for reasons that don't really make a lot of sense to me, the word independent is key in New Hampshire.

We divide up Americans into Democrats and Republicans, but in the state of New Hampshire, registered independents are more than 40 percent of the voting population, 40 percent of the electorate.

That makes independents a bigger group than Republicans or Democrats. Bernie Sanders, at the debate pointed out, he's been the longest sitting independent member of Congress in American history.

He's making an appeal to the independents and in New Hampshire, that could be the single divisive demographic.

DOS SANTOS: All right, Jonathan Mann, host of "Political Mann." Thank you very much for that. I'm certainly going to tune in to your show over the course of the weekend.

Now a new report says that Hillary Clinton is not the only U.S. secretary of state who received classified information through personal e-mail accounts.

The State Department now says that on occasion Clinton's predecessors such as Colin Powell and also Condoleezza Rice both received classified information in the very same way.

Joining me now from New York City is Alec Ross, who is a senior adviser on the issue of innovation to Hillary Clinton herself when she was U.S. secretary of state. He is the author of "The Industries of the Future."

Alec, thank you very much for joining us. We'll get to the topic of your book in a seconds' time because it's all about the fourth industrial revolution, and it's very interesting stuff.

But first, I want to talk about the issue that just won't go away for Hillary Clinton. That issue of sending e-mails through an unsecured personal server. How long is this likely to dog her campaign?

ALEC ROSS, FORMER ADVISER FOR INNOVATION TO HILLARY CLINTON: Well, look, the people who I spend time with in Middle America are well past this. I think the people in Middle America are most worried about their national security. They're worried about their economic wellbeing.

So while this gets a lot of real estate in the newspapers and gets an lot of air time on TV, when you talk to voters, it's not one of the things they talk about so I think the American people have moved on.

DOS SANTOS: Have you personally moved on from this? Because you're one of the people who is sending the U.S. secretary of state e-mails to this personal account.

ROSS: Yes, I've moved on.

DOS SANTOS: You have?

ROSS: I get to read the e-mails every month when they're released. Look, I've read all of the e-mails and, you know, there's -- what I've seen so far is absolutely nothing that suggests she's anything but an outstanding secretary of state. And the person who's best suited to address the issues I cover in my book about the industries of the future.

DOS SANTOS: Did it never occur to you that it might not be a good idea to send this information, to send e-mails to a personal account? Did you ever discuss it with her?

ROSS: I didn't know that it was a personal account.

DOS SANTOS: All right. Let's move on and talk about your book here because it is interesting stuff too. You're talking about how in the future people won't need to learn other languages because robots will automatically do a lot the interpretation for people. How do you feel the world is likely to change in ten years from now?

ROSS: Well, first of all, that's actually not in the book. Actually one of the recommendations at the end of the book is called the most important job you'll ever have, which is about parenting. And one of the things I say in that chapter is that actually we do need to be teaching our children languages. We need to be teaching them foreign languages and we need to be teaching them computer languages.

DOS SANTOS: But you have written a really interesting article for "The Wall Street Journal." I feel sensitive about this myself because I've learned seven languages.

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