Transcript: Friday, January 10, 2014

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and
Susie Gharib, brought to you in part by —

(COMMERCIAL AD)

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Big miss. December
created the fewest number of jobs in three years as the workforce shrank
dramatically. What`s causing people to drop out?

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: In the bull`s eye.
Up to 110 million people now impacted by Target`s security breach. What it
all means for the retailer.

GHARIB: And defying gravity. Shares of a little-known biotech are
doing something few if any have done before — gaining more than 370 points
in just two days. Why is the stock taking off, and is it justified?

We have all that and more tonight on NIGHTLY BUSINESS REPORT for this
Friday, January 10th.

MATHISEN: Good evening, everybody, and welcome.

A reality check from the Labor Department, and it wasn`t a good one.
Only 74,000 new jobs were created in December, far fewer than the roughly
200,000 economists expected — a real disappointment. It`s raising
concerns now about whether this is a one-time miss or a sign of a real
slowdown in job growth.

Hampton Pearson has more on today`s jobs report and what it means for
the economy.

(BEGIN VIDEOTAPE)

HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
December 2013 was the weakest month of hiring in three years. After
averaging 214,000 jobs per month from August through November, the economy
generated just a third as many new jobs in December.

Leading economists were shocked.

UNIDENTIFIED MALE: I wouldn`t pay any attention at all to these
numbers.

MARK ZANDI, MOODY`S ANALYTICS: They`re not consistent with anything.

(CROSSTALK)

AUSTAN GOOLSBEE, FORMER COUNCIL OF ECONOMIC ADVISERS CHMN: Everybody
needs to chill it down a little. We haven`t fully turned the corner any
more than we were down in the dumps. I think this is just a reminder that
we`ve got to get all our ducks in a row before we declare victory.

PEARSON: Even the drop in unemployment to 6.7 percent had a dark
cloud. Most of the decrease was due to people giving up looking for work
and dropping out of the labor force altogether. The labor force
participation rate dropped to 62.8 percent, the lowest in 36 years.

Once people stopped looking for work, the government no longer counts
them as unemployed.

Ammunition for those on both sides of the debate over extending
jobless benefits.

DIANE SWONK, MESIROW FINANCIAL: We have seen that when people lose
their jobless benefits they`ve not been rejoining the labor force as we
thought they would. On the other side of it, you do know that in order to
qualify for unemployment insurance, you have to actually be looking for a
job.

PEARSON: Baby boomer demographics are also a major factor in the
shrinking labor force. According to a recent MetLife (NYSE:MET) survey,
the average retirement age is now just under 60. With about 25 percent of
the oldest boomers retiring early because of the sluggish job market.

JARED BERNSTEIN, CENTER ON BUDGET AND POLICY PRIORITIES: Some of the
folks who are leaving the labor force due to retirement probably would have
stayed in longer had the labor force been stronger.

PEARSON (on camera): Many economists warn one month`s bad jobs report
does not mean the economy is getting weaker. But it is a warning sign —
the job market may not be as strong as we had hoped.

For NIGHTLY BUSINESS REPORT, I`m Hampton Pearson in Washington.

(END VIDEOTAPE)

GHARIB: Despite that lousy jobs report, there are many American
businesses that want to hire but they just can`t find enough skilled
workers. In St. Paul, Minnesota, a group of local companies is banding
together to solve this problem.

Mary Thompson has more.

(BEGIN VIDEOTAPE)

MARY THOMPSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Two years ago, J.W. Hulme had a problem. The company`s former CEO Jennifer
Guarino saying the maker of luxury leather goods and accessories couldn`t
find the workers it needed to meet growing demand.

JENNIFER GUARINO, MAKERS COALITION CO-FOUNDER: It began to really
worry our company. And we thought at one point it actually was strangling
our growth. We had to actually slow down our sales point as a result of
that.

THOMPSON: It`s a common problem. A survey by the Manufacturing
Institute says 82 percent of U.S. manufacturers have skilled jobs they
can`t fill. Vacancies that are growing now that rising labor costs in Asia
are prompting many to bring work back home.

Work is what Larry Corbesia was looking for when he landed in a
homeless shelter after 15 years of checkered employment history.

LARRY CORBESIA, J.W. HULME EMPOLOYEE: I just wanted some kind of
income and some kind of steady job.

THOMPSON: He found one at J.W. Hulme after a nonprofit called Life
Tracks directed him to an industrial sewing class at Minneapolis`s Dunwoody
College of Technology.

Dean Debra Kerrigan designed the program at the urging of the
manufacturing group that includes J.W. Hulme. Known as the Maker`s
Coalition, it promotes a trade of industrial sewing and hires and
apprentices Dunwoody students.

DEBRA KERRIGAN, DEAN: Companies didn`t want to focus on training.
They wanted to focus on being productive.

THOMPSON: Dunwoody`s six-month course costs just over $4,200. Many
students like Corbesia receive grants to defray the costs.

(on camera): The course launched last year, but only after Kerrigan
confirmed regional firms would need 90 new hires over the next 6 to 18
months, and more over the next seven years as retirement will claim 50
percent of their workforce.

(voice-over): The first class hitting snags, though. J.W. Hulme vice
president Laura Smith saying the new hires needed more work.

LAURA SMITH, J.W. HULME V.P. OF BRAND MANAGEMENT: The first three
brought in from the program, we really saw a need to have highly skilled
more refined skills for industrial sewing for leather.

THOMPSON: With employer`s feedback, Dunwoody altered the course.
Students now spend more time at the machines, less time on the books. Its
placement rate is 90 percent and graduates earn an average hourly wage of
$13.46.

But for Corbesia, the new skills and job are priceless

CORBESIA: It makes you feel proud when you see a finished product.
It looks real good and you know you did your best on it and everything is
nice and neat and straight. And it`s guaranteed for life.

THOMPSON: A life improved by an industry stitching a workforce back
together.

In St. Paul, Minnesota, I`m Mary Thompson, NIGHTLY BUSINESS REPORT.

(END VIDEOTAPE)

MATHISEN: Stocks ended today`s session mixed and little changed with
traders trying to make sense of that weak December jobs report. And what
it might mean for the economic recovery and the Federal Reserve`s plans to
start pulling back on its bond-buying stimulus regimen.

But the day wasn`t all bad. The Russell 2000 small cap index and the
Dow transports both ended the session at all-time highs.

Today, the blue chip Dow stocks fell just 7 points, ending slightly
lower for the week. The NASDAQ was higher by 18. The S&P 500 added four.

GHARIB: Our market guest tonight is telling her clients there`s a
silver lining to today`s dreary jobs report. She`s Rebecca Patterson,
chief investment officer at Bessemer Trust.

OK. Rebecca, make your case. Why the sobering news is good for
investors and the markets.

REBECCA PATTERSON, BESSEMER TRUST: Well, of course we all would like
to see a lot more job growth for every American. But purely from an
investment point of view, I think there`s at least two reasons this isn`t a
terrible day. I think on one hand, the bumpy start we`ve seen for stock
market this year is just consolidation. We had a very, very strong 2013
for equities, about three times the annual historical average gain.

So, some consolidation is actually quite healthy in a bull market. I
think secondly, the fact that we got the soft report today is going to
reinforce a view within the markets that the Federal Reserve is going to
move slowly to take away the punch bowl and global central bank, liquidity
including the Fed is going to be a help for cyclical assets like stocks.

MATHISEN: They have said at the Fed that the progression of the
tapering of it is going to be data dependent. Here is some data. Do you
think it`s going to change whether they continue to pull back at $10
billion a month?

PATTERSON: I don`t think this one data point would be enough to
change the Fed`s mind at this point. As I think you had earlier in your
program this evening, we`ve had a number of other data releases just in the
last few weeks, ranging from business sentiment to weekly jobless claims to
consumer data showing that the economy in the U.S. while not robust is
gaining momentum.

So, I think the Fed will look through this number, given the weather
distortion, I think we probably have to see more before the fed changes.
But you`re right. They are focusing very much to make sure the economy has
momentum.

GHARIB: And how about for you, Rebecca, in terms of your investment
strategy? To what extent does this one data point make a change in what
your plans are for 2014?

PATTERSON: You know, when we see volatility — today, the market
didn`t do that much. But when we see a data point that disappoints and
leads the market lower, if it hasn`t changed our bigger picture view,
frankly it`s an opportunity to buy. Today, we didn`t get much pullback.
So, not a big opportunity.

In generally, we`re sticking very much with our core view where
overweight equities in our portfolios, we`ve built that over weight over
the last year. So, staying very under weight fix income. We think incomes
are going to continue to rise this year, although less quickly than last
year, underweight commodities.

And we think the U.S. stock market will be one of the leaders again
this year as it was last year.

MATHISEN: Rebecca, very quickly, do we have any good idea in the
labor force participation numbers which are down, how many of those people
who have stopped looking for jobs have stopped because they are discouraged
and how many have stopped because, well, they`re retiring?

PATTERSON: Yes. I haven`t seen any good breakdowns recently what the
mix is exactly. I think that`s a great question. But I do think it is
becoming a greater political agenda. And I think we could hear more on the
State of the Union address from President Obama later I believe at the end
of this month on the divide.

You know, the people with jobs, the people benefitting from this great
stock market, and the people who haven`t been able to find work after the
Great Recession, and it`s creating a bigger social and political issue for
America.

I don`t know what the breakdown is, Tyler, on your question. It`s a
good one. I`ll find out this weekend. But I do think it`s a bigger issue
for the country that has social and political ramifications. And if it
continues, it could become an economic issue as well.

GHARIB: All right. Rebecca, great talking with you. Have a great
weekend.

PATTERSON: Thank you, too.

GHARIB: Rebecca Patterson, chief investment officer at Bessemer
Trust.

MATHISEN: The data breach at Target (NYSE:TGT) during the holiday
shopping season is far, far worse than initially thought. It turns out the
number of people impacted is nearly triple, triple the original estimate.

Courtney Reagan has more.

(BEGIN VIDEOTAPE)

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Target (NYSE:TGT) is now widening the scope and scale of the data breach at
its U.S. stores. The retailer now says its investigation has revealed up
to a whopping 110 million shoppers may have had information stolen. Target
(NYSE:TGT) now says 70 million customers` names, e-mails, addresses and
phone numbers may be among the information stolen in the breach. That`s in
addition to the 40 million customers whose debit or credit card information
was already reportedly stolen.

Target (NYSE:TGT) does expect some overlap in the two groups but can`t
quantify it at this point.

Well, the number of shoppers eventually impacted has nearly tripled
Target (NYSE:TGT) says the time period previously stated, November 27th to
December 15th has not widened.

Target (NYSE:TGT) is attempting to reassure customers, saying shoppers
will not be liable for any fraudulent charges on their cards related to the
breach. The retailer is also offering a year of free credit monitoring and
identity theft protection to all guests who shopped in its U.S. stores.

(on camera): While the company is taking steps to regain consumer
trust, Target (NYSE:TGT) acknowledged that business has already taken a
hit. Today, Target (NYSE:TGT) lowered its earnings guidance for the fourth
quarter, noting that sales did drop off after that data breach announcement
was made.

Now, many market watchers are concerned that consumer confidence could
be shaken a little bit more broadly than just at Target (NYSE:TGT).

STACEY WIDLITZ, CNBC RETAIL ANALYST: This is maybe more of a
widespread industry issue that has really put some fear into the consumers`
minds, are they really safe going on line and putting all their information
out there.

REAGAN: Other analysts however don`t think the data breach will have
a long-term effect on Target`s sales and traffic but are concerned about
what it will cost the retailer once all the legal fees and technology
updates are added up. But it`s hard to estimate the impact of consumer
behavior on a data breach of this magnitude.

For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan.

(END VIDEOTAPE)

GHARIB: And still ahead on the program, looking for stocks that are
expected to grow their dividends? Our market monitor tonight has some
ideas.

(MUSIC)

GHARIB: Another remarkable day for investors, at intercept
pharmaceuticals. As we told you last night, this stock nearly quadrupled,
surging more than 200 points after positive trial results for its liver
drug. Today, the stock added another 62 percent. That works out to $170 a
share more closing at $445.83 a share.

Now, the drug maker`s market cap has risen from $1.5 billion to nearly
$9 billion in just two days.

MATHISEN: So what`s so hot about intercept? It has no products on
the market. It doesn`t make money. It has just 45 employees.

Joining us now to talk more about this phenom is Jonathan Eckard.
He`s a biotechnology analyst at Citi.

Jonathan, welcome. This is a fascinating story and I want to get into
it in the time we`ve got.

But I want to start by asking a dumb question. How can something like
this happen?

JONATHAN ECKARD, CITI BIOTECHNOLOGY ANALYST: It`s a really unique
situation.

So, this trial that read out this week really was not expected to be
positive at all. This setting of liver fibrosis is one that has had
failures for years and years. And so, everybody was really just ignoring
this opportunity. And this is just — so the outcome was just shocking.

And given that neglect of paying attention to this trial, people were
neglecting the opportunity that is available here. I mean, this is a very,
very large market. We`re talking the size of the lipid market or for
lipid-lowering like Lipitor and Crestor. I mean, tens of billions of
dollars market. So, yes, it was just — people were just not paying
attention because of the lack of successes in the past.

GHARIB: But, you know, as Tyler just said, it has its only one
product. And this product isn`t really a product yet. It still has to go
through clinical trials. I`m guessing that`s going to take a couple of
years.

So, what happens to this company in the meantime? What does it mean
for investors?

ECKARD: Well, the regulatory path from this stage is unclear. This
trial we haven`t even seen the details of the data. The — so, we`ll have
to find out what the additional paths are taken. However, the results that
we saw, at least the initial findings, seem to be pretty robust. So, I
think that the risk that additional trials if needed would be negative are
probably fairly low.

So, that is more of a timing issue versus is it actually going to get
to the market. So, the bigger question is, how big is this opportunity?
And even very frequent that drugs not on the market yet but have shown
great potential.

MATHISEN: You say millions of people, potentially billions of dollars
in revenue, a drug on the scale of the Lipitor and other statins. Is this
a company that is going to be bought out by one of the major drug
companies?

ECKARD: It would arguably say this is an opportunity that large
pharma and biotech would be very interested in having. It would — so it
makes a lot of sense that this would be a take-out candidate for sure. You
know, so, we have to wait and see.

As you noted, there`s only 25 employees. So, you know, obviously,
they`re going to have to scale up and really ante up to market a drug of
this size. But realistically, this is something that probably ends up
better in the hands of large pharma.

MATHISEN: Jonathan Eckard, thank you very much for helping us through
it tonight. Jonathan Eckard, biotechnology analyst at Citi.

GHARIB: Tiffany (NYSE:TIF) wrapped its holiday report in a blue box,
but it didn`t impress investors. And that`s where we begin tonight`s
market focus.

Sales rose 4 percent from November through December, driven by demand
in the U.S. and Asia. But the company kept its full year earnings forecast
unchanged and many view that as disappointing. Shares fell nearly 2
percent to $90.36.

Shares of Humana (NYSE:HUM) also on the down side. The health insurer
said it now expects unhealthier and costlier customers than it had first
predicted. The company expects higher medical bills because of the
government`s decision to let some people keep their existing health plans.

Despite that forecast Humana (NYSE:HUM) backed its 2014 earnings
outlook. Still, the stock fell 2 percent to $96.90.

MATHISEN: The world`s third largest oil field services company Baker
Hughes (NYSE:BHI) warned investors of a profit miss today. Hughes said it
had to suspend operations at one of its facilities in Iraq because of a
protest there last year. And that incident is going to reduce its fourth
quarter profit.

Despite that shares were up more than 2 percent today to $53.06.

And shares of YRC worldwide took a major hit after union workers at
the trucking company rejected a contract extension. YRC said it needed
that labor agreement to refinance more than $1 billion of debt and avoid
bankruptcy. Get that word in there, that`s what happens. The stock
slumps, down 13 percent at $13.58.

GHARIB: Our market monitor tonight says investors should balance the
risk in their portfolios with stocks of high-quality companies with solid
earnings. He`s Jason Pride, director of investment strategy at Glenmede.

So, Jason, let`s get right to it. You`ve got a couple of stocks to
tell us about.

At the top of your list is Abbott Labs, ABT. Tell us why this fits
your investment theme.

JASON PRIDE, GLENMEDE, DIRECTOR OF INVESTMENT STRATEGY: Well, first
for the overall picture, when you`re taking and we`re recommending taking a
little bit more risk in the international markets, a little bit more risk
by underweighting fixed income and broad portfolios. In order to offset
that one of the best things to do is provide stability within the U.S.
equity market universe, where valuations are a little bit above fair value
and there are inexpensive, high-quality, stable opportunities that are able
to deliver good long-term growth.

Abbott Labs fits well into this camp, a very reasonable 18 times
earnings sort of valuation, a stable growth story where if there are any
unknowns unknowns that come about in the coming year, they`re going to be
less subject to the volatility surrounding that. And their growth story
very generally has been a good one recently, where a good number of product
deliveries in the right direction. And 9 percent total general growth for
the underlying business and paying at 2.3 percent dividend along the way.

MATHISEN: Your second choice is home depot. Isn`t a lot of the nice
run there already in the stock?

PRIDE: Yes, the valuation is a little bit more pronounced, a little
bit higher than what we were getting with the other companies. But
interesting that final third that typically comes increased home sales.
And the home market has been reasonably strong.

This is a company with fairly good profit margins and ability to grow
from still a lower base because of what we went through over the period
following the financial crisis. And that`s why we think that home
improvement cycle is still coming about in the company, and they`re
carrying through with that investment.

GHARIB: Your next stop, Accenture, ticker symbol here, ACN, also has
had a nice run from about $70 a year ago, $82 now. Tell us you like it.

PRIDE: Well again, going back to this kind of baseline thought
process, we want high profit margin businesses, stable businesses.

Accenture is a little bit different from the other two. It`s a
cheaper valuation. It`s a more globally oriented business that will move a
little bit more when international markets develop and emerging markets
fluctuate on you.

But we think the growth story is interesting there. They are pushing
an overall technological consulting franchise out into those international
markets and really gaining a lot of shares through that process. It`s a
good growth rate, good delivery yield and a nice solid 17 times normalized
earnings from our perspective.

MATHISEN: That apparently brought in today by the government to help
pull the Web site, the health care Web site along.

Very quick thought here, should we be —

PRIDE: Hope that works out.

MATHISEN: We hope that works out for all of our sakes. Very quick
thought here, should we be worried at all about the kind of halting,
stumbling start that blue chips have had at this beginning of the year?

PRIDE: You know, we think it can occur. There`s definitely always
the possibility and every market year has its fluctuations up and down and
its drops down lower. So we think investors should position themselves in
a way that if that drop comes for some reason nobody can really figure out
exactly why it would happen, the position to add.

But from our perspective even after the 30 percent run last year,
valuations are reasonable and returns are probably going to be pretty
decent from this point forward.

GHARIB: OK, lot of good information.

Jason, any disclosures to make on these three stocks you`re
recommending?

PRIDE: Sure. Glenmede, the holder of all three of them. But I am
not personally, and we have no investment banking relationships.

GHARIB: OK, good to know. Thank you so much, Jason Pride, director
of investment strategy at Glenmede.

MATHISEN: Coming up, bow ties aren`t just for tuxedos anymore. And as
demand grows, two guys had a bright idea and now dressing for success.

bow ties are kind of in these days. Boy bands, rappers and NBA stars
are tying them on. One estimate puts bow ties at 7 percent of the $850
million U.S. neck wear market that was last year and up from just 4 percent
a year ago.

That`s a good thing for two guys who were already living the dream
before they got the bright idea to try their hand at selling bow ties.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: This is the tricky part.

MATHISEN (voice-over): Bow ties are — well, bow ties are a little
bit different. If you think tying one is difficult —

DAVID KRAMER, BEAU TIES LTD. OF VERMONT: We`re good.

MATHISEN: Imagine what it`s like trying to sell them. That`s what
the Daves, Dave Kramer and Dave Mutter, started doing in the fall of 2012.

DAVID MUTTER, BEAU TIES LTD. OF VERMONT: Our customers are distinct.

MATHISEN: Their sartorial stamps of distinction are handmade, hardly
the norm.

MUTTER: It`s kind of nontraditional. That`s exactly who we are as a
brand.

MATHISEN: Being nontraditional makes Beau Ties Limited of Vermont a
fit in Middlebury, perhaps best known for its liberal arts college and the
poet Robert Frost, the guy who wrote about choosing the road less traveled.

KRAMER: We were bow tie wearers.

MATHISEN: The Daves met in business school in the 1980s, following a
more traditional path from there. One, a New York investment banker, the
other a California management consultant. They stayed in touch over the
years, keeping in mind the talks they`d had about maybe one day going into
business together.

MUTTER: We wanted to see whether or not we had what it took to run a
small business.

MATHISEN: Deb Venman founded Beau Ties with her late husband Bill
Kenerson back in the early 1990s. By the early 2000s, they were looking to
sell the company. But they`ve never found quite the right buyer.

And when the Daves came calling, Kenerson and Venman`s broker thought
they wouldn`t be the right ones to tie the knot with, either.

KRAMER: It was a flat out no. We had to sell ourselves to the
broker, and then we had to sell ourselves to Bill and Deb.

MATHISEN: Bill Kenerson started selling bow ties out of his house in
1993. Sales of roughly 3,500 ties in year one grew to more than 40,000 and
Kenerson who had worked with the county`s economic development council, was
putting people to work.

DEB VENMAN, BEAU TIES LTD. OF VERMONT CO-FOUNDER: It was very, very
important to us that whoever bought this building intended to keep it in
Vermont.

KRAMER: I think a lot of other potential people would have not done
that.

MATHISEN: The Daves are adding value through Web site tweaks and
marketing tacks.

But customer service remains on hallmark. Got an old tie you`d like
to convert to a beau tie? They`ll do it. Precision cutting and stitching
are still the main draw.

They`ve got stripes, plaids, and the company logo polka dots. Typical
price? Forty to 60 bucks.

KRAMER: This was a classic tie you would have seen Churchill wear.

MATHISEN: They`ve also got creations like the mad scientist. They
make cummerbunds, shirts, and, yes, long neck ties, too. But bow ties
account for the 85 percent of the business, and business is up.

MUTTER: Well north of 50,000 ties are going to process through this
room.

MATHISEN: December sales are up 55 percent year-over-year. Bill
Kenerson`s baby, it seems, is in good hands.

MUTTER: He looked at us and said my gosh, I wish I could be you when
he never realized we looked at him and said we wish we were you. You built
this great American business. He did it his way. I think that`s why it
worked.

(END VIDEOTAPE)

MATHISEN: I can`t tie one for the life of me.

One of the lessons for this little case study, sometimes you don`t
have to start a business out of whole cloth as it were. Often, the path to
entrepreneurial success starts by buying an existing company, tweaking it
and make it grow. That`s what the Daves say they`ve done with Beau Ties,
Limited. They call their changes evolutionary, not revolutionary.

GHARIB: Should have worn a bow tie, too, Tyler.

MATHISEN: Can`t tie one.

GHARIB: That`s NIGHTLY BUSINESS REPORT for tonight. Have a great
weekend, everyone. I`m Susie Gharib.

MATHISEN: And I`m Tyler Mathisen. Thanks for joining us.

END

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