Liesman, Eunice Yoon, Robert Frank, Julia Boorstin>

China; Labor; Holidays; World Affairs>

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Sue Herera.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Hard assets. As stocks slump, gold shines, leaving some investors to wonder if this is the year that heavy metal finds it luster again.

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Road to a rate hike. Why March is not off the table just yet for the Federal Reserve despite all this market volatility.

MATHISEN: And one way ticket. Why this lunar New Year is different for some of China`s migrant workers.

All that and more tonight on NIGHTLY BUSINESS REPORT for Monday, February 8th.

HERERA: Good evening, everyone, and hold on tight.

It was another breathless start to the week. The Dow plunged 400 points midday as investors rushed out of stocks and other risky assets. And just when it looked like things could get a lot worse, they didn`t. The buyers came out of hiding. And by the closing bell, the Dow Jones Industrial Average was off only 177 points to 16,027, the NASDAQ fell 79, the S&P 500 dropped 26.

So, what should investor make of the late-day buying?

Bob Pisani helps breaks things down from the New York Stock Exchange.


BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: It was another ugly day and it didn`t end as bad. But along way, there was a lot of anxiety in the usual hand-wringing. Now, a lot of the problems started in Europe, where else, with bank stocks like Deutsche Bank down 9 percent. It`s off 35 percent this year. There`s concern there about declining revenue revenues and asset writedowns, OK.

Our banks are in much better shape. That didn`t stop the big U.S. banks from hitting 52-week lows, for Bank of America (NYSE:BAC), Citigroup (NYSE:C) for example, both down more than 5 percen. Stocks did turn around midday, led by a rally in energy. Conoco, Chevron (NYSE:CVX), ExxonMobil (NYSE:XOM) and Hess (NYSE:HES) all ended the day in positive territory.

So, are we at the bear market or not? The S&P 500 is only about 14 percent off its high. But large parts of the market are down already more than 20 percent. Transports, banks, energy, material names, for example, close to 60 percent of the S&P 500 are down 20 percent or more.

So, let`s not quibble. The markets way off the highs. The question is, when is the bottom?

Unfortunately, we`re still seeing a lot of stock for sale. Almost 7 billion shares changed hands at the NYSE today. That`s twice normal.

We`re not seeing a lot of buyers coming in to pick up bargains. That`s not good. That did happen toward the close today. OK, but there`s been no follow throughs on days like today. They just come and sell the following day.

We need a lot more late-day rallies like today before anyone believes that real bottom is in.

For NIGHTLY BUSINESS REPORT, I`m Bob at the New York Stock Exchange.


MATHISEN: And as Bob just reported, the energy sector turned at the end of the day. But for most of it, the group saw very, very heavy selling. One of the hardest hit companies was Chesapeake. It lost half its value at one point and was faulted multiple times. Bankruptcy rumors forcefully denied, swirled around the company for much of the day, and it ended 33 percent lower.

As Morgan Brennan reports, Chesapeake wasn`t only energy company to come under pressure today.


MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: The pain is spreading and the latest to feel the effect is Chesapeake Energy (NYSE:CHK). Following reports that it retained Kirkland and Ellis to help restructure the debt load, Chesapeake issuing a statement saying the law firm has served as one of its counsel since 2010 and the national gas producer has no plans to pursue bankruptcy. Still, investors jumped ship on the stock, even if some analysts maintain that Chesapeake can hang on, even if gas prices stay depress.

TIM REZVAN, STERNE AGEE CRT: It`s important to remember, they have a $4 billion undrawn credit facility today. We expect that to get a big haircut to $3 billion or maybe even below, but it is undrawn today. It can take their nearest debt maturities and put them on their credit facility and hope for a better gas prices and asset sales to give them a chance to survive.

BRENNAN: Shares of pipeline operators, Energy Transfer Equity (NYSE:ETE) and Williams Company also fell. In addition to a surprise (INAUDIBLE) change at ET that`s drawing the company`s merger into question, Williams is a major partner of Chesapeake.

Another name that tumbled today, Linn Energy (NASDAQ:LINE), which has said about 70 percent in just the past week. The oil and gas producer recently said it`s reviewing strategic alternatives to sure up the balance sheet.

All this as ratings agency cut their outlook, with Standard & Poor`s downgrading 13 oil companies and Moody`s (NYSE:MCO) placing 120 energy firms under downgrade consideration. In general, fears of widespread bankruptcy are growing. Law firm Haynes and Boons has 42 North American oil gas companies filed for bankruptcy last year, including Samson Resources, Quicksilver Resources (NYSE:KWK) and Swift Energy (NYSE:SFY).

And Wolfe Research winds up to a third of U.S. producers could end up structuring by mid-2017 if prices continue to stay this low. Other names they are watching is Sand Ridge Energy which was delisted from the New York Stock Exchange, and Halcon Resources, which in response to rumors, put out a press release this morning saying it has no formal plan but continues to review all options related to restructuring.



HERERA: Meantime, gold is starting to shine. After being shone by investors for years, the heavy metal is seeing some gains. Today, prices were up nearly 3.5 percent. Its best trading day since the end of 2014. For the year, gold is up 12 percent, making it the best performing asset of 2016 so far.

Jackie DeAngelis tells us what`s behind gold`s move and if the trend higher might continue.


JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Gold prices have gotten off to a good start in 2016, more than 10 percent pop due to volatility in the global equity market. The year to date move, a departure from losses in gold for the last three years. The mixture between a return to safety and optimism, that the Fed won`t be as aggressive as raising rates as predicted last year.

ANTHONY GRISANTI, GRZ ENERGY PRESIDENT: Since the beginning of the year, gold has been the darling for investors. If you look at most commodities, they are down on the year. Equity markets are very volatile. So, investors are looking at gold.

DEANGELIS: Today`s action, a great example. Lower equities, lower oil, giving gold a nearly $40 lift. While moves like that were common place in just a few years ago, they become increasingly rare.

So, while the gold vaults have their moment in 2016, many are forecasting that bullion could continue to run -- some of the estimates as high as $1,500.

GRISANTI: I would expect because of the volatility in the stock market and I think it will continue at least for the first half of year, then investors are going to look at good even more so.

DEANGELIS: There are risks, though, that equities will settle down and Feds finds enough to stay the course in its tightening. If those events play out, gold could lose the glitter that it gained early on.



MATHISEN: And joining us now to talk more about gold and whether it belongs in your portfolio is Jan Van Eck, he`s the CEO of Van Eck Global.

Jan, welcome. Good as always to see you. Is it as simple as people are going into gold now because they are afraid of everything else?

JAN VAN ECK, VAN ECK GLOBAL CEO: Actually, I think what`s driving the rally in gold this year is you have to take a step back and look at what`s been happening since the global financial crisis. And central banks around the world have been cutting interest rates. Gold really competes with interest rates because gold doesn`t pay any coupon or dividends. So -- but when interest rates are negative around the world which they started being in Europe last year, started in Japan just a couple of weeks ago, then, gold looks more attractive.

MATHISEN: So, what is the best way to add it to your portfolio and how much of a, quote/unquote, "typical portfolio", what kind of exposure should they have?

VAN ECK: Yes. So, generally, we don`t invest -- we don`t advise a very large investment in gold, something like 5 percent or so. It`s really meant to be a hedge to an overall portfolio over the long term.

But you do have these risks to the financial sector now and the risk of can the Fed get the economy going? Does it have to go back to a QE4 kind of situation?

We think this is really great time to be buying the gold and for those nervous about the recent run up -- again, just take a look back at the last five years. You`ve seen what`s happened year to date is a slight heartbeat.

MATTHEWS: Yes, that`s right. I mean, one can buy a gold fund, which invest in gold miner. You can buy the miners directly, and gold miners are up 8 percent in the past two days. One can also buy the bullion.

Which do you suggest?

VAN ECK: Well, because I`m leaning a little more bullish after this horrible bear market, I favor the shares over bullion right now. The gold shares were down almost 90 percent from their peaks in 2011. So, they`ve gone through a lot of pain, a lot of restructuring, and what you`re the energy companies being forced to do today, gold companies have been doing for the last two years. So, I think they`re ahead of curve so to speak. That`s why I love the companies right now.

HERERA: All right. You`ve given us two names. I hope I pronounce this correct, Agnico-Eagle Mines. The symbol is AEM and RandGold Resources. The symbol is GOLD.

VAN ECK: Right, those are the top holdings and they`re actively managed gold fund. We also have an ETF GDX. Why we like those companies is we like a little growth to go with our gold portfolios. Agnico-Eagle is based in Canada, and RandGold has more African properties. What we like about gold companies in general is true for these companies, which is their costs are decreasing, partially because the currencies, the Canadian dollar and an emerging market decreasing. But also, other raw materials inputs and the cost of labor as well.

So, that`s expanding, the profitability of the shares at this time in the cycle.

MATHISEN: Jan, thank you very much. Jan Van Eck with Van Eck Global.

VAN ECK: Happy to be here.

HERERA: Despite the distress in the financial markets, some maintain that the Federal Reserve could raise interest rates at its next meeting in March. But a number of things all have to fall into line for that to happen.

Steve Liesman maps out the road to a rate hike.


STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: To many, the market deep down declines make it claim that the Federal Reserve may not be hiking interest rates in March or even this year for that matter.

But some economists continue to insist, especially after Friday`s job report that a Fed rate hike remains a possibility in March, maybe in June, but almost certainly this year.

MICHAEL HANSON, BOFA MERRILL LYNCH: I still think that given the dynamics we`re seeing in the labor market, the fact that I think you`re seeing inflation in the U.S. bottom after core level, headline could still come down a bit because of oil. That puts the Fed I think in play not for March, but perhaps. And so, there`s still definitely some risks that the market is well behind the curve on where the Feds is going to end up.

LIESMAN: Most agree a lot has to go right with markets on the economy for the Fed to hike. Among them, a February payroll report on March 4th that shows a low unemployment rate and strong wage gains, just like it did last month. The economy needs to be on firm footing, bouncing back at least somewhat from the weak fourth quarter. Inflation needs to be unchanged or rising. Most importantly, by the time the Fed meets, markets need to stabilize from the current roller coaster volatility.

STEPHEN STANLEY, AMHERST PIERPONT CHIEF ECONOMIST: I think it`s a little too soon to say they are out of play. Obviously, the odds of a move in March are a lot lower today than they were in December when the fed lifted off. I think they are still waiting to see if the dust clears with financial conditions and if financial conditions were to normalize between now and the March meeting and the focus could return to the economic fundamentals, I think there`s a decent chance they could still go.

LIESMAN: On Wednesday, we`ll get the first clue of what Janet Yellen thinks of the mess that`s now the stock market this year. She hasn`t spoken since December 16th when the Dow was near 17,800. She`s more likely to strike a more balanced tone explaining that hikes are still on the table but unlikely if the economy, as opposed to the market, weakens further.



MATHISEN: Still ahead, the long journey home. Why the slowing Chinese economy is making this Lunar New Year`s journey particularly painful for some.


HERERA: China saw its foreign reserve levels fall to the lowest since May of 2012. China`s central bank used nearly $100 billion in January to defend its currency, and that lowered the country`s reserve to a little lower than $3 trillion.

MATHISEN: Today marks the first of the China Lunar New Year. Millions of workers travel home to be with their family. But this year, with China`s slowing, things are a bit different.

Eunice Yoon reports tonight from Beijing.


EUNICE YOON, NIGHTLY BUSINESS REPORT CORRESPONDENT: China is a society on the move. At no time is that more true than during Lunar New Year.

Every year, hundreds of millions of Chinese hop on trains, planes and buses to return home for the holiday, in the largest migration of people on the planet.

Already in the year of monkey, millions of migrant workers have gone home because of the slowing economy.

Migrants Du Lijuan and Song Yadguo say they can no longer afford to live in a big city like Beijing. Both lost their jobs working at a restaurant when it ran into financial problems last September. They`re waiting to receive their unpaid salary of about $1,000 each before heading back home.

"We have no money to buy tickets to buy gifts for our family or children. Normally, we spend $650 every lunar New Year", she says. "I am not coming back."

Du and Song are far from alone. Many migrants are considering finding a new life in the countryside, fearing jobs won`t be available to them if they return to the big city.

For years, migrant workers have been in backbone of China`s economic growth, working in factories and constructing buildings. But in 2015, the migrant population fell by 5.7 million, its first drop in about three decades.

But with the economy growing at its weakest rate in a quarter of a century, many workers are questioning their future whether they are in traditionally powerful industries like manufacturing or new industries that depend on Chinese consumers.

"It`s not easy to get a job in restaurant industry," she says. "When I first game to Beijing ten years ago I was excited with new hope. I thought I could do well in a big city. But now, I`m so sad and disappointed."

Disappointed that her Chinese dream could disappear in the unpredictable year of the monkey.

For NIGHTLY BUSINESS REPORT, I`m Eunice Yoon in Beijing.


HERERA: India is growing faster than China. India`s economy expanded by 7.3 percent in the last three months of 2015, making India the world`s fastest growing major economy, thanks to a strong manufacturing sector. China`s economy grew at 6.8 percent during the same period.

MATHISEN: Hasbro (NYSE:HAS) reports its biggest jump in quarterly revenue in almost five years and that is where we begin tonight`s "Market Focus".

The toymaker reported better than expected earnings for its fourth quarter and raised its dividends 11 percent. The company attributed the results to strong sales of "Star Wars" and "Jurassic World". Toy shares of Hasbro (NYSE:HAS) up more than 1 percent to $75.11.

Meantime, shares of Apollo Education soared after they agreed to be taken private by a group of investors. The deal is valued at more than a billion dollars. Apollo Education is the parent of the University of Phoenix. It`s had shrinking enrollment and revenue in recent years. Shares of the company up 24 percent to $8.62.

Cognizant Technology solutions saw its shares fall after the company issued weak earnings and revenue guidance for 2016. The IT services provider said clients worldwide were cutting back on routine tech services spending. Shares of Cognizant Tech fell more than 7.5 percent to $54.05.

HERERA: Chipotle temporarily closed all 2,000 of its stores for four hours today to hold a schedule a company-wide employee meeting on the topic of food safety. The company said it planned to set aside up to $10 million to help local growers meet the new food safety standards. The Centers for Disease Control announced last week that the E. coli outbreak of the chain was over. Shares were down more than 3 percent to $445.

Commercial property and casualty insurance company Loews (NYSE:L) misses forecast on both its top and bottom lines. The company blamed charges from two of its holdings. Shares of Loews (NYSE:L) were up to $36.33.

Online review website Yelp posted better than expected fourth quarter earnings. The company also announced that its CFO Rob Krolik would be stepping down. Yelp was slated to report after the closing bell, but the results were released early due do a vendor error. Despite Yelp beating estimates, the stock fell more than 11 percent to $16.06.

MATHISEN: A suburban investment fund manager caught running a $17 million Ponzi scheme is now finally headed to prison. His deception lasts more than nine years.

Andrea Day has this story of crime and punishment.


ANDREA DAY, NIGHTLY BUSINESS REPORT CORRESPONDENT: When it comes to telling lie, prosecutors say this next guy mastered the art of deception. We caught up with him on his way in to meet the judge. Take a look.

You told so many lies for so long, do you have anything honest to say to your investors now.

JAMES PEISTER, CONVICTED FUND MANAGER: I have nothing to say to you or anybody.

DAY: Meet James Peister.

KELLY CURRIE, FORMER ACTING U.S. ATTY, NY: He was an incorrigible liar.

DAY: Apparently still fabricated stories when we found him heading into court, to be sentenced for securities fraud.

When you swindle $17 million, how do you sleep at night?

PIESTER: I didn`t swindle anything.

DAY: He told us he didn`t swindle anything. Is that true?

CURRIE: It`s not true. And if he believes that, then he`s deluding himself.

DAY: Former acting attorney of Eastern District of New York, Kelly Currie.

CURRIE: I don`t think there`s much genuine about him at all other than his genuine greed.

DAY: Greed, he says, that had James Peister living large. In this fancy Long Island estate, his tale beginning right here, where he spent almost two decade fixing cars and managing a repair shop. But according to Currie, Piester decided to switch gears from cars to forming a hedge fund, luring in people he knew to invest.

CURRIE: Telling them that he had years and years in investment experience. None of that was true. He told at least some of them that he used to be an FBI agent. That was a lie. He told other investors that he worked on the floor of the Chicago Commodities Exchange. That was also a lie.

DAY: The reality, investigators say armed with his experience under the hood, Piester rented office space in this building, forming North American Globex. The funds promising to invest in a mix of securities. He demanded at least 250 grand to buy in, netting more than $17 million from some 74 investors.

CURRIE: He`s lost a ton of money on terrible investments that he did make, because it turns out he didn`t know what he was doing.

DAY: He says the rest of the cash went to fund Peister`s lifestyle and to pay off early investors. And to keep the Ponzi under wraps, prosecutors say he sent out phony account statements.

CURRIE: He lied to everything about the performance of the funds. He lied to everybody about how much money was in the funds.

DAY: According to Currie, Peister even brought investors over to see his house, to make them he was a huge success.

Should investors have trusted James Peister with their cash?

CURRIE: Absolutely not.

DAY: Almost a decade after Peister left the body shop, the economy collapsed.

CURRIE: Ultimately, the game ran out. And investors and his auditor actually filed reports and complaints with the FBI, with the SEC and with the CFTC, and that`s really when things unraveled.

DAY: Well, you must have something you want to tell your investors now. Many of them are very hurt.

PEISTER: My investors already heard from me.

DAY: They did? What do you want to say to them?

PEISTER: I`m sorry. I have no comment.

CURRIE: He lied from the beginning to the end.

DAY: Has he made his victims whole?

CURRIE: No, not all.

You know, in total, Mr. Peister paid back only about $220,000.

PEISTER: I didn`t steal anything.

DAY: He said these words, "I didn`t steal anything."

CURRIE: Well, that`s just not true based on the record. It`s not true based on his guilty plea and it`s not true based on what he told the judge at the sentencing.

DAY: And just days ago, James Peister walked into prison to begin serving his six year sentence behind bars.



MATHISEN: Coming up, the controversy being caused by a classic Ferrari and currency swings.


MATHISEN: Here`s a look at what to watch tomorrow:

Two Dow components Coke and Disney (NYSE:DIS) out with earnings.

First primary of the 2016 presidential election. Have you heard about it? Takes place in New Hampshire. And the White House releases its federal budget for fiscal 2017. And that`s what to watch tomorrow.

HERERA: Classic cars, they command staggering price tags and one 1957 Ferrari is certainly no different. But was it the most expensive car sold at auction or not?

Robert Frank explains why that question is hard one to answer.


ROBERT FRANK, NIGHTLY BUSINESS REPORT CORRESPONDENT: A bright red vintage Ferrari took to the stage in Paris Friday and sold for over $35 million, making it one of the most expensive cars ever auctioned.

MATTHIEU LAMOURE, ARTCURIAL MOTORCARS ACUTION HOUSE: This car has been driven by all the best pilots of history.

FRANK: Yet, the famous racer also stirred up a little controversy. The 1957 Ferrari 335S is considered one of the masterpieces of the motor world, with a timeless design and successful racing career. Many of the richest Ferrari collectors in the world came to bid, pushing the total past 32 million euros or $35 million U.S.

In euro term, this was the most expensive car ever auctioned. And Artcurial motors which auction the car said it marked a new world record. But in dollar terms, it falls short of the 1962 Ferrari GTO that sold in 2014 for $38 million. So, car aficionados are now sharply divided on which car should hold the poll position.

Whatever its rank, the sale comes as a welcome relief to the collectible car market which has been slowing in recent months on worries about financial marks and slowing global growth.

Artcural Motors declined to identify the buyer but sources tell me the winning bidder was Bryan Ross, a developer and Ferrari collector in Ohio. Mr. Ross declined comment.

Much more is known about the seller. The car was owned by Pierre Bardinon, the wealthy heir to a French fur making dynasty, who loved red wine and red Ferraris.

After his death, his collection of 20 cars passed to this children who told French tax authorities said they were worth 70 million euros, but experts say they are actually worth over 200 million. Now, the family is battling each other and the French government over the collection which could result in even more Ferraris coming to the auction block.



MATHISEN: Fans tuned in near record numbers. Nearly 112 million people watched the Denver Broncos beat the Carolina Panthers in Super Bowl 50. That made it the third most watched television event in U.S. history.

And as Julia Boorstin reports, some advertisers scored big as well.


JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Hyundai`s first date ad was the top rated ad in "USA Today`s" ad meter, which surveyed 19,000 viewers from across the country. It was followed by the Heinz`s wiener stampede.

And then the Doritos ultrasound ad. This comedic spot the most shared ad of the Super Bowl, according to ad tech company Unruly.

These ads were the biggest winners of the year dominated by predictable mix of celebrities, animals and comedy, and a few big surprises.

JAMES COOPER, ADWEEK EXECUTIVE EDITOR: I don`t think there was a winner this year. It was pretty safe. In general, it was fairly vanilla.

I would say that if there was a winner, it would probably be one the Jeep ads. They sort of really reach for that sentimental touchdown. And I think they scored with it.

BOORSTIN: He`s talking about this series take on the powerful history of Jeep.

The losers?

UNIDENTIFIED MALE: How did he get in here?

BOORSTIN: The pharmaceutical advertisers, in particular, Jublia, and a constipation drug commercial that scored at the bottom of "USA Today`s" ad meter. And perhaps the biggest was Anheuser-Busch, not because of the four ads it bought for its brand, but for the unpaid promotion it got from Peyton Manning, giving two shout-outs to Budweiser in interviews after the game. According to Apex MG Analytics, those shout-outs were worth $3.2 million.

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


HERERA: And before we go, here`s another look at the selloff on Wall Street. It was a wild ride today. The Dow Jones Industrial Average was off 177 points to 16,027, after falling 400 points midday. The NASDAQ fell 79 and the S&P 500 dropped 26.

That does it for us on NIGHTLY BUSINESS REPORT, I`m Sue Herera.

MATHISEN: And I`m Tyler Mathisen. Thanks for watching. Have a great evening, everybody. And we`ll see you here tomorrow night.


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