Transcript: Friday, August 8, 2014

Stocks bounce back

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and
Susie Gharib.

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Bounce back rally. Why
the Dow and S&P 500 had their best day in five months, even as the world
remains on edge.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Giving credit —
where credit is due. And now, after a major overhaul, millions of
consumers are likely to see their credit scores rise.

HERERA: Last chance. Why pressure is building to change the system
that grants very ill patients access to unapproved drugs — the third part
in our series “Desperate Measures”.

All that and more tonight on NIGHTLY BUSINESS REPORT for Friday,
August 8th.

And good evening, everyone. I`m Sue Herrera. Susie Gharib has the
evening off.

MATHISEN: And welcome, everybody. I`m Tyler Mathisen.

I don`t know about you, but I am glad that trading week is over. I`m
ready to inject liquidity, frankly. It didn`t feel like an up week for
stocks, not at all, not with all the flare ups around the world, but it
was. In fact, after today`s strong rally, all three of the broad market
barometers, the Dow, the S&P 500, the NASDAQ composite, finished the week
in the black and for the Dow and S&P today was the best performance in five
months. The Dow closing near the highs of the session up 185 points,
NASDAQ higher by 36, and the S&P 500 rallied 22.

And for the week, each of the big three were up at least a third of 1
percent. Investors gobbled up stocks seemingly unworried in a broken
cease-fire in the Israel-Gaza conflict and U.S. airstrikes against Muslim
extremists in Iraq. But the real catalyst for today`s rally, however real
it may be, were reports out of Russia that tensions may be easing between
it and Ukraine.

Here is Michelle Caruso-Cabrera.

(BEGIN VIDEOTAPE)

MICHELLE CARUSO-CABRERA, NIGHTLY BUSINESS REPORT CORRESPONDENT: The
market rallied in the early afternoon when a Russian news agency reported
that Russia was ending its military war games on the border of Ukraine.
It`s caused a relief rally because throughout the week, expectations
steadily increased that Russia might invade Ukraine to support the
separatists who seem to be on the verge of losing the city of Donetsk.

The president of Russia, Vladimir Putin has backed down before. It
happened in May, and yet, subsequently, the West said he supported rebels
with equipment, training and even troops. So, what remains to be seen
exactly what this headline from today means.

Earlier in the day, the trading session got off to a rough start due
to nervousness about the growing humanitarian crisis in Iraq. Overnight,
the U.S. military dropped food and water to thousand of Iraqis who were
members of a minority religious sector. They have escaped to a hot and dry
mountaintop in Sinjar, Iraq, because the Islamic militant group known as
ISIS is threatening to kill all of them. The U.N. says dozens of children
have died of dehydration.

Then, early this morning, right before the open, we learned the U.S.
had bond a group of militants who were threatening the capitol city of
Kurdistan in northeast Iraq, Irbil, where a U.S. consulate is located.

Although Iraq is clearly a serious situation, the moves in the markets
today show that investors are far more concerned about the stand off with
Russia.

For NIGHTLY BUSINESS REPORT, Michelle Caruso-Cabrera.

(END VIDEOTAPE)

HERERA: So, why did the markets react the way they did today?

Tonight`s market monitor has some thoughts on that, as well as some
top picks for you and me. He`s Charles Carlson and he`s the CEO at Horizon
Investment Services. He`s coming to us this evening from Chicago.

Welcome. It`s nice to have you here, Chuck.

CHARLES CARLSON, HORIZON INVESTMENT SERVICES CEO: Nice to be back,
Sue.

HERERA: What do you make of the way the market performed today? I
found it very curious. We had this big kind of relief spike mid-session.

CARLSON: Well, I think you called it with a release spike. The
market had been over sold on a short-term basis. You had traders out there
hearing the news possibly what is coming out of Russia not wanting to take
positions into the weekend and I think there were some short covering, as
well. And then, finally, you know, markets do correct but at some point
those corrections end and stocks are ready to resume their upward move.

So, you know, we`re at a point where you would expect a bounce, a
bounce happened today. We`ll have to see if there`s follow-through next
week.

MATHISEN: Yes, a bounce is one thing but a resumption of an upward
move which is the reference you just made is quite another. Do you think
this is that turning point?

CARLSON: You know, this has more of a feel of less of a bottom
conviction buying than short covering. Having said that, we still regard
this as a correction within an ongoing bull market and this correction has
met the typical historical standards of a correction in terms of its
duration and length.

So, you know, maybe we haven`t seen the bottom yet, but I think we`re
probably, you know, on the Dow Jones Industrial Average, that 16,000 level
seems like good support to me.

HERERA: You`ve come up with ideas tonight. Let`s start with your
first one, Halliburton (NYSE:HAL). Why do you like it?

CARLSON: It`s a group we like. It`s a stock that continues to grow
at double digits both on the top and bottom line. You can buy that growth
at what we believe are reasonable values. So, they`re coming up a pretty
solid quarter. And, you know, given this latest downturn, that stock is
trading in a discount of 8 about percent to its 52-week high.

So, we just think from the standpoint this a bull market. We think
stocks will resume their upward trend. This is a quality stock that you
can get at a discount and you ought to take advantage of.

MATHISEN: And a lot of people like you like that sector.

Let`s move to your next pick, which is Ameriprise Financial.

CARLSON: Ameriprise Financial is a nice demographic play. You got,
you know, continuing ageing of America and the people looking at
requirement and investing. Ameriprise has a nice position in that space.
I like the dividend yield, which is about 1.9 percent.

I can buy the stock around 14 times at 2014 estimates. So, again,
it`s that story where I`m getting double digit top and bottom growth and
not over-paying for it, getting a yield. Those are the types of stocks I
think will do well when this upward trend resumes in earnest.

HERERA: And, finally, in another sector, Comcast (NASDAQ:CMCSA)
(NYSE:CCS).

CARLSON: Yes, it`s a cash machine. I like distribution companies. I
also have content. I think the Time Warner (NYSE:TWX) cable deal is going
to be a good one for them. They are coming off a very strong quarter. You
get a nice dividend of 1.7 percent. So, it`s kind of that complete total
return package in a company that has good operating momentum and an
industry I think can continue to do well and probably buck a fairly
volatile market here.

MATHISEN: Chuck, let me ask you one final thought on bonds, which sue
and I have been watching closely. The year began with everybody saying
bonds will go to 350, the 10-year, or 375, and they haven`t. Why?

CARLSON: No, they haven`t. Well, probably because everybody was
expecting them to do that and the market haves a tendency of not doing what
everyone expects.

I think the way we frame what to do in bonds right now is quite
honestly if you can earn a little bit more in cash than you can no bonds,
you own bonds. I don`t think anybody is getting cheap — getting rich in
the bond market — and I still think stocks relative to bonds are the place
to be. But I don`t think you`re going to see a total washout in the bond
market this year. And again, as a place to try to generate a return better
than cash, I still think they have promise for that.

HERERA: Chuck, thank you very much. Any disclosures before we let
you go?

CARLSON: Yes, our company and our clients own all three of the
companies that I mentioned.

HERERA: Terrific. Thank you so much. Have a great weekend.

CARLSON: Thank you. You, too.

HERERA: Charles Carlson, CEO of Horizon Investment Services.

MATHISEN: Tough times for the world`s biggest burger chain with sales
falling flatter than an all-beef patty here in the U.S. and around the
world.

So, what does McDonald`s have to do to get cooking again?

Sara Eisen has the story.

(BEGIN VIDEOTAPE)

SARA EISEN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Investors are not loving the news out of McDonald`s today. Sales continue
to fall. Global sales for stores open at least a year fell 2.5 percent
last month, the worst drop in more than a decade.

The immediate concern: Asia. McDonald`s having to pull chicken
McNuggets and other menu items as a result of a food safety scandal.
Authorities there investigating one of McDonald`s suppliers for selling
expired meat. Sales in Asia-Pacific fell 7.3 percent for the month, and
the problem is it could have a more lasting effect as consumers lose trust
in the brand and turn to local alternatives.

PETER SALEH, TELSEY ADVISORY GROUP: Comps in China and in Japan
running down high teens, 20 percent. I don`t think that`s going to turn
around anytime soon. I think that can take, you know, six to nine months
for this to kind of blow over a little bit.

EISEN: The company says the full-year outlook is at now risk, as it
weighs the fallout from supply shortage and the impact on consumers.

(on camera): A longer-running problem for McDonald`s has been finding
sales growth in the United States. It`s home market still making up more
than 30 percent of the total business. In fact, this is the eighth month
out of the last nine in which sales have declined.

And competitors like Burger King and Wendy`s have been doing better
when it comes to connecting with their core customers.

SALEH: There is really no low-hanging fruit. They were taking share
from all their competitors from many, many, years and right now, everybody
is nibbling back at them and taking some share back.

EISEN (voice-over): Investors are growing inpatient. CEO Don
Thompson says the company is working to revamp the menu and find new
options that consumers want, but repositioning a company with 35,000 stores
around the world is going to be an ambitious half. And the fact is, fast
food is out. Healthier, fresher options like Chipotle are in, and those
brands are eating McDonald`s (NYSE:MCD) lunch.

For NIGHTLY BUSINESS REPORT, I`m Sara Eisen in New York City.

(END VIDEOTAPE)

HERERA: Big changes coming at FICO regarding how it calculates a
person`s credit score, and these changes could be a big help for millions
of Americans struggling to get loans.

Mary Thompson has more.

(BEGIN VIDEOTAPE)

MARY THOMPSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
You may feel better after a hospital stay, but medical emergencies can
really harm your financial health. A 2012 study found 75 million Americans
had trouble paying their medical bills, hurting their credit scores.

Now, FICO plans to treat those debts differently for some, under a new
way of modeling credit-worthiness called the FICO Score 9.

ANTHONY SPRAUVE, FICO DIRECTOR OF PUBLIC RELATIONS: What we found is
that unpaid medical debt that`s in collection, if someone has an otherwise
pristine credit history, it is not an indicator that they are having
trouble. It`s not a sign that they are having trouble repaying debt. It`s
an anomaly. And so, as such, it should be treated differently by the FICO
score.

THOMPSON: Under Fico Score 9, medical debts held by collection
agencies would carry less weight in determining a credit score, while debts
held by collection agencies that have been paid off, would have no impact
at all. The result, higher scores for many consumers.

Here`s FICO`s Anthony Sprauve.

SPRAUVE: For someone whose credit score and their history is pretty
pristine, they have no other derogatory actions, it could boost their score
by about 25 points.

THOMPSON: But why treat medical debts differently?

(on camera): First, a debt is unpredictable, often causing short-term
problems, even for financially responsible people. Second, the Consumer
Financial Protection Bureau says billing problems and confusion about
what`s covered by insurance often means a consumer doesn`t know they owe
money until a collection agency holds the debt and their credit score is
impacted.

A 2012 study found 18 percent of adult Americans had medical bills
that were held by a collection agency and 42 percent of those people said
this hurt their credit scores.

And while FICO Score 9 holds a promise of more credit on lower rates
on some loans, it won`t improve a person`s chance of getting a mortgage.
An earlier version of FICO known as FICO Classic is one of the many factors
in assessing a client`s credit worthiness, meaning a higher score won`t
translate into a total financial victory.

For NIGHTLY BUSINESS REPORT, I`m Mary Thompson.

(END VIDEOTAPE)

MATHISEN: So, what are the three things you can do to improve your
credit score?

Gerri Detweiler is the director of consumer education at Credit.com.

Gerri, great to see you.

I want to start, though, by asking you — how and where can I get my
credit score or my credit report?

GERRI DETWEILER, CREDIT.COM DIRECTOR OF CONSUMER EDUCATION: Sure,
your credit report you can get free once a year at annualcreditreport.com.
That`s your federally mandated free copy. You can get a score for free at
Credit.com and your financial institution may offer you one as well on your
billing statement.

MATHISEN: So, Gerri, if indeed you suspect or you find out you have
issues with your credit and your credit score as a result of that, give me
a few ideas of how you can repair your credit and how long it might take to
repair that credit.

DETWEILER: Well, one of the fastest ways that I see consumers improve
credit score is by paying off their credit cards faster. The FICO score
looks at your balance compared to your available credit and if you`re
someone who even pays in full but you`re maxing out that card to earn
rewards, the balance may be high compared to the limit. So, pay that down,
pay it faster. You can see a quick improvement.

Another thing is the collection accounts you just talked about that
will be changing. I don`t think it will happen soon. There will be an
implantation period, but right now, if you`re dealing with collection
accounts, one strategy is to pay them so that they don`t wind up with a
second or third collection agency if they remain unpaid.

MATHISEN: And another area that Mary Thompson just mentioned are
medical bills, which sometimes we tend to forget about. We don`t know that
they`re going to show up on our credit report, but of all the categories of
debt that can damage you or even lead to bankruptcy, medical bills are
number one.

DETWEILER: Exactly. And this is something that happens to people
even with excellent credit. You know, that one bill you thought insurance
was going to take care of slipped through the cracks and next thing it`s
with a collection agency. So, I really encourage consumers any time you
get medical treatment anywhere, stay on top of those bills and if you don`t
get a bill, call the medical provider and find out why, because it could be
going to the wrong address and could hear next when it shows up on your
credit report.

HERERA: OK, so let`s recap, pay down the high balances, watch your
medical bills, resolve collection accounts. I`ve also heard that be
careful how many department store or individual retail accounts that you
open. Is that correct or not?

DETWEILER: Yes, exactly. It is to some extend because new credit is
a risk factor on your credit score. So, that`s why it`s usually
recommended that you`re very careful about applying for new credit.

If you really want a new car, that`s fine. But holiday season is
coming up. You don`t want to take advantage of all those offers that you
get at the cash register, because doing so will definitely have an impact
on your score.

MATHISEN: All right. Jerry, thanks, always great to see you.

DETWEILER: Thank you.

MATHISEN: Gerri Detweiler of Credit.com.

HERERA: Still ahead, which part of the real estate industry is having
a blowout year? We`ll tell you. That story is coming up.

(MUSIC)

HERERA: A federal judge has rejected a $325 billion settlement
between Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), Intel (NASDAQ:INTC) and
Adobe and tech workers who said that those firms conspired to stop poaching
each other`s employees and therefore they kept salaries down. The judge
says the amount, quote, “falls below the range of reasonableness,” end
quote.

MATHISEN: Pfizer (NYSE:PFE) reportedly facing a surge of lawsuits
over its blockbuster drug Lipitor and that`s where we begin tonight`s
“Market Focus”.

According to “Reuters” a fast-growing number of women have filed
lawsuits against the pharmaceutical giant. These women claim the company
knew about serious side effects associated with the cholesterol-lowering
drug, but didn`t inform the public.

Some of the alleged side effects include causing type 2 diabetes and
inducing memory loss. Despite that, shares of Pfizer (NYSE:PFE) were
higher today in the upward market to $28.34.

Sotheby`s posted weaker-than-expected second-quarter earnings and
revenue. It blamed the weak results on a higher tax rate and special
charges. Shares down nearly 8 percent to $37.49.

HERERA: Breakfast cereal maker, Post Holdings, cut its earnings
outlook for the year, sending shares way down in today`s session. The
company swung to a loss in its most recent quarter on charges related to a
recent string of acquisitions. Despite that, though, it announced it will
buy peanut butter maker American Blanching for $128 million. Shares
tumbled about 16 percent to $37.43.

And shares of Tekmira took off today as investors got a chance to
react to some good drug news. The Food and Drug Administration cleared the
company`s experimental Ebola drug for potential use in humans affected with
the virus. Now, Tekmira will be able to use the drug in limited
experiments. The stock surged, up 45 percent to $20.07.

MATHISEN: A New York City office building owner is gearing up to have
the largest initial public stock offering ever by real estate investment
trust or REIT. Paramount group which also owns properties in San Francisco
and Washington, D.C., is looking to raise as much as $2.7 billion in its
IPO.

HERERA: And those real estate investment trusts have had a pretty
good year, out performing the overall market. These high dividend paying
stocks are taking advantage of low interest rates and investor desperation
for yield.

Diana Olick has that story.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Apartments, warehouses, offices, even retail malls, commercial real estate
is climbing out of the recession with a vengeance.

ROSS SMOTRICH, BARCLAYS CAPITAL: I cannot remember a time when you
had such a strong real estate fundamentals, relatively disciplined supply,
good demand and accommodative capital market. So, from a fundamental
perspective, we`re really relatively constructive on commercial real estate
and institutional quality of commercial real estate specifically.

OLICK: U.S. equity REITs are up around 15 percent year-to-date with a
dividend of about 3 1/2 percent. Compare that to the S&P 500 up around 4
percent with a dividend yield of 2 percent.

STEVE SAKWA, ISI GROUP: Low interest rates are positive for REITs
because they really offer investors an alternative yield relative to
treasuries or fix income, and you have a growth characteristic that have
dividend yield that will go up and increase versus a fixed return over a
period of time.

OLICK: Apartments are still a top pick despite concern last year of
over building. Avalon Bay, Equity Residential (NYSE:EQR), to name a few,
fueling the 25 percent year-to-date jump in this REIT sector.

Freddie Mac reports the supply of new units is being absorbed. They
point to nearly 4 million potential households that weren`t formed during
the great recession over the next decade, close to half a million rental
apartments may be needed to meet that growing demand. Office is still
mixed, as employers are hiring but downsizing their work spaces. But even
retail malls are starting to get some love after under performing other
sectors.

SMOTRICH: The good results, both GGP and Simon put up a beaten race
quarters and I think sentiment will start to come slowly back towards in
favor of the mall stock. So, I tend to believe that they will work well in
the second half.

OLICK (on camera): After such strong results in the first half of
this year, analysts are not banking on double digits for the second half
because the biggest risk to this, of course, is rising interest rates.

For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Washington.

(END VIDEOTAPE)

Coming up , when experimental drugs are a patient`s only hope and the
pressure to change the system to make access to them easier.

The final part of our series “Desperate Measures”.

(MUSIC)

HERERA: Tonight, the final report in the three-part series “Desperate
Measures”, on the challenges terminally ill patients and families face when
treatment options run out and the only thing left to try is experimental
drugs.

Among the challenges, a lack of uniform guidelines or laws that
determine which patients can get access to those new and unproven
medications.

Meg Tirrell has the story.

(BEGIN VIDEOTAPE)

MEG TIRRELL, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Compassionate use is a last resort for the sickest of patients like
Nathalie Traller, a 15-year-old who`s been battling an aggressive cancer
for two years.

NATHALIE TRALLER, CANCER PATIENT: When we found this new promising
medicine, PD-1, we definitely wanted to participate in a trial and we asked
for compassionate use but they denied it.

TIRRELL: Companies can use compassionate use to use drugs outside of
clinical trial.

RICK PAZOUR, FDA CANCER CZAR: There are three parties in these
expanded access programs. The patient and their doctor, the FDA, and
pharmaceutical companies and all three have to be in agreement if the drug
gets to the patient.

TIRRELL (on camera): It is not a simple pass and a spill of public
outcries is putting pressure on the system to change. One issue: a lack of
guiding industry principles.

Tony Plohoros consults for drug makers fielding requests for
compassionate use.

TONY PLOHOROS, 6 DEGREES PR PRINCIPAL: Is there an individual process
put in place or should there be a universal sort of set of principles that
regulators and companies might agree to that won`t be compromised in the
face of a strong public pressure campaign?

TIRRELL (voice-over): Another initiative is right to try, a law
that`s been passed in three states and being considered in several others.

DARCY OLSEN, GOLDWATER INSTITUTE PRESIDENT & CEO: The right to try is
about giving terminally ill patients the right to fight to save their own
lives.

TIRRELL: The Goldwater Institute designed the laws which removed the
need for the FDA to sign off under passionate use requests.

OLSEN: As soon as a doctor tells a patient that there is a promising
drug for you, the patient can then go out right away to the company and
seek that approval. And that`s going to cut down on the time that patients
have to wait enormously.

TIRRELL: The FDA counters that the laws are focused on the wrong
place. Of 977 applications of compassionate use, all but three were
granted.

PAZOUR: The potential problem here is the pharmaceutical firm has to
agree to give the drug.

TIRRELL: Bioethicist Art Caplan puts right to try a different way.

ART CAPLAN, BIOETHICIST: But their right to beg laws.

TIRRELL: And he says other changes are needed, including creating
funds for patients to pay for treatment and travel.

And in addition to a push for getting medicines to market faster,
Caplan says regulators could make other changes to facilitate compassionate
use.

CAPLAN: The FDA probably could be a little more flexible, probably
need to have some reform there to say if people die taking experimental
drugs, we won`t hold that against the drug in terms of the approval
process. We want to know but we`re not going to penalize you.

TIRRELL: The focus on compassionate use has risen to a federal level,
with a push to gain more data on how the system is working. Any changes
though may not come soon enough for patients like 15-year-old Nathalie
Traller and others battling diseases with no good options.

TRALLER: Every day that we don`t do something or don`t try to fight
the cancer, like that`s another day that the cancer can grow and get worse.
So, we just — we always feel that in the back of our mind that pressure
that there is a time limit.

(END VIDEOTAPE)

MATHISEN: Meg Tirrell is with us now. Meg, you mentioned that the
federal government is becoming more interested in compassionate use. What,
if any, kind of changes are brewing?

TIRRELL: There`s really a focus on gathering more data. There aren`t
good numbers on how many of these requests get made companies and how many
are denied. The figures we showed were just from the FDA. And that means
they`ve already gotten through the companies and then the FDA had a chance
to review them and they only rejected three at that point.

MATHISEN: The FDA only rejected it, right.

TIRRELL: The FDA did. But we don`t know how many goes through
companies. And so, there is a push to understand that better and also some
legislation potentially brewing that would ask the GAO to take a look at
how well compassionate use is working.

MATHISEN: The momentum is really kind of building right now, but how
long has the system been place really?

TIRRELL: Sure, it actually started in `80s, the compassionate use
system was put in place in 1987. This came into place around HIV and AIDS,
and then was adopted again by breast cancer activists in the `90s, with the
drugs called Herceptin. So, this has been around for a long time and there
has been reforms made to the system.

But it`s interesting because now there really does seem to be momentum
building for the system to change and it`s through things like social
media. It`s because companies are pursuing rare and unmet need diseases.
And so, people are in a much bigger need for the drugs.

MATHISEN: We`re a little short on time but I wonder whether some
companies are known as compassionate, that others — it may not have to do
with their compassionateness per se, but where their drugs happen to be
working.

TIRRELL: No, it`s really interesting that you bring that up, because
in this story, we focus on three companies that Nathalie was asking for
drugs from. One of them was Genentech. And actually, in the `90s, they
were involved with that drug Herceptin, and they did figure out a
compassionate use program, but not until they`ve been pressured strongly by
these breast cancer activists.

So, it often takes a lot of patient voice and power.

MATHISEN: All right. Meg, thank you for your reporting. Wonderful
series. We appreciate it very much.

HERERA: Keep us posted on Nathalie`s progress.

MATHISEN: And to read more about Meg`s series on compassionate use,
head to our Web site, NBR.com.

HERERA: And that will do it for NIGHTLY BUSINESS REPORT for tonight.
I`m Sue Herera. Susie is back on Monday. Have a great weekend, everybody.

MATHISEN: And I`m Tyler — great being with you, Sue.

HERERA: It`s been fun.

MATHISEN: Thanks for filling in. Have a great weekend, everybody.
We`ll see you on Monday.

And we`ll see you, Susie, on Monday, too.

HERERA: Absolutely.

END

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