Full Episode Transcript – Friday, Mar 9, 2012

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JOHN RYDING, CHIEF ECONOMIST, RDQ ECONOMICS: We have strong evidence here that one of the key missing pieces of the recovery is falling into place.

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: We’re talking jobs.
The February numbers are in and they show another month of solid gains.

DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: I’m Darren
Gersh. We’ll hear from Treasury Secretary Timothy Geithner on tax reform
and ways to keep jobs in the United States.

TOM HUDSON, NIGHTLY BUSINESS REPORT ANCHOR: And are you looking
forward to the weekend? Lou Heckler has been thinking about anticipation
at work. It’s NIGHTLY BUSINESS REPORT for Friday, March 9th.

American Businesses Add More Jobs in February

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: U.S. companies are hiring again. That’s according to the government’s latest snapshot of the job market. And, Tom, the February market was even
better than expected.

TOM HUDSON, NIGHTLY BUSINESS REPORT ANCHOR: Yes, some strong numbers here, Susie. It also turned out
there were more jobs added in December and January than first reported. It
all adds up to even more jobs for the American economy. So let’s take a
look today’s data, the numbers here: The nation’s unemployment rate held
steady in February at 8.3 percent. But employers added 227,000 news jobs
to payrolls in the last month and an additional 61,000 happened to be added
in December and January.

GHARIB: Those strong numbers pushed up stocks a bit here on Wall
Street: The Dow rose 14 points. The NASDAQ added 18. The S&P was up
about 5 points. And that was even though Greece was officially declared in
default. And we’re going to have more on that a little later in the
program. But first, Suzanne Pratt takes a closer look at the labor news that’s
lifting spirits from Wall Street to Main Street.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Two hundred
twenty-seven thousand new jobs. That’s a nice boost in hiring for an
economy still riddled with question marks. It’s also the third straight
month of job growth over 200,000, a good sign for the fragile recovery.

Economist John Ryding calls it extremely encouraging.

RYDING: We’re hitting at an employment pace now of 250,000 jobs a
month. That’s a million jobs every four months, that’s 3 million jobs a
year, if sustained. And that’s certainly a major step forward compared to
the recovery pace that we’ve seen over the last two years.

PRATT: In February, the strongest hiring came in professional and
business services with 82,000 jobs. Still, more than half of those were at
temp agencies. Health care added 61,000 new jobs, restaurants and bars
hired 41,000 workers. And the manufacturing sector added 31,000 new
employees.

Naysayers don’t believe the current pace of job growth is sustainable.
They point to nasty prices at the pump and how they’re expected to hurt
economic growth. But, some experts predict the damage will be modest.

BRUCE KASMAN, CHIEF ECONOMIST, J.P. MORGAN: I think the question is
whether hiring will slow in response to that weakening growth number. We
think it will slow a little bit. But we’re hopeful that we’re going to
continue to hold somewhere close to 200,000 in payroll gains as we make our
way thought the rest of this year.

PRATT: And here’s an interesting twist on all those new jobs we’re
seeing. It’s encouraging people who stopped looking for work to go out and
pound the pavement again. But that new supply of job seekers is expected
to restrain the unemployment rate.

KASMAN: I think 200,000 payrolls gains which should normally bring
the unemployment rate down at a pretty healthy pace will leave the
unemployment rate probably no lower than 8 percent at the end of this year
if we’re right.

PRATT: In case you’re wondering when the unemployment rate falls to
let’s say 6 percent, experts say that’s a long way off. We’re talking at
least a few years if not longer. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.

Jobs Report Inspires Optimism in Mesirow Financial’s Diane Swonk

SUSIE GHARIB: Well, our next guest says she is encouraged and hopeful about
today’s job news. She’s Diane Swonk, chief economist at Mesirow Financial.

DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: I do think there was
hope in this report that has been really missing from other reports, and
that was there was an increase in the number of people throwing their hat
in the ring, looking for a job.

We also saw some people that were more willing to quit a job. You
don’t quit a job unless you’re going to get a job in this economy. So,
again, some signs of hope.

GHARIB: So, Diane, though, is this job growth a trend? Can this
employment growth be sustained?

SWONK: Not at this pace, but I think what we are going to see is more
of a moderation as we go into the year. There are some special factors
that helped. We really had unseasonable weather since October, so that
helped us out. The good news is, it’s there. The good news is, there’s something
turning and it’s better than it was. We have to remember our threshold,
though, was pretty low.

GHARIB: You know, I was talking to the head of a very big executive
recruiting firm and he was saying CEOs just aren’t hiring, they’re getting
by with less to do more. Is there anything that we can do to encourage
companies to hire more?

SWONK: Well, the Fed is trying to make it so repulsive to hold cash
that we make better investments in our future, which includes more labor
force and more investments in our long-term sustainability or future,
invest in our future. That’s not occurring right now, but that’s what the Fed is trying to
get us to do. That’s one thing that’s happening. And we also saw today
the trade data was not as good and it’s because the rest of the world is
slowing, particularly emerging markets and the periphery of Europe.

And so, you know, these are the things that CEOs worry about.

GHARIB: We do continue to see encouraging numbers on the economy. Is the economy really getting better?

SWONK: It is really getting better. It’s just getting better from such a low. We had such a big, deep hole to crawl out of and we’re still crawling out of that hole. And I think that’s the hard thing. And we’re not going to see the kind of getting better that everybody and lifts all tides until housing market really comes back. And that’s still going to struggle this year.

GHARIB: How would you describe the shape of the economy right now?

SWONK: Encouraging. I’m not overly optimistic, but I’m encouraged
because it has been a long, hard, slog. I think the recovery is becoming
more sustainable. There are still a lot of headwinds and potholes in the
road ahead, but we look better able to go through those potholes and brace
ourselves through them than we were just a year ago.

That said, we have had a lot of false starts, and we can’t
underestimate the headwinds we still face.

GHARIB: Let’s talk about some of the issues that are facing the
economy. Oil prices went up today. Do you think that higher gasoline and
oil prices could stall the economy?

SWONK: Absolutely. That’s the greatest single threat going forward.
We had it buffered because it was unseasonably warmed. People paid lower
energy bills. That buffer plays out as we move into spring and all of a
sudden we’re hit with higher energy prices at the pump and that can crimp
consumer spending.

We also have — that’s mostly related to political risk, the political
uncertainty abroad. All that we face today is political uncertainty. And
it’s not unsubstantial.

GHARIB: As you know, Fed Chairman Ben Bernanke said last week that
the job market is far from normal. What kind of moves do you expect from
the Fed when they meet next week?

SWONK: I think it’s going to be steady as it goes. Because right
now, you know, the labor market is improving a bit, so they can take from
that. It’s not enough, but it’s not enough to trigger them to move or do
anything. Frankly, they’ve done enough recently. I don’t think they want
to make any noise right now.

GHARIB: OK. Diane, thank you so much for your time. Great talk
talking to you.

SWONK: Thanks.

HUDSON: Still ahead tonight, meet one of the newly hired, Heather.
She tells us how she found a career in social media. It’s coming up in
tonight’s “You’re Hired.”

Treasury Secretary Tim Geithner Explains Why He’s Pushing Corporate Tax Reform

TOM HUDSON: Now when it comes to jobs, the treasury secretary of the United States
says infrastructure investment and promoting U.S. products overseas are key
to adding more workers to American payrolls. That’s what Timothy Geithner
told NBR’s Darren Gersh in an exclusive interview in Fort Worth, Texas,
yesterday.

Darren also asked the secretary about why the Obama administration is
focused on corporate tax reform when several income tax provisions, like
the payroll tax cut, are due to expire at the end of the year.

TIMOTHY GEITHNER, TREASURY SECRETARY: Both are exceptionally
important, and tax reform is going to have to come because the tax system
we have today is really unfair, and it makes us less strong, less
competitive as a country, and you need to work on both to get it, you’re
right.

And the president, of course, you know, has laid out a whole range of
proposals on the individual side to help make sure to protect middle class
Americans, and we ask the most fortunate 2 percent of Americans to bear a
somewhat larger burden of what the country needs.

On the corporate side, what we think we need to do is clean up all the
loopholes, help lower the rates so we can be more competitive, help make it
easier for small businesses to operate in this environment.

GERSH: Here at BNSF Railway, a lot of their customers have them ship
parts that are then exported overseas, and the companies that assemble them
overseas — put them together overseas and sell them overseas.

But your corporate tax reform would require those companies to pay a
minimum foreign tax. The companies are saying that will make them less
competitive overseas.

GEITHNER: Well, what we want to do is lower the overall rate by
cleaning up and reducing this huge amount of loopholes across the system.
And that will make the system more fair for companies. And it will make
the investments incentive stronger in this country.

Now as part of that, we have got to be careful we’re not creating new
opportunities and incentives for people to ship jobs and investment income
outside of the United States.

So we think an important principle for reform should be that all
companies pay a minimum tax on their worldwide income so they’re not — you
don’t see, again, more powerful incentives for companies to shift jobs
outside of the United States. That’s very important.

GERSH: The argument comes back from companies, and they say, look,
we’re more competitive overseas. We’ll also be more competitive here at
home. We’ll invest more here at home. So don’t put a minimum tax on us
overseas.

GEITHNER: Of course, we have heard all of those concerns and these
are things we’re going to work through. But even the chairman of the Ways
and Means Committee, Dave Camp, in his broad outlines for corporate tax
reform, said that Congress should consider as an option a minimum tax like
that.

And he’s doing it as a Republican for the same reason we’re concerned,
because we, again, want to say as we do reform, again, we don’t want a tax
code that creates incentives to move that stuff offshore.

GERSH: On the deficit issue, back in Washington, the policy wonks all
say that the key issue is to get Medicare spending and Social Security
spending under control if we want to get our deficit and debt under
control.

But when I go around the country or to places like Fort Worth and you
ask people, they say that Medicare and Social Security aren’t the problem.
So how do you deal with our deficit when you have that disconnect between
what policy experts are saying and what people are actually saying about
this problem?

GEITHNER: Well, you’re right, that the biggest drivers for our long-
term deficits are the fact that more Americans are retiring and the price
of health care is rising as we discover new technologies for helping extend
life.

Those are the biggest drivers of the long-term growth in government
costs. They vastly dominate and overwhelm the rest of what people think of
this government in that context.

And if we’re eventually address those long-term deficits, then you
have to get both sides to come together and think about ways to make those
commitments to retirement security, to health care security for retirees,
make those sustainable and affordable over time.

And those are going to probably have to be accompanied by the broader
set of tax reforms that you and I were just discussing. I think the core
thing for people to understand is that we can’t put off forever addressing
this long-term deficit.

We have to do it so we make sure we’re helping future growth. We
create room — preserve room for investing in things we need like
infrastructure and education and innovation.

And it’s also very important for people to realize that there’s no
realistic way of restoring gravity to those long-term deficits without tax
reform that helps generate a bit more revenues for the economy as a whole.

Not realistic to do, not possible to do, and not credible for people
to offer Americans a path through that without tax reform that helps raise
revenues.

GERSH: Treasury Secretary Timothy Geithner, thank you for your time.

GEITHNER: Good to talk to you.

GHARIB: Boy, what a week, Tom. We started off with the Dow having
its biggest loss for the year and then we ended up on the upside on some
good news about the job market and who knows what next week is going to be
like.

Market Focus with Tom Hudson-Friday, Mar 9 2012

TOM HUDSON: If we hadn’t lived through it, we wouldn’t have remembered it
here, Susie. It has been that kind of week here. Let’s go ahead and get
you updated to the quiet end to this week with tonight’s “Market Focus.”

As Susie mentioned, the ups and downs earlier in the week. Despite
all of the volatility we saw earlier in the week, we really did see a quiet
end. Stocks began the week in the red, pretty significantly, especially
with that stiff sell-off on Tuesday.

But buyers fought back and the Dow Industrials ended the week down
only 0.4 percent. Of the three major indices, it was the only one down for
the week. The NASDAQ was able to erase all of the losses from Monday and
Tuesday and actually finish the week higher by 0.4 percent.

In the broad market, S&P 500 was able the climb higher compared to
last Friday night, barely, but still higher, just 0.1 percent stronger
tonight compared to a week ago.

Today’s action for the S&P 500 shows morning buyers holding steady
until about the last hour of trading or so, when the day’s gains were cut
in half, but it was a very, very tight and narrow trading range, only about
10 points today.

Now a trade group made the official designation today a, quote,
“credit event” has happened in Greece. In other words, a default. The
International Swaps and Derivatives Association is the arbiter of complex
financial derivatives and its declaration will likely trigger some pretty
big payouts.

Now the move impacts credit default swaps, these are essentially
insurance on bonds. The trade group declared a credit event after Greece
forced all bond-holders to take losses, whether they wanted to or not.

So now owners of those less valuable bonds could collect more than $3
billion if they owned credit default swaps. Now the move was not really
much of a surprise. Just consider the fact that the financial sector,
which has been so much in focus with the European worries, was the best-
performing stock sector today.

Starbucks (NASDAQ:SBUX) shares really perky lately, jumping to a new
high, up 3 percent. The buying came after it released plans to sell a
single-serve brewer. That single-serve market comes with bigger profit
margins.

And the big player in that market currently fell hard. Green Mountain
Coffee Roasters (NASDAQ:GMCR) dropped 16 percent with shares settling at
their lowest price since early February. Now the stock rallied back in
February after a very strong quarter, thanks to its single-serve coffee
business. And, of course, now that’s a business that has a new competitor
in the form of Starbucks (NASDAQ:SBUX).

The company behind women’s clothing store Ann Taylor is one of those
retailers suffering from the strategy of steep holiday discounting,
offering big promotions to get shoppers in the door hurt its fourth quarter
results. But though there are higher hopes for this quarter.

And that led to some share stock-buying. Shares jumping 6 percent to
their highest close since October. The company expressed more confidence
in the types of clothing it’s selling currently and promised better
customer service.

It was a mix of news though at some specialty retailers. Teen
retailers Zumiez (NASDAQ:ZUMZ) and Aeropostale (NYSE:ARO) were up 6 and 3
percent respectively. Both had better-than-expected earnings. But outdoor
clothing store QuikSilver was quick to fall, 7.5 percent, after coming up
shy of expectations.

Now the stock market wasn’t the only thing able to rebound from those
losses earlier in the week. After sinking below $1,700 an ounce earlier
this week, gold is back above that price tonight. As we move into the
weekend, gold rallying almost $13 an ounce on the session.

And that is tonight’s “Market Focus.”

Good Risks & Bad Risks noted by Jack Ablin of Harris Private Bank

TOM HUDSON: Even though the stock market has shot significantly higher this year
already, it’s off to its best start in almost 20 years, tonight’s “Market
Monitor” guest says there’s still opportunity to take risk and be rewarded.
Jack Ablin back with us. He’s chief investment officer at BMO Harris
(NYSE:HRS) Private Bank, with us from that firm in Chicago. Jack, always great to see you. Where do you see taking good risks,
even after this rally?

JACK ABLIN, CHIEF INVESTMENT OFFICER, BMO HARRIS PRIVATE BANK: Sure.
Probably the best opportunities still, Tom, are in the U.S. large cap, S&P
500-type stocks, and also emerging markets. Both trading, I would say, at
a valuation discount to most equity markets and the rest of the world.

HUDSON: Lots of concerns though have been raised about bonds. Is
that a risk to avoid in this market?

ABLIN: Yes, unfortunately, with bonds held down by the Federal
Reserve and other, I will say, artificial factors, we’re not very
comfortable owning bonds beyond five years. So anyone in retirement,
certainly go ahead and buy laddered individual bonds, maybe out to five
years.

But once you get between five years and, say, 10 years, the
opportunity to start owning equities, we would look for more of a hybrid
solution like yielding, you know, preferred stocks or REITs or some other
kind of what we’ll call hybrid securities.

HUDSON: Sure, dividend stocks have been a great place to be over the
last six months or so. A couple of your new picks are both directed in
energy, beginning with Chesapeake Energy (NYSE:CHK). This is really a
natural gas play. And as nat gas prices are at decade lows, you’ve seen
the damage it has done to its share price of C-H-K.

ABLIN: Yes. It is, Tom. And remarkably for as cheap as natural gas
here is in the U.S. and in Canada, natural gas prices in Europe are
substantially higher. They’re, like, three times higher than they are
here. And in Japan, almost four times higher.

So at some point either we’re going to start to move to more of a
world normal energy price, or we’ll start moving this gas through to these
other continents and pick up the slack that way.

So longer term, I think Chesapeake’s position with natural gas will
rise over time.

HUDSON: OK. Another one in the nat gas field, but really all energy
patch here, is Exxon Mobil (NYSE:XOM), X-O-M, the giant that it is, with
still a decent yield at 2 percent, even though it has had a heck of a rally
over the past six months.

ABLIN: It really has, Tom. And it is well-positioned in natural gas.
It’s also, obviously, well-positioned for crude. Here a case where while a
lot of people are pointing to tensions in Iran and the Middle East as the
reason why crude prices are as high as they are, I argue another reason and
probably almost a more important reason is just the expansion of the
monetary base, the amount of money the Fed has printed is now pushing
commodities in general and crude in particular higher.

So if you look at crude prices, for example, denominated in gold,
we’re at longtime median levels, suggesting to me that a lot of this move
we’ve seen in crude has to do with monetary expansion.

HUDSON: Interesting.

ABLIN: It also means that if the tensions in the Middle East subside,
it may be we’re not going to see crude oil roll back that much.

HUDSON: Just to be clear, you’re not taking bullion to the pump, at
least not yet, though, Jack, are you?

ABLIN: No, not yet, no.

HUDSON: OK.

ABLIN: I’m just trying to use to triangulate.

HUDSON: Understood, understood. Previous picks, last time we saw you
was right before Labor Day in September. You liked the health care sector,
ETF of about 12 percent, nice rally there. You also liked the PowerShares
High Yield Equity Dividend Fund, up 15 percent. Putting any new money to work?

ABLIN: Yes, I would say — you know, I would look for the high
quality stocks like V-I-G would be a good place to be. And health care,
I’d stay with that as well.

HUDSON: OK. Fair enough. Do you own everything we mentioned?

ABLIN: Absolutely.

HUDSON: All right. It’s our Friday “Market Monitor,” eating his own
cooking. Jack Ablin with Harris (NYSE:HRS) Private Bank.

ABLIN: Thank you.

Retraining Helped Land a Job as Social Media Specialist

SUSIE GHARIB: As we reported, almost 13 million Americans are still out of
work, but as we continue our look at people finding jobs, we talk with
Heather Carper. In tonight’s “You’re Hired,” she tells us how retraining
provided by a city-run program took her from administrative assistant to
social media specialist.

HEATHER CARPER, ASSOCIATE, AKRETE COMMUNICATIONS: My name is Heather
Carper, and I’m a communications associate at Akrete Communications PR. My
specialty is in social media. So social media strategy, teaching
businesses how we can take things that we typically think of with personal
communications, Facebook, Twitter, that sort of thing, and leverage it in
the business world.

I became unemployed as of August 2010. I had been an executive
administrative assistant for about 10 years. I knew when I got laid off
the last time that I really didn’t want to just go get another job, I could
go get another job, I had done it before. But what I really wanted to do
was find a career where I could have, you know, more determination of what
my future would be.

I’ve been working for Akrete Communications for the last two months
now. Well, you know, I’m not the girl who just brings the coffee and water
to the table, I actually have a place at the table now, and contribute to
the dialogue. And that’s incredibly exciting.

HUDSON: Congratulations to her, certainly in the last month lots of
Americans finding jobs.

And here’s what we’ve got next week for you. We’re going to get a
check on how you’ve been shopping and the prices you’ve been paying with
February’s retail sales and Consumer Price Index.

We’ll find out what’s next for interest rates on Tuesday, when the men
and women of the Federal Reserve meet in Washington.

And on Monday, serving 70,000 customers in four hours, how one NFL
stadium and IBM are using technology for better business.

Lou’s Been Thinking about Listening with Your Eyes

SUSIE GHARIB: And, finally, it’s our Friday feature “Lou’s been Thinking”
with author and educator Lou Heckler. Tonight, Lou has been thinking about
engaging employees.

LOU HECKLER, AUTHOR & EDUCATOR: I’ve been thinking about the joy of
anticipation. Years ago, I hosted a morning TV talk show in North
Carolina. I asked a pediatrician on the show, what’s one thing most of us
as parents forget when it comes to raising children?

He only hesitated slightly: kids love to anticipate, he said. We
should give them something to anticipate every day, maybe a bunch of
somethings. That applies to us big kids as well.

If you manage a group of people, are you giving them the gift of
anticipation? I hear a lot about the problem of getting employees engaged
with their work. I wonder if we have so systematized things in the hopes
of preventing errors that we have taken away some of the creative fun.

What would happen if we explained a goal we were hoping to reach and a
date by which we wanted it completed and then gave them leeway in deciding
how to get there?

Big time athletic coaches often have incentives in their contracts for
certain achievements, building their anticipation of what might occur if
these goals are reached. Couldn’t we build in incentives for our workers,
too?

I heard a famous novelist say once that the best fiction makes us
constantly ask, hmm, what’s going to happen next? It seems to me that
would be a really exciting in the world of non-fiction business as well.

I’m Lou Heckler.

GHARIB: And what’s going to happen next for us is we’re going to wrap
it up here. That’s NIGHTLY BUSINESS REPORT for Friday, March 9th.

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

HUDSON: It’s support that makes programs like NIGHTLY BUSINESS REPORT
possible.

GHARIB: Thanks for joining us tonight and don’t forget to support
your public television station. I’m Susie Gharib. Have a great weekend,
everyone. You, too, Tom.

HUDSON: Anticipating the weekend. You have a wonderful one, Susie. Thanks for joining us. We’ll catch you online and right back here next week.

Copyright 2012 NBR Worldwide Inc.


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