>> announcer: this is "nightly business report" with tyler mathisen and sue herera, funded in part by hss. >> our value principles are patient first, and we want to deliver the highest quality care. the goal of creating and sustaining value is all about putting the patient at the center of the equation. >> the purpose of this organization is to help people get back to what they need and love to do. good evening, everyone, and welcome to this special holiday edition of "nightly business report." i'm sue herera. tyler mathisen is off tonight.

2016 is almost in the books, and what a year it was. conventional wisdom was turned on its head, both politically and economically. even the stock market was turned upside down and inside out. it was the worst start to a year ever, only to end up with a string of record highs, and that wasn't all. here's your "2016 year in review." naughty or nice, it was mid-december by the time we got the year's first and only interest rate hike. >> we expect the economy will continue to perform well. >> but will it? 2016 quickly became the year to expect the unexpected. >> we're going to win florida. >> oil prices hitting 13-year lows in february, below $27 a barrel. recession fears flying, the stock market tanking. but almost as quickly as they dropped, stocks turned sharply upwards in february. go figure. a brexit vote, terror attacks --

nothing kept stocks down for long. perhaps the biggest shadow cast on election night in the united states. >> here are the raw numbers for you. implied open lower of 776 points on the dow. [ stock bells ] >> not a day later, surprise! a rally. new highs almost daily for weeks. and there were more surprises. apple fighting a court order to help the fbi unearth data inside a locked iphone belonging to one of the san bernardino terror suspects. the move set off a global debate -- privacy advocates versus law enforcement. samsung discontinuing sales of its galaxy note 7 when batteries overheated, some catching fire, others exploding. samsung's estimated losses? $17 billion. among the headline-making mergers announced but not yet completed, at&t's deal to buy time warner for more than $85 billion, bayer buying monsanto for about $66 billion, and

british american tobacco buying rj reynolds for about $47 billion. and it's not only politicians failing when it comes to gaining the public's trust. volkswagen paying out more than $15 billion, the largest auto settlement ever made to u.s. consumers to settle actions died to its emissions deception case. politicians, though, turned the heat on drug companies like mylan, asking how the cost of its epipen could jump more than 500%. and banks just keep on misbehaving. wells fargo, for instance, opening more than 2 million bank and credit card accounts without customer approval. >> you went on television to blame thousands of $12-an-hour employees who were just trying meet cross-sell quotas that made you rich. you should resign. you should give back the money that you took while this scam was going on, and you should be

criminally investigated. >> ceo john stumpf is gone, wells fargo fined more than a dozen times in recent years. total cost, more than $10 billion. other ceos are moving on next year under better circumstances. mutar kent at coca-cola, howard schultz at starbucks, and rex tillerson at exxonmobil, who will soon be telling congress why he should be the next u.s. secretary of state. >> we are operating under a cloud of uncertainty at the moment. >> cloudy because the road ahead is marked by divergent paths. the u.s. is raising interest rates while the rest of the world is not. u.s. unemployment staits stands at a multiyear low, but participation rates are still down, too. high-tech, artificial intelligence, robots and driverless cars increase efficiency but stand ready to claim more jobs. wage growth is a little better. u.s. consumers appear to be buying. but if 2016 tells us nothing

else, it's not to take anything for granted. >> and indeed, this year was anything but conventional for investors. mike santoli was tracking the ups and downs for us. we're going to walk through some of the market's biggest trends and events. good to see you, mike, as always. >> hi, sue. you as well. >> all right, first, the worst start to the year ever. i still remember that, thinking, whoa, this is going to be a rough one. what triggered the decline? >> you know, it was really several hostile trends coming together at the beginning of the year. oil prices were collapsing, as you mentioned there, going below $30 a barrel, really to levels nobody saw, and it happened in a hurry. that destabilized lots of other markets, for example the market for corporate bonds was carried down by that. at the same time, there was a fear of a steep chinese economic slowdown and global industrial production was coming down at a fast pace. so, essentially, all this suggested to investors that the risks of a recession here and across the world were really rising at a time when we

actually thought the economy was going to be on decent footing. so, all of that did feed on itself for a couple months until we got stability and interest rates got to an extremely low level, where it seemed as if you could find some sort of a bottom, and oil prices led the way out. >> then came the brexit vote, which was unexpected. donald trump's white house win as well. unconventional year, certainly. did anybody expect all of the new highs that we've been seeing recently as a result? >> no. in fact, i don't think you could find many people who either predicted those outcomes of those votes and the market reaction. certainly, they went right against conventional wisdom in terms of how the public o would absorb the votes of the british voting leaving the eu. there was a lot of anxiety in the lead-up to that vote and similarly to the u.s. election. markets took a step back and a lot of people essentially trying to stay on the sidelines to see how it worked out. and it seems as if they almost took too much caution heading into those votes. and then, of course, you had this sense that rates were going

to stay low and it seemed as if the u.s. economy was still plugging along, even at a slower pace, under 2%. it still was in growth mode. >> yeah, you mentioned interest rates. the bond market, especially in the latter part of this year, had some huge moves. the yields dipped first, and then they turned right around and rose. so you know, the whipsaw that we saw in yields, how unusual or how much of a surprise was that? >> quite a surprise to get down on the ten-year treasury note, for example, below 1.4% in july, and then really turned around right from there is interesting because that dynamic of rates going down so much were supportive to stocks on the way in the first half of the year because people said, wow, looks like i can buy stocks from decent dividends if the interest rates would be that low. then the comeback. people are perhaps talking about the 35-year bull market in bonds perhaps ended over the summer and you have some momentum to interest rates right now. unclear how much higher you go. in fact from a 12-month basis,

looking back to december of last year, the ten-year note is not up that much in yields, so rates haven't gone up that much, but it was a dramatic, v-shaped move along the way. >> it sure was. part of the merger boom that we saw -- there were a lot of big ones announced -- was part of that the interest rate scenario or were there others? >> definitely a part of it. basically, the market for corporate debt -- again, i mentioned it had a bit of a panic at the beginning of the year -- it came back very strongly. so companies were continually able to borrow at very advantageous rates, stock prices recovered and i think ceo confidence did come back as well as the markets were resilient. also, you have a bunch of industries, media, technology, energy, where they were undergoing a lot of very fundamental changes, and you had companies that were looking to kind of either, you know, acquire in order to grow or to find a new home, and i think a lot of those new dynamics were playing out over the course of the entire year. >> all right, we'll see what 2017 looks like. i know you'll be there with us, mike.

thanks for joining us. >> sure, sure, thanks. >> mike santoli. 2016 may also be remembered for a surge in populism. voters decided it was time to give antiestablishment outsiders a chance to govern. we saw it with donald trump's election victory. but as michelle caruso-cabrera reports, it started across the atlantic in great britain. >> reporter: 2016 was the year of revolt. a sweepy world elite to the fact that they, the ruling class, are in trouble. brexit and donald trump. citizens of the uk angry that bureaucrats in a faraway capital, brussels, have so much sway over uk laws. >> i don't want to see england become under brussels' rule and regulations, because that is what will happen. >> reporter: it's happening now, isn't it? >> well, yeah, that's why we want out. so we can become great britain again. >> reporter: angry, too, that

cheaper labor from other countries allowed by the eu's open border policy makes it harder for local, low-skilled workers to get jobs. those same open borders, they worry, make them less safe after terrorist attacks in paris and brussels. so in june, the united kingdom's referendum on membership in the european union led to the unexpected decision that the uk will leave the eu. not even those who wanted it to happen thought they were going to win, but they did, leading to the downfall of a government and the realization that the euro may not survive. >> there are 17 million people that voted for brexit. it's a victory for ordinary people, decent people. it's a victory against the big merchant banks, against the big businesses and against big politics. >> reporter: there are now three major elections in europe in 2017 -- in france, germany and italy -- and two of them pose direct threats to the survival of the currency.

in france, marine le pen, one of the top contenders to win the election, and she wants france to abandon the euro and bring back the franc. in italy, where support for the euro is barely above 50%, a comedian could come to power, leading to the italian era political pundits thought they never had a chance to win, but then along came -- >> mr. donald j. trump! >> we will make america strong again. we will make america rich again. we will make america safe again, and we will make america great again. >> reporter: looking toward 2017, there is so little that is certain, except, perhaps, for this -- there are no sacred cows left in the world, and all we assume to be true may not be. for "nightly business report," i'm michelle caruso-cabrera. >> so, here in the u.s., voters had their own economic concerns,

though the statistics show the labor market is improving, there are large parts of the country that are not feeling the benefits. joining us now to discuss this is noah vereman, who covers politics for the "los angeles times." welcome back, noah. nice to see you again. >> thanks for having me. >> as you look back at 2016, an amazing year, certainly, but politically one that we really have not seen in our lifetime. >> no, no. i think, you know, even most of trump's voters were really surprised by what happened. certainly people who were working for trump's candidacy were very surprised what's happened. although in retrospect, a lot of the clues were right there in front of us. >> yeah, you mentioned that there was at one point in the campaign, and you covered it so closely for the entire cycle, where you realized that donald trump was "the real thing." when was that? >> it was actually back in 2015, not that i had any premonition

that he would win, but i was actually covering the initial campaign swing that governor scott walker of wisconsin was making in south carolina to show that he had national standing. and he was really one of the establishment heavyweights of the race. and i was at one of his events at a harley-davidson dealership early in the morning. people were lined up to see him. and i wanted to ask them what they thought of this huge republican field. and i was just surprised how many people without any prompting mentioned donald trump. he was speaking to them. they knew he wasn't being taken seriously by some of the other candidates and the media, but to them, he was saying something important. and i came back thinking, you know, trump is a real thing. at that point, most people weren't regarding him as such, including most of the other campaigns. >> what do you think that the primary motivator was for his momentum? i mean, it seems to me, and we've talked about this before

when we had you on the program, it's a sense of the lack of fair ness in the system and the lack of willingness to fix that by the establishment. >> i think that's right. i think it's also an overall lack of security, and you can put so many things into that category because it's economic security, for sure, but it's also an insecurity with immigration, changes in demographics, seeing terrorism happened here and abroad, and people just said, you know, those who voted for him, it's just time to take a shot, take a chance here that maybe there's a better way, maybe the system is not working for us. and a lot of those people felt that traditional politicians had just been in too long, not to say that a lot of these factors weren't there before trump, but trump was this unique figure who could really capitalize on all that. >> he was a catalyst, if you will. so, as you look into 2017, the

new administration will shortly, you know, be in place. what are your expectations having covered the campaign and mr. trump so closely? >> well, i'll say the first one having covered it, that my expectations are i'll be completely surprised, as will all of us, right? we can't -- those in the prediction business might have had one of the worst years ever in 2016. but i do think that it's going to be very interesting, because a lot of the people who voted for trump aren't necessarily on board with all of the policies he talked about, and we're not sure if trump is on board with all of those policies. >> right. >> yet, he had appointed a cabinet, especially on the domestic front, that is a very strongly right cabinet that believes in a lot of things that actually trump didn't talk about or he expressed a different opinion than they have. so, the push and pull between the agencies that control the actual government and donald trump, who will have the final

say, i think is going to be a huge story in the coming year. and we're really going to see early, you know, how much of an imprint will be trump's and how much of an imprint will be some of these individual agencies. >> okay. well, we will have you back to talk about that in the new year. noah, thank you very much. >> thanks very much. >> with "the los angeles times." still ahead, a landmark year for housing, a sector that touches millions of americans. this year the federal reserve hiked interest rates for the first time in a year, the economy grew at the best pace in two years and the unemployment rate dropped to a nine-year low. and as steve liesman reports,

those are just some of the economic milestones of 2016. >> reporter: 2016 began with so much optimism that fed vice chair stan fisher felt confident enough to predict as many as four rate hikes. >> those numbers are in the ballpark. you know, the reason we meet eight times a year is because things happen. >> and stuff sure did happen. how the fed went from forecasting those four rate hikes to doing just one is a story of a year that produced several bouts of global fear and ended with a dollop of cheer. within days of fisher's comments, china would begin a meltdown that would send shock waves around the globe and lead to concern about recession in the united states. growth would go flat, averaging just over 1% in the first half. unemployment got stuck at 4.9%, and job growth downshifted from a brisk pace of 2015. another blow from abroad came from the unexpected brexit vote, where the british decided to leave the european union, putting the fed on hold yet again. >> there's no question but this is an additional headwind, but i

think that, you know, it is something that we can manage through, and europe and the uk can manage through. >> and manage through it did. markets ultimately recovered. job growth rebounded in the third quarter. and overall growth topped 3% for the first time in two years. but 2016 had one more surprise in store, the election of a president that most predicted would mean economic doom but actually sparked a stock market boom. with a year of near misses and would-be accidents in the rearview mirror and markets buoyant with the chance of fiscal stimulus and tax cuts to come, the fed finally felt confident enough to hike. fed chair janet yellen called it -- >> a reflection of the countenance we have in the progress the economy has made and our judgment that that progress will continue and the economy has proven to be remarkably resilient. >> reporter: resilient enough, of course, for just one hike, not four. and maybe the fed is now taking

the market's advice. as 2017 begins, they forecast on average only three hikes. for "nightly business report," i'm steve liesman. and 2016 was a banner year for the housing market. demand was strong and mortgage rates sat near record lows. two types of buyers were behind the strength, but one barrier kept cropping up. diana olick looks back on the year that was. >> reporter: 2016 was marked by the first big move from first-time millennial home buyers. >> to me, once we got married, i just wanted our own place, something to call our own. >> reporter: as well as downsizing baby boomers. >> this is it, you know, this is the last house you're going to have. you've got to get what you want. >> reporter: the two largest generations and the two biggest drivers of 2016 home sales. the pace was the highest in a decade, although 1 million more homes sold in 2006 than 2016. >> low interest rates were definitely a factor, and i also think that rising prices. you know, real estate became

again a good deal, a good investment. you saw real returns. you saw prices appreciate. >> reporter: the popular 30-year fixed mortgage rate sat below 4% for much of the year, hovering near a record low, and only surged higher following the presidential election. home price gains, which had been easing at the start of the year, revved up again over the summer, thanks to very tight supply of homes for sale. older buyers, most of them already homeowners, saw much of their home equity return, thanks to those rising prices. that allowed many to sell and downsize into popular, new, active adult communities, like this one by towle brothers outside of denver. >> we've been able to save and invest and all that stuff, so we have funds accumulated to get here. >> this is a year where everything came together -- buyer demand, enough inventory, superstar cities, wage growth and technology, technology that fed listings to people's watches

and their cell phones and made it really easy to make decisions on homes. >> reporter: the only ones not keeping up with all this housing heat were the homebuilders. they're still operating well below historical norms. without more new homes for sale and with rising mortgage rates, those young, first-time buyers who came to the market this year may be sidelined once again. for "nightly business report," i'm diana olick in washington. up next, what do you get when you mix one of the nation's biggest banks and fake accounts? arguably the biggest corporate scandal of 2016.

one of the biggest corporate scandals of the year had to be wells fargo. the company paying $185 million in fines to settle allegations it opened millions of fake accounts for customers. that led to some cities to suspend business with the bank for a year. that also led to contentious congressional hearings, and ultimately, the ceo, john stumpf stepping down. and just two weeks ago, wells was accused of selling customers prudential insurance products that they were unaware they were buying. dick bovet with equity research at rafferty capital joins us now for a look back at wells fargo. pleasure to have you with us, dick. welcome. >> thank you, sue. >> you know, you were early on identifying wells' problems, and you know, it's interesting because those problems are still with them. it's been basically a full year

of damage control at that bank. >> well, what's really fascinating about this story is that -- and i agree, by the way, with what elizabeth warren said. i think that what the bank did was horrendous and they deserve to be punished for it. but what is really fascinating is all of the negative things that i thought would happen to wells fargo after this stuff was revealed have happened. you know, the company can't change its executives without the government's permission. it can't make acquisitions. people are not showing up at the branches. their riskiness was downgraded by the fsb. they need to raise more capital. so you know, all these bad things have happened, but the stock continues to reach new highs. so, the market simply doesn't believe that any of these negatives will have any meaningful impact on the earnings of the company or the secular growth rate going forward, which quite frankly i don't understand. >> well, is it that, or is it that the financials overall,

especially at the end of 2016, have been the sector to be in, above almost any other? is it just going along for the ride with the rest of the financial stocks that have rallied so dramatically? >> yeah, no, i think you're very correct in that. i think that, basically, people said, you know, now is the time to buy bank stocks. i've got to buy bank stocks. i'm going to buy bank stocks. what bank stock should i buy? then, of course, because wells fargo historically has been the favorite of institutional investors, they say i'm going to buy wells fargo. and i don't think they've looked beneath what they're buying to find out what the real problems are with generating secular growth in this company. i mean, i think when they figure that out, they might not be that happy with what they've purchased. >> so, it sounds like you're predicting a rather rocky, at least beginning of 2017 for the bank. >> well, not for the banks overall, but for wells fargo, definitely. >> but for wells, yeah. >> yes, yeah, i think that the

outlook for the banks is probably the best that it's been in a decade and that there are a number of ways that they're going to benefit as a result of the supposed trump policies. i mean, if he's going to repatriotate $2 trillion worth of money, that's bank deposits. if he's going to stimulate economic growth through, you know, building bridges and tunnels, that's bank lending. if he's going to increase manufacturing activity using tariffs, again, that's bank lending. if we're looking at interest rates moving up ever so slightly, that's bank margins. so you know, you can look element by element in this program and it benefits programs across the board. >> well, we'll see what happens. dick, thank you for spending time with us. >> thank you. >> dick bovet with rafferty capital. thanks for watching this special edition of "nightly business report." i'm sue herera. have a great evening. we'll see you tomorrow. >> announcer: "nightly business report" has been funded in part by hss.

>> our value principles are patient first. and we want to deliver the highest quality care. >> the gome of creating and sustaining value is all about putting the patient at the center of the equation. >> the purpose of this organization is to help people get back to what they need and love to do.

man: it's like holy mother of comfort food.ion. woman: throw it down. it's noodle crack. patel: you have to be ready for the heart attack on a platter. crowell: okay, i'm the bacon guy. man: oh, i just did a jig every time i dipped into it. man #2: it just completely blew my mind. woman: it felt like i had a mouthful of raw vegetables and dry dough. sbrocco: oh, please. i want the dessert first! [ laughs ] i told him he had to wait.