NIGHTLY BUSINESS REPORT for September 1, 2016, PBS



Harwood, Dina Gusovsky, Courtney Reagan, Diana Olick>

Space; Technology; Business; Education; Real Estate>

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

BILL GRIFFITH, NIGHTLY BUSINESS REPORT ANCHOR: Not so fast. Just when everyone was focused on tomorrow`s jobs report as the trigger for the Fed to raise rates, the nation`s manufacturing sector shrinks.

SHARON EPPERSON, NIGHTLY BUSINESS REPORT ANCHOR: Mission to Mars. How NASA and private companies are focusing their attention to get people to the red planet sooner rather than later.

GRIFFITH: And livin` large. Why new off-campus housing has students hoping the dorms go the way of the dodo.

All that more for this Thursday. It is September 1st already, everybody. Good evening and welcome. I`m Bill Griffith, in tonight for Tyler Mathisen.

EPPERSON: And I`m Sharon Epperson, in for Sue Herera.

It was a common belief on Wall Street that all the data was pointing in the right direction and that the Federal Reserve was just waiting to see tomorrow`s August job support and then, it would have all the information it needed to determine the fate of interest rates.

But then, a funny thing happened on the way to Friday, the data did not cooperate. Today`s raft of numbers may give some pause. The big one, the ISM manufacturing index came in at 49.4, below expectations, and shows the sector is contracting. Some pros on the street think that alone could be enough to keep the Fed on the sidelines this month.

Worker productivity in the second quarter also dropped more steeply than originally thought and labor costs rose. Weekly jobless claims rose slightly but the overall number is still better than expected.

GRIFFITH: And then there are auto sales. They cooled off in August, falling by six percent compared to the same month last year, the annual rate came in at just under 17 million that is below estimates.

And as Phil LeBeau tells us now, some think the industry`s six-year run of higher annual sales will come to an end.


PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT: Ask any auto dealer and they`ll tell you business remains strong, but increasingly, they`re starting to see sales slowed down. Last month, three of the four biggest automakers saw sales drop. The lone exception being Fiat-Chrysler, which continues to see strong demand for SUVs and pick up trucks.

KARL BRAUER, KELLEY BLUE BOOK: We`ve been growing for six almost seven years straight. We couldn`t do that forever and we are now seeing what looks like a natural plateauing of the market.

LEBEAU: After six straight years of annual sales climbing by at least 1 million vehicles, it appears pent-up demand for new vehicles has peaked and it`s increasingly clear Americans are moving away from sedans.

Ford, Fiat, Chrysler and Nissan all saw car sales plunge at least twenty- five percent in August. Americans may have grown up in cars, but these days, they`re looking for bigger, more versatile utility vehicles and pickup trucks.

BRAUER: I think the SUV is going to become kind of a new met benchmark car for the American car buyer. I think we`re used to see, you know, Accords and Camrys as kind of the iconic vehicles of a brands like Honda and Toyota (NYSE:TM). I think you`re going to see CRVs and Rav4s kind of take that over.

LEBEAU: The good news for automakers is that crossovers, SUVs and pickup trucks are far more profitable than sedans. So even though overall industry sales may slow down, profits are expected to remain near record highs as Americans pay up for bigger and more versatile vehicles.

For NIGHTLY BUSINESS REPORT, I`m Phil LeBeau in Chicago.


EPPERSON: So, with all that data and tomorrow`s jobs number, it`s not much of a surprise that investors play the waiting game today. The Dow Jones Industrial Average rose 18 points to 18,419. The NASDAQ rose just about 14, and the S&P 500 was off a tick.

GRIFFITH: And another Federal Reserve official has weighed in on the interest rate situation. This time, it is Cleveland Fed Bank President Loretta Mester. She says the labor market is at full strength and a gradual increase in her view in rates is pretty compelling right now.

EPPERSON: And now a day before the August job support comes out, the nation`s largest private sector employer is cutting jobs. Walmart says it will eliminate about 7,000 back office jobs where which are typically higher paid hourly workers. The company says the cuts are part of its effort to have more employees working on the floor with customers and not in offices.

GRIFFITH: Apple (NASDAQ:AAPL) CEO Tim Cook fired back today on that EU ruling to have Apple (NASDAQ:AAPL) pay more than $14 billion in back taxes. The E.U.`s antitrust regulator says that Apple (NASDAQ:AAPL) received unfair tax breaks from Ireland for more than a decade and Cook told the Irish Independent that the ruling was in his words political crap, and that he is confident it will be overturned.

EPPERSON: A SpaceX unmanned Falcon rocket exploded at its launch site in Cape Canaveral, Florida, this morning. It was during a test firing of the engine in advance of a plan launched on Saturday. SpaceX said there were no injuries but the rocket and the payload were lost.

GRIFFITH: And despite that accident, the push into space does continue for both NASA and private companies. One focus is Mars. It is generally accepted that humans will be going to the Red Planet.

But as Morgan Brennan tells us tonight, it may be sooner than we think.


MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: The exhaust blasting out of this RS 25 rocket engine is moving fast enough to get from New York to L.A. in 15 minutes. An engine like this one will propel the Space Launch System, the most powerful rocket ever built, packing a half million pounds of thrust each, it will take four to power the SLS as it launches Orion on its mission toward Mars.

And Mars isn`t as far off as you may think.

BILL HILL, NASA DIRECTOR: We hope to get astronauts in the Martian facility in the early thirties, at least that`s our target today. And that`s based on kind of the funding level were seen today.

BRENNAN: That`s about three and a half billion dollars annually, just for this NASA project. If it all goes according to plan, NASA`s team will make the multi-year maiden voyage to the Red Planet in 2035.

HILL: There`s a lot of technologies we`re going to have to develop that don`t even exist today to get there.

BRENNAN: It will take 10 months just to get there.

RICK MASTRACCHIO, NASA ASTRONAUT: Our astronauts are going to have to be better trained and better equipped, yet we have to do that with less volume and less mass and smaller amounts of equipment that we have on the International Space Station.

BRENNAN: And vastly less support from Mission Control due to communication delays.

HILL: It could be anywhere from eight minutes minimum to about 22 minutes. There`s a -- there`s a every 26 months, Mars goes on the other side of the Sun, so we`ve got about a two to three-week period where we`re not to be able to communicate at all.

BRENNAN: Astronauts will have to administer their own healthcare, farm to get crucial nutrients, and find ways to keep from going stir-crazy.

Perhaps most challenging, exposure to multiple forms of radiation, including galactic cosmic radiation spun off by supernovas.

MATTHEW SIMON, NASA HABITATION DESIGN LEAD: The amount of shielding that would be required to stop these particles is so large that there`s no way that we could actually launch all of that mass.

BRENNAN: Scientists say overcoming Mars and radiation is akin to curing cancer. But all the science and the galaxy doesn`t matter if the money`s not there.

HILL: It`s a package. It`s going to be robotics. It`s going to be commercial industry international. We`re going to have to collectively use our best of the best to get there.

BRENNAN: That means collaborating with private sector companies and combining resources to achieve mission self-sufficiency. NASA and its partners are also retrofitting whenever possible, thanks to automation and metal 3D printing, even manufacturing has been streamlined, including for Boeing`s SLS core stage.

But for all the technology and careful planning, space is still expensive hard and dangerous as evidence just today when SpaceX`s Falcon 9 rocket exploded on the launch pad just across this water at Cape Canaveral`s Air Force station.

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan in Port Canaveral, Florida.


EPPERSON: We get a lot of important information from space, including satellite images of storms. This is Hurricane Hermine projected to make landfall along Florida`s Gulf Coast late tonight or early Friday. But remnants of that storm could impact the whole East Coast just in time for Labor Day, the last big weekend of the summer.

So, what will it mean for business and travel?

Mary Glackin his head of science and forecasts operation at the weather company. She joins us now.

And, Mary, you know, we`re watching the path of this now hurricane and as it is likely to make landfall in Florida and then go up the coast, what impact will actually have on the Northeast?

MARY GLACKIN, THE WEATHER COMPANY: Well, it`s not great timing in the Northeast given the Labor Day weekend, because it`s going to be a pretty big wash out there.

I want to stress first off though that we`re talking about a storm that hasn`t made landfall yet and will continue to track this and update the track of the storm as we go through.

If it stays on the path it`s on, you`re going to see heavy rain up and down the coast there. You`re going to see the storm sit off the coast and generate high surf beach erosion and things like that -- all in all, not what you want on a holiday weekend where you`d like to be enjoying the sun on the beach.

GRIFFITH: You know, we`re all looking at the business angle and we all assume that the only way that people can spend money is when they`re outdoors. But they spend it indoors too so even if they get stuck indoors, they can buy online or they can rent movies or whatever they want, right?

GLACKIN: Absolutely. I think there`s -- that`s the one interesting thing about weather is there`s the physical impacts. People can go and I think you`ll see a lot of online shopping over this holiday season, that`s where right on the cusp going into fall here, good time to think about new wardrobes and things like that.

But whether really impacts your mood as well and we see this all around him working with businesses and there`s really opportunities there to capitalize on these things going forward.

EPPERSON: Are there some other leisure businesses that you think may really benefit from this entertainment business, casinos perhaps, along the coast?

GLACKIN: Yes, I think that you`ll see -- you know, you`ll see people at those indoor activities, you know, go to -- you know, people that are going to brave the rain will get out, maybe do some outlet shopping and things like that I think the casinos are one that will see some draw there.

You`ll see people that you know wanted to go to the coast and maybe plan to go to the coast might head inland.

So, again, we have to kind of watch the track of the storm and plans will adjust based on it.

EPPERSON: All right. Certainly will.

Thank you, Mary Glackin, with the Weather Company.

GRIFFETH: Stay home and read a book.

Coming up the costly tab that states could be facing to ensure their voting systems are secure this election season.


GRIFFETH: Well, Donald Trump is dealing with the aftermath of his immigration speech delivered last night in Phoenix.

John Harwood joins us from Washington tonight with the reaction.

What`s it been so far, John?

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, a couple of things, first of all, some members of his Hispanic Advisory Council resigned today. One said he didn`t want to be used as a prop. You had some conservatives applauding both the message that Donald Trump gave in Phoenix last night and the appearance he made earlier in Mexico City.

But you also had some confusion about where Trump really comes out here and mixed messages. He goes to Mexico City has his picture taken a photo op in a meeting with president Pena Nieto and it was a good picture. It was meant to convey someone who could be a statesman, could be a diplomat.

But then when he goes to Phoenix and presents a different picture, when he serves up a lot of the red meat rhetoric that we`ve come to expect in the primary campaign, you wonder whether the voters he was trying to target, the swing voters with the first event, what they make of the message from the campaign after the second event.

So, not clear it changed his position in the race.

EPPERSON: Has it changed the minds of Latino voters? Has there been a significant change in the numbers that are saying that they will or will not vote for Trump at this point?

HARWOOD: No, his numbers are very poor among Latinos. There`s a new survey out today. He was down more than 40 percentage points with Latinos. Now, Mitt Romney lost Latinos by about forty four percentage points. Can Donald Trump do any better than that? We haven`t seen evidence of it so far. We still got two months to go before Election Day.

GRIFFETH: And in the scheme of things, though, the latest polls do show he has narrowed the gap to some degree against Hillary Clinton, right?

HARWOOD: That`s right. FOX had a poll that was out yesterday that show Donald Trump`s lead at six percent -- excuse me, Hillary Clinton`s lead at six percent. It had been ten percent. So, the peaks that she reached post-convention when after she had a successful convention and Donald Trump made some mistakes seem to be coming down a bit. Six points is still a substantial lead though and Donald Trump`s got a lot of work to do.

GRIFFETH: John Harwood in Washington -- thanks for joining us tonight.

HARWOOD: You bet.

EPPERSON: And with the election a little more than two months away, protecting the infrastructure against cyberattacks is becoming more of a priority.

As Dina Gusovsky tells us, states that are working to secure their voting systems are finding it could be an expensive fix.


DINA GUSOVSKY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Recent attempts to hack voter registration systems including a successful attack in Illinois this week begs the question how secure our state systems.

FRANCESCA SPIDALIERI, PELL CENTER SENIOR FELLOW: As I have researched for the past two years, states are ill-prepared for a series of cyber threats. So, both the campaign party database and website, and the voter registration database a really a week target and the low-hanging fruit of the entire electoral infrastructure. The financial implications could be in the millions.

GUSOVSKY: This report by Francesca Spidalieri published in November 2015 concludes that when it comes to preventing a potential cyber attack, no state is cyber-ready -- though some like California Maryland and Michigan are more prepared than others.

SPIDALIERI: States are increasingly being targeted. A lot of the systems are older. We have over 2,000 jurisdictions with different voting system and voting machines, every state administers their own voting machine.

The staff that is assigned to those machine as a little to no training in cybersecurity.

GUSOVSKY: Internet security expert Joseph Steinberg agrees.

JOSEPH STEINBERG, INTERNET SECURITY EXPERT: Very often, states dedicate a much smaller percentage of their IT budget to security than does industry or even parts of the federal government.

GOV. NIKKI HALEY (R), SOUTH CAROLINA: South Carolina has come under attack by an international hacker.

GUSOVSKY: A South Carolina Department of Revenue hack in 2012 cost the state about $21 million, between payments to investigate the matter and costs associated with upgrading their computer systems and security software.

The Department of Homeland Security Chief Jeh Johnson recently warned that state election officials about potential cyber attacks that could interfere with the elections. He said he would consider designating certain electoral systems as critical infrastructure. Currently, voting systems are not considered critical infrastructure under federal regulations. So, those in charge of these systems are on their own in terms of deciding on the best approaches in dealing with cybersecurity threats.

Some companies that could benefit its local and state governments elect to make additional investments in cybersecurity include IBM, Symantec (NASDAQ:SYMC) and FireEye.

STEINBERG: Whatever the cost of these particular breaches are, it`s probably a small piece of the bigger puzzle which is that states are going to have to spend a lot more money on security.



GRIFFETH: Well, a disappointing quarter promise Genesco (NYSE:GCO) to cut its full-year outlook and that`s where we begin tonight`s "Market Focus".

The specialty retailer said that a shift in footwear trends was to blame for the lower than expected revenue. The owner of Lids and Journeys also reported a surprise drop in same-store sales. So, shares were certainly punished today, ending the day down more than thirty two percent to $48.79.

Salesforce shares were hit after last night`s week current quarter guidance. Company`s earnings and revenue did top expectations with results helped by the impact of a recent acquisition. It also raised its sales outlook for the year, but shares did fall by four percent down the $75.91.

Campbell Soup (NYSE:CPB (NYSE:CPF)), though, said that a product recall and execution issues in its organic foods division cut into sales, and that caused revenue to miss analyst estimates. The soup giant also saw profits fall, and that too came in shy of expectations. In addition, the company gave earnings guidance for the year. That was below targets.

Shares fell by six percent as a result of $56.91.

EPPERSON: Bill, Diamond Offshore said Brazil`s Petrobras has terminated its contract two years early and according to a regulatory filing, Diamond Offshore said it could take legal action as it does not believe Petrobras had a valid or lawful reason for ending the agreement. Shares of Diamond Offshore fell 10 percent on the news to $16.51. Verizon (NYSE:VZ) is raising its quarterly dividend to 2 percent to 57 cents a share, making this the 10th consecutive annual hike.

Shares rose fractionally to $52.56.

Private equity firm TPG has reportedly begun talks with Intel (NASDAQ:INTC) regarding a potential takeover of the chipmaker`s antivirus software division MacAfee this according to Bloomberg. The potential deal could be worth up to three billion dollars. Shares were up 13 cents to 36.02.

GRIFFITH: It has been 15 years since the 911 attacks and that area of New York City`s financial district that was once devastated has been revitalized. Courtney Reagan takes a look at Lower Manhattan`s retail resurgence.


COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: New York City`s financial district has seen a resurgence in many ways since the tragedy of 9/11 and retail plays a large part particularly in the last several years.

Earlier this month, Westfield World Trade Center opened its doors. While it`s fully leased, not every store is open yet. There are more than a hundred brands, including an Apple (NASDAQ:AAPL) Store, Sephora and Kate Spade. Nearby Brookfield places higher end with stores like Burberry, Gucci and Sax which opens September 9th.

UNIDENTIFIED FEMALE: I lived in New York about three years ago, but I haven`t been back since. And back then, this was under construction, so it`s actually quite surprising to see how modern everything looks.

REAGAN: When the seaport district reopens next year, it`ll have more of a market filled with smaller lesser known retail brands.

The Alliance for Downtown New York projects by 2019, Lower Manhattan`s retail square footage will have increased by nearly seventy percent in five years.

Rents are on the rise, too. Financial district available ground floor retail rents are up nearly one hundred percent over the last decade, according to the real estate board of New York.

The foot traffic to the financial district is a key element of redevelopment. Many come to see the 9/11 museum and reflecting pools designed by architect Michael Arad.

MICHAEL ARAD, DESIGNER OF 9/11 MEMORIAL: I remember being here 15 years ago and seeing how the site is transformed over that period of time and it feels like it`s New York again. It`s taken awhile that it feels like it`s an organic part of the city.

REAGAN: Westfield estimates the 13 subway and train lines now shuttle 300,000 commuters through the World Trade Center station everyday, and projects 15 million tourists will visit the neighborhood next year.

UNIDENTIFIED FEMALE: I`m here flying out of JFK to Rome today, so I came a couple days early to see the city and I actually came especially for the memorial museum.

UNIDENTIFIED MALE: I`m here on business but I`m taking a break and going to see the museum and I think what the area says about the period of time that`s passed is the resilience of New York.

REAGAN: For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan in New York City.


GRIFETH: And for more on the resurgence of Lower Manhattan, you can go to our website at NBR com.

EPPERSON: Coming up, how big money is making off-campus living the envy of dorm dwellers everywhere.


GRIFFETH: Well, that didn`t take long. After just six weeks, Amazon (NASDAQ:AMZN) and Wells Fargo (NYSE:WFC) are ending their program offering college student discounts on private loans. Amazon (NASDAQ:AMZN) so-called Prime Student Members could have gotten a half percent discount off their student loans if they applied for a new one with Wells Fargo (NYSE:WFC) or consolidated old ones. But no reason was given for the ending of that program.

EPPERSON: It is that time of year again back to school and for some college students, that means living in large, tricked-out off campus apartments. Developers are pouring money into the sector as demand rises, especially at state universities.

Diana Olick has more from the University of Maryland in College Park.


DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: At Landmark Apartments, just steps from the main campus of the University of Maryland, upperclassman Jordan James and her mother Gia unload groceries into the stainless steel refrigerator of her two bedroom unit.

JORDAN JAMES, UNIVERSITY OF MARYLAND STUDENT: I just like having my bedroom and also the living area, what you don`t get in dorms.

OLICK: Dorms also don`t come standard with a 50-inch flat-screen in-suite bathrooms or in-unit washer dryers. This type of off-campus student living is fast becoming standard at large public universities across the country, as residential developers like landmarks CA (NASDAQ:CA) ventures and investors see ever more green just off the quad.

JJ SMITH, CA (NASDAQ:CA) VENTURES COO: The interest really started two or three years ago. A lot of the capital institutional investors needed to be educated on the space itself and what it meant to be student housing. We had to do a lot of convincing that it wasn`t all animal house you know structures but actually really stable cash flow properties.

OLICK: Close to 48,000 new beds are expected to come to market in privately owned student housing properties this fall. Universities in the Southeast are seeing the most according to apartment research firm Axiometrics. Cash-strapped state universities are actively recruiting out- of-state students who pay higher tuition and that presents a need for more housing.

SMITH: Now that we have educated the institutional world, we`re seeing a lot of capital interested in these properties.

OLICK: As the competition heats up, so do the amenities. Fully tricked- out health and fitness with yoga and spin rooms, outdoor kitchens, media rooms, game rooms, CA (NASDAQ:CA) Ventures is putting a ski and snowboard simulator into one of its newest properties at where else? Colorado State University.

GIA JAMES, PARENT: I think also by living at home and having that certain lifestyle that they become accustomed to, I think it would be difficult for her to move into a room with another person and just share space.

OLICK: But all these amenities come at a premium. After all, the lattes aren`t free. These apartments can cost anywhere from ten to fifty percent more than a campus dorm room, depending on the unit and the meal plan. But apparently, enough parents are willing to pay for it.

Peter and Beth Daw of Manhattan are moving their son in as well.

PETER DAW, PARENT: I tried to accommodate, well, depending on the circumstances, yes. Yes, it`s a -- it`s not a blank check, you know. It`s not the Four Seasons.

OLICK: Maybe not, but it`s close.

For NIGHTLY BUSINESS REPORT, I`m Diana Olick in College Park, Maryland.


EPPERSON: Wow, it sure is close.

GRIFFETH: How nice for them.

EPPERSON: Yes. That`s NIGHTLY BUSINESS REPORT for tonight. I`m Sharon Epperson. Thanks for watching.

And we want to remind you that this is the time of year your public television station seeks your support.

GRIFFETH: I`m Bill Griffeth. We do thank you for your support.

Have a great evening, everybody. We`ll see tomorrow.


Nightly Business Report transcripts and video are available on-line post broadcast at The program is transcribed by CQRC Transcriptions, LLC. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Nightly Business Report, or CNBC, Inc. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c) 2016 CNBC, Inc.

(Copy: Content and programming copyright 2016 CNBC, Inc. Copyright 2016 CQ- Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.)