this is "nightly business report," with tyler mathisen and sue herera. make or break. why tomorrow's jobs report could determine whether the federal reserve does something later this month that it hasn't done in nearly a decade. the digital highway. will big investments in technology help make your commute a whole lot easier? and too much risk? why your portfolio may not be as diversified as you may think. all that, and more, tonight on "nightly business report" on thursday, september 3rd. i'm sue herera. tyler mathisen is off today, a day that saw a big market rally fade. we begin tonight with the job market. and tomorrow's employment report for august. which is being hailed as one of

the most important in recent memory. not just because it's a barometer for the health of the economy, not just because it lets us know how many people are working and whether wages are rising, but because it is the last piece of the economic data that the federal reserve will get before its next meeting later this month. the one that some think could mark the first interest rate hike in nearly a decade. a strong report could bolster the case to raise, a weak one to wait. we'll get that number before the opening bell tomorrow. hampton pearson has more. >> heading into friday's all-important job reports, more signs of underlying strength in the overall economy, the trade deficit shrank in july to just under $42 billion, its lowest level in five months due to increased exports. and service sector companies expanded at a healthy pace last month due to robust consumer spending from job gains. private sector job growth came in less than expected at

195,000, and weekly jobless claims increased to 282,000. above expectations, but still consistent with a stronger jobs market. in recent years, august headline jobs numbers have come in below expectations, only to be revised upward in later months. so economists and market watchers are paying more attention than usual because it's the last decent key economic data to consider raising interest rates for the first time in nearly a decade. >> they can be put off easily, the fed, if the numbers don't hit their mark. 220,000 payroll jobs, pretty much has to be there. unemployment rate has to come down to 5.2%, and wages have to hold at 0.2% for the month, 2.1% year over year. if we don't get that constellation of the data and the market rallies, i wonder

what the fed will do. >> but they say a fragile global economy triggered by the downturn in china may keep the fed on hold. >> mainly for the fed is not whether it should have hiked, it should have hiked, hike? not whether the domestic economy requires a hike. it does. do you really want to do this when the global economy is so fragile. if they hike in september, it will be the equivalent of what trying to do it a few weeks ago with the currency. the right move, but at the wrong time. that's why i think net-net, they'll wait. >> more good news for workers late today. a national survey of small businesses found hiring increased in august, with wages for hard-to-fill jobs going up as well. for "nightly business report," i'm hampton pearson in washington. while the u.s. economy appears to be chugging right along, the same cannot be said for europe.

today the european central bank cut its growth and inflation forecast for that region, blaming concerns over the global economy. mar mario draggie's tone is that the economic recovery has been disappointing. >> information available indicates a continued weaker economic recovery. and as lower increasing inflation rates, compared with earlier expectations. more recently, renewed down side risks have emerged to the outlook for growth and inflation. >> many are interpreting these comments to mean that the ecb's 1 trillion euro stimulus program could be extended. and a further fall in oil prices and slowing chinese economy, which is the world's second largest. china's stock market which

sparked much of the recent volatility across the globe is closed today and tomorrow. this is as the country commemorates the 70th anniversary of the end of world war ii. china is marking that occasion with a military parade in tiananmen square in what some say is an effort to divert attention away from its economic issues. meantime, the white house is getting tough with china. in an exclusive interview with steve liesman, treasury secretary jack liu criticized the country over the relationship with the u.s. >> if there's further devaluation of the yuan, will that give you concern that china's trying to depreciate its way out of its problems and do so in a way at the expense of the united states? >> look, i think we have been very clear for a very long time with china, how they manage their exchange rate is a matter of great concern to us. and that they need to be willing to let market forces drive the

value up, not just drive it down. that's a message i've delivered very clearly. you know, i think in a moment when their economy is weakening, as opposed to strengthening, you know, it's easy to say the pressures are to go down, not up. but this is not a new conversation. this is a conversation that's been going on for some time. so we need to see a serious commitment to the kind of reform agenda that makes it clear that over time, you know, their currency will go up as their economy is strengthening, and they need to be committed to the kinds of policies that will contribute to stronger economic growth. >> republican presidential contender donald trump said what's going on with china's economic policies amount to the greatest theft in history. >> i don't need to look to the political statements to focus on the importance of the u.s.-china economic relationship. it is enormously important relationship, where china needs to understand quite clearly that we expect for them to behave in

a way that's consistent with agreements that they have made. where we expect them to behave in a way that meets a level of transparency, where it's credible that they're moving to keep commitments that they've made. and they have to understand, and i make this point to them quite clearly, there there's an economic and political reality to things like exchange rate. and they need to understand that they signal their intentions by the actions they take, and the way they announce them. they have to be very clear that they're continuing to move in a positive direction, and we're going to hold them accountable. >> treasury secretary liu also spoke with steve about the iran deal saying the u.s. will continue until iran complies with the agreement. liu was expected to attend the meeting in turkey this upcoming weekend. meantime, on wall street, another big rally faded. the blue chip dow index was up nearly 200 points efarly in the

day on the comments of mario draghi. volatility took over and the market couldn't hold on to its gains. by the close, the dow jones industrial average rose just 23 points to 16,374. the nasdaq slipped 16 points and the s&p 500 was up two points. the move lower in stocks followed the price of oil, which started the day much higher than where they ended at 4675 a barrel. the volatility is prompting some investors to look at their portfolios to determine whether they're diversified enough. according to the next guest, you're probably not as diversified as you think. joining us is the president of the arcade yan asset management. people put money in etfs and bond funds and market funds all the time thinking that that is achieving diversification for them. you argue it is not. how so? >> it's not that it's not achieving diversification, it

just may not achieving the amount of the diversification that you want. the s&p 500, those etfs are what they call cap weighted, meaning the largest companies take up the most bandwidth in that index. when you look at that, 60 securities represent 51% of the s&p 500 index that most people buy. so another way of thinking about that is, for every dollar you put into that, 51 cents of that is going for 60 stocks, and the other 49 cents are going to buy the other 440. >> if you want to increase your diversification then, what index do you think better reflects a diversification for a, quote unquote, typical port foal yo? >> if you want to get representation broadly, you can buy something like an equally weighted s&p 500 index. etf, excuse me. where it owns one share of the each 500 securities, so you get a more broader band.

and i'm not saying one's better than the other. >> this broader index smooths out the volatility? >> yes. what it does is, it gives you a bigger swath of the economy than you're participating in. you're not just participating in the largest 60 stocks. when you look back since the market took off in the beginning of the bull market in march of '09, you actually see the equal weight of one has done better than the one everyone buys. it's not a recommendation as much as we're seeing so much swings in the market. and everyone's concerned about the big up 1,000, down 500. what people need to realize is in many ways, these indexes are becoming momentum driven when so much money is going into such a narrow swath of companies. >> creating a volatility. >> as it's going up. etf makers have to buy more of those big stocks, and when it goes down they have to sell more. >> what about the broader market and volatility that we have seen

with china, perhaps not linked to this momentum play? do you see this smoothing out a bit or do we have more rough seas ahead? >> i think volatility is here to stay. i think investors need to get used to much wider swings in the market. markets are pretty much dominated by computers, and these very easy-to-trade risk on, risk off trades. people have to realize that in the old days, mutual funds were priced at the end of every day. they weren't moving markets during the middle of the day, where etfs trade like risk on, risk off. >> you need a little drama mean. >> you do. >> ken, thank you very much. president at mer cade yan asset management. ahead of tomorrow's jobs report, more than 8.5 million workers are likely wondering whether they'll be impacted by a recent federal ruling. the national labor relations board last week broadened the definition of employer while redefining what an employer is, may not seem to you like a big

deal. kate rogers explains that it could have huge implications for franchise operators. >> do we add another layer of overhead? do we add more consultants? do we hire more attorneys? and what do we do to make sure we're in compliance? they're beginning to absorb what last week's ruling from the national labor relations board might mean for their future. the broad definition of employer, franchise locations could be considered joint employers, alongside their corporate parent. in an industry that has long separated the two. now the corporate parent may also be responsible for liabilities and violations at franchise locations. owner of seven franchise locations of a bakery across california, it will take away her ability to run her business independently. the former lawyer got into the industry seeking her own piece of the american dream. >> i got into this to be my own

business owner. and to have a say in how my business ran. with the support of a brand. and what's happening with the nlrb is it really takes the power away from me, to run my own business. >> reporter: among her concerns are higher costs from her corporate parent, and more oversight to remain compliant under potential joint employer policies. more broadly, the industry's largest trade group says a move may, quote, create havoc within the fast growing segment of the economy, causing fewer stores to open, and holding corporations accountable for actions and violations at franchise locations. according to the international franchise association, the franchising industry was expected to grow about 21.5% to more than 780,000 locations nationwide. franchising employees have 8.5 million workers across the country and they say this could stifle the projected growth. but advocates say it's just a

reaffirmation of the decades-old labor law. >> this has been around for a long time. at least since 1938. so brownie farris just really clarified that franchiseors and franchisees may well be joint employers, and have a duty then to bargain with their employees. >> reporter: it remains to be seen how this decision may impact the separate case the labor board is weighing against mcdonald's, expected to resume this fall. experts say it could very well set a precedent. for "nightly business report," i'm kate rogers. to read more about how that ruling might impact franchise operators, head to our website nbr.com. still ahead, how disney plans to develop a new generation of star wars fans. and a new generation of potential profits.

some good news, if you're planning on taking a road trip this weekend. gas prices are falling. this holiday weekend the cost to fill up will be the cheapest since 2004, according to aa, the national average is currently $2.44 a gallon, nearly $1 below where it was a year ago. and that translates into big savings. all in, consumers will save a total of about $1 billion on gasoline this holiday weekend alone. and if you do plan to drive this holiday weekend, you will be very aware of the poor state of our nation's roads. and all the traffic that goes right along with it.

but amid the hand wringing about our aging infrastructure, some states are building a digital infrastructure with the aim of improving your commute. mary thompson reports from woodbridge, new jersey. >> more than 2 million cars a day traveled in new jersey turnpike and garden state parkway, where accidents and weather often disrupt commutes. commutes the state wants to disrupt and speed up with the help of technology. >> we're trying to improve our visibility of the roadway, and we're improving that visibility for traffic management professionals. >> the chief information officer of the new jersey turnpike, at its traffic management and technology center in woodbridge, a massive video screen reflects information, sent from the centers embedded along the road's 2,600 lane miles, and views from cameras perched along the way. >> the more data that we can bring into there center, and then analyze, the more pertinent

information we can give to our professionals who know the roadway, that then inform all of our motorists. >> with americans spending an average of 40 hours for a work week's worth of time stuck in traffic, new jersey looks to ease commutes, sending information to dynamic signs, warning drivers of accidents and slowdowns, and providing estimated travel time. this is isn't unusual, but in the future, ibm said the information will be used in other ways. >> you go from an a littics to tell you what happened, to starting to predict what might happen, to being able to prescribe what would be the best thing to do. >> that means some day drivers could be directed to less congested roads, or barriers could be moved and lanes shifted to accommodate heavier traffic slows. the centers and weather data will be analyzed to direct travelers to the best roads in bad weather. >> we're using digital technology to thermal map the

roadway. what that tells us is, it allows us to determine the propensity for different parts of the roadway to freeze earlier. >> while the current goal of the digital infrastructure is to get better information to the signs like the one you see behind me, the ultimate goal is to get that information directly to the cars, and their drivers. a shift requiring new technology in many cars, and continued investments of technology in the roads they drive on. in woodbridge, new jersey, i'm mary thompson for "nightly business report." a food deal is where we begin tonight's market focus. general mills is selling some of its vegetable brands like green giant to b & e foods. general mills which owns cheerios and yo play said the deal will allow it to focus on its other brands. general mills was more than 1% higher to $57.61. land's end saw its sales to

slip in the most recent quarter. the company's spring and summer apparel didn't sell well with customers. the shares went 5% higher. a big miss from joy global. the mining equipment company reported earnings and revenue that came in below estimates, as weak demand for commodities weighed on its business. the company also cut its guidance for the full year. shares tumbled more than 14% to $18.90. and verizon and royal caribbean are raising their dividends. verizon's new payout of 66 1/2 cents per share will be payable in november for shareholders on record as of october 9th. royal caribbean increased its dividend to about 37 cents a share which will be payable to shareholders in october who are on record as of september 18th. verizon shares were higher, and royal caribbean rose a fraction to $89.29.

disney "big investment in "star wars" is entering a new phase. this one is a marketing push like few have ever seen before, and it starts tomorrow. months before the first film is scheduled to be released. julia boorstin said it's not just disney that is expected to profit from what's called force friday. >> force friday is an unprecedented global merchandise campaign. with hundreds of new "star wars" products hitting stores. disney and retailers are pulling out all the stops. the disney store, toys "r" us and walmart are opening stores around the world at 12:01 friday morning. online, those retailers and amazon are making a promotional push for toys and deals. it's the start of a 3 1/2-month-long rollout of products which licensing expert says expands disney's merchandising potential. >> four to six weeks in front of the film is when the second wave of merchandise is going to start to appear.

so this way everybody gets a couple of different bites of the apple. >> not only great for disney, but also hasbro which has the toy licenses, plus legos and retailers, particularly toys "r" us. it could accelerate their growth. it's projected half a billion dollars in incremental revenue in disney's 2016. >> one, two, three. >> and to maximize "star wars" potential, disney is turning to youtube to lure in a new generation of "star wars" fans. it's giving its maker studio stars with huge youtube followings. an 18-hour live streaming leadup to the sale. >> i think disney bringing in

maker talent was smart. "star wars" is very much community based and they understand that. a lot of the people who have been very excited to play with the toys and unbox the toys are being amplified. and to be a part of that is really showing that disney, star worse and maker really understand it. "star wars" is more than a brand to some of us. it's a lifestyle. >> if this strategy works, disney will turn a new generation into "star wars" fans. the risk, all this promotion overdoes it. analysts are optimistic. i'm julia boorstin at lucas films in san francisco. all right. coming up, student housing at college used to mean shared bathrooms and cinder block walls. but that was then. wait until you see what's happening now.

to housing now where the average rate on the 30-year fixed mortgage rose last week to 3.89%. mortgage rates tend to track the yield on the ten-year treasury note which has been very volatile lately, along, of course, with the market. it is one of the hottest real estate plays today. just in time for back to school. student housing. here's the twist. as the market gets more competitive, developers are tricking out the properties, luxury living on a student budget. diana olick shows us how it works from athens, georgia. >> it may look like happy hour

at the four seasons, but it's just a week day afternoon at the university of georgia, off-campus housing. the standard developed by athens based landmark properties is aptly named because apparently this is what students today demand. the resort style pool, fitness center, racquetball, sauna, game room, private study lounges, and granite laden apartment suites that would balk at the very idea of cinder block walls. developers say the most expensive suites actually leap up the fastest. >> we'll be catering to the 10% making them super premium. offering larger square footage, more amenities for those residents, maybe two-story rooftop town homes with patios. >> how do students pay for all this? prices actually aren't much

higher than on campus where costs have been soaring. they target big public schools which have lower tuition. and then there is the foreign factor, as millennials age out of their college years, foreign students' enrollment is climbing and more than making up the demand. foreign students tend to favor all these amenities. landmark is taking its standard brand across the nation, growing footprint and profit. they sold the athens georgia property to the catholic community. this as another edr put a waterfall into its new building down the street. >> now we're starting to see institutional quality, developers and investors, so it's getting a little more competitive to go after the market share. >> coleman said demand is strong and parents' pockets are deeper than you might think. >> if it's $1,000 more a semester, say, it's worth it compared to the competition. it's going to be older,

dilapidated and unsafe product. not up to code. >> the thing about the shangri-la is, what's going to happen when you get out in the real world and y'all can't afford all that? >> for sure. >> it quickly turns to paradise loft. i'm diana olick in athens, georgia. that is "nightly business report" for tonight. i'm sue herera. thanks for watching. have a great evening. see you tomorrow.

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