Transcript: Tuesday, October 28, 2014

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

(COMMERCIAL AD)

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Stocks jump. The Dow
top 17,000, as the Federal Reserve gets set to end its stimulus program.
What comes next for the Central Bank?

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Mobile strength.
Facebook (NASDAQ:FB) reports a 90 percent rise in profits. But were
investors looking for more to like?

MATHISEN: Your financial future, we`re all living longer, but can our
pension systems afford it? Can you?

All that and more tonight on NIGHTLY BUSINESS REPORT for Tuesday,
October 28th.

GHARIB: Good evening, everyone.

Policymakers at the Federal Reserve kicked off a two-day meeting in
Washington on interest rates. And on Wall Street, the investors launched a
rally, powering the Dow over a 17,000 threshold. Now, today`s gains were
fuelled by confidence that the Fed will keep interest rates at super low
levels, also helping a string of positive earnings, reassuring investors
about the health of corporate America.

And it was small cap stocks like bio tech and social media firms, not
the big blue chips that helped the beaten down Russell 2000 index post a
gain of nearly 3 percent.

Here is how things look at the closing bell. The Dow shot up 187
points, the NASDAQ jumped 78 points, a nearly 2 percent leap, and the S&P
500 added 23 points.

Steve Liesman takes a look now at what top economists are expecting to
hear from the Central Bank tomorrow and what may be next.

(BEGIN VIDEOTAPE)

STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Two years and
$1.6 trillion later, the Federal Reserve is set to end the bond program
known on the street as QE3, or the third round of quantitative easing since
the Great Recession. Wall Street is in general agreement that the Fed will
vote to end the program. But the real question is, what comes next.
According to the CNBC October Fed survey of Wall Street experts, the
Central Bank is seen raising interest rates only in July 2015, and hiking
them only gradually, up to a final point of just 3.3 percent by the fourth
quarter of 2017. That would be the longest, mildest rate hike cycle ever.

The street even pushed ahead its forecast for the first rate hike amid
growing concerns about growth in Europe and the spread of Ebola, with
survey respondents twice as concerned about the global risks from Europe as
they were for Ebola.

JAMIE COX: If the ECB doesn`t get its act together and sort of thwart
the deflation trends that are happening in Europe, I think they could drag
us down. There is nothing worse for us than a disinflationary environment
than to have to import the inflation from Europe. So, I think that`s the
thing that needs to be addressed. If it is, we should be just fine.

LIESMAN: In fact, Europe even ranked as the biggest threat to the
U.S. for recovery, outpacing slow job growth and tax and regulatory
policies. Not to worry, three out of four respondents think the European
Central Bank will follow in the Fed`s footsteps and announce its own QE
program as soon as February.

Overall, the street maintains a fairy upbeat of the U.S. economy in
2015, looking for 2.9 percent growth, even while the Fed is expected to
hike rates.

The chance of recession? Just 15 percent in the next 12 months.

Oh, and not everyone is convinced QE is going away forever anyway.
Survey respondents see about a one in six chance of another round of QE in
the next two years.

For NIGHTLY BUSINESS REPORT, I`m Steve Liesman.

(END VIDEOTAPE)

MATHISEN: Home prices are still going up, just not as fast as before.
The S&P Case Shiller home price index for the nation`s 20 largest cities
shows an overall gain of 5.6 percent in August over the year prior. That
was just short of the forecast and the eighth straight monthly slowdown.

Robert Shiller of Yale and the co-founder of monthly index says
slowing price gains may be a cause for concern.

(BEGIN VIDEO CLIP)

ROBERT SHILLER, YALE UNIVERSITY: We had a big entry, seeing it
flattening out. And, historically, that`s a weakening sign, especially in
the bubble state.

Now, there is a big difference between California and say, Texas, or
Colorado. California has just been very bubbly. And now, that is where
we`re seeing the sharpest decline.

(END VIDEO CLIP)

MATHISEN: Detroit had the greatest monthly gain in August, up nearly
a percentage point just from July. Followed by Dallas, Denver, and Las
Vegas.

GHARIB: Here is some other data out today, showing mixed signs on the
economy. Consumer confidence this month is at the highest level since
2007, thanks to job gains and lower gasoline prices. But orders for big
ticket long-lasting durable goods last month fell by a surprising 1.3
percent instead of rising as expected. Businesses getting most of the
blame for not buying new equipment.

MATHISEN: After the bell earnings from Facebook (NASDAQ:FB) which saw
a 59 percent jump in revenue last quarter, a big rise in mobile
advertising. The social networking giant earned an adjusted 43 cents a
share. That topped estimates by 3 percent. Revenue of $3.2 billion also
beat Wall Street forecast.

Now, despite those numbers and a jump in active monthly users, shares
were initially lower in after-hours trading as you see on the graphic.

Bertha Coombs joins us now from the NASDAQ Exchange with her one big
takeaway from Facebook`s report.

What is it, Bertha?

BERTHA COOMBS, NIGHTLY BUSINESS REPORT CORRESPONDENT: You know, it
seems investors want beyond perfection. This stock hit an all-time high
just ahead of those results today. It`s up nearly 50 percent year to date.

The numbers are all pretty strong. One of the things that the company
talked about on the conference call is that costs will continue to rise.
Facebook (NASDAQ:FB) continues to look to acquire other social
applications. They acquire WhatsApp, which is very popular in overseas and
in Latin America and India. Also, they had also acquired Instagram.
They`re seeing growth there.

And they are talking about perhaps that may be having another
acquisition in the works. So, some investors might be taking a little
pause. They might be taking a little bit of profit here, but compared to
its peer, Twitter, Facebook (NASDAQ:FB) is certainly performing on all
cylinders.

MATHISEN: That is really the comparison, yesterday, Twitter and that
stock not doing well.

Bertha, thank you very much. Bertha Coombs at the NASDAQ.

GHARIB: Also out after the bell today, earnings for bio tech firm
Gilead Sciences (NASDAQ:GILD). The big news, sales of its blockbuster
Sovaldi hepatitis C drug, this is the treatment that costs upwards to
$1,000 per day, fell by 20 percent last quarter. With that, Gilead posted
earnings of $2.05 a share, beating forecasters by 13 cents. Revenues came
in at just over $6 billion, higher than estimates. Shares initially
slumped in after-hours trading, but so far this year, Gilead stock up over
50 percent.

MATHISEN: Before the bell, we heard from the pharmaceutical giant and
Dow component Pfizer (NYSE:PFE). It reported better than expected third
quarter earnings, thanks to cost cuts and higher drug sales in emerging
markets, including China. That helped offset the loss of revenue from such
blockbusters as Lipitor, it and other Pfizer (NYSE:PFE) medicines no longer
are protected by company patents.

But after narrowing its full-year guidance, Pfizer (NYSE:PFE) shares
were up but just a fraction today.

Meg Tirrell spoke with Pfizer (NYSE:PFE) CEO about today`s results and
the company`s unsuccessful bid to acquire the British drug maker
AstraZeneca for $119 billion in the tax inversion deal.

Meg, what did the Pfizer (NYSE:PFE) CEO say about those proposed rules
by Treasury covering inversions?

MEG TIRRELL, NIGHTLY BUSINESS REPORT CORRESPONDENT: Yes. Well, Iran
Read has been really vocal about the U.S. tax system, saying it puts
American companies at a competitive disadvantage to their European
counterparts. And he says the new proposed rules from treasury only
complicate that further, only put them at a further disadvantage when it
comes to business development.

He also said that the fact the treasury said that they may implement
more rules or may suggest more rules, brings even more uncertainty to the
process, potentially stymieing the deal activity.

But what he said that was that Pfizer (NYSE:PFE) is going to have to
look at everything on a case by case basis.

GHARIB: So, is he saying then that there a chance that Pfizer
(NYSE:PFE) will try another inversion deal? What does he say to you?

TIRRELL: He didn`t rule anything out. He said that Pfizer (NYSE:PFE)
is looking at all different opportunities. But some analysts like SunTrust
analyst John Boris is saying that instead of going for the big inversion
deal, looking at something like AstraZeneca, again, or an Actavis, which
has also been brought up, Pfizer (NYSE:PFE) might start looking at smaller
deals, trying to maybe beef up its cancer pipelines for example.

MATHISEN: All right. Meg, thank you very much. Meg Tirrell,
reporting tonight from New York.

GHARIB: Another Dow component posts strong results before trading
began today. Profits at DuPont shot up 52 percent, thanks to selling more
nutrition and health products and paying less for raw materials. But after
forecasting sluggish growth ahead of the global economy, DuPont shares were
flat on the day.

MATHISEN: And still ahead, new numbers show we`re living longer. But
will your pension be there for you and what can you do about it? That`s
coming up.

(MUSIC)

GHARIB: Just one week to go before the midterm elections, with the
candidates coming into the final stretch, spending a record amount of money
on campaign ads.

John Harwood joins us from Washington with more on how much money is
being spent and where all that cash is going.

I mean, that is the question of the day, John. I mean, this isn`t
even a presidential race and you know there is not too many doubts about
control of the House. So why is so much money pouring into these
elections? And why? And how much?

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT: Because Susie,
it is such a close race for control of the Senate, in the House, 435 seats.
But only about 20 are tightly contested. You`ve got a dozen races in the
Senate that will determine whether Democrats or Republicans control for the
last two years. That`s why the total amount that is being raised and spent
is about $4 billion this year. That`s up from 2.8, eight years ago when
Democrats were trying to win back the House and Senate when George W. Bush
was president.

MATHISEN: John, what`s business doing? Which candidates, which
parties are business or industries pouring money into?

HARWOOD: Well, businesses tend as a general matter to be pro-
Republican. And the biggest single sector in terms of campaign spending in
donation is Wall Street and that leans more towards Republicans this year
than it has in the last couple of years.

But there are some sectors would stand out as Democratic friendly,
high tech, for example. You`ve got a majority of high tech money going to
Democrats. One that`s really had a pronounced shift (ph) and it`s very
heavily Republican this year, Tyler, is the energy sector because President
Obama is pushing an agenda on carbon emissions and climate change, 78
percent of energy money is going to Republicans this year.

GHARIB: So, John, which party is getting the most money? I take it
the Republicans or is it the Democrats?

HARWOOD: The Republicans are getting more money this year, it`s
estimated by the Center for Responsive Politics that Republicans, overall,
the outside groups as well as the candidates and parties themselves, the
Republicans will get about $157 million more. But that`s only about 4
percent in the context of a $4 billion election.

And I don`t think, Susie, it`s going to make the difference in the
outcome. These campaigns are going to be run on the ground in those states
by local candidates, local issues. Money is not likely to be to deciding
factor.

GHARIB: All right. We`ll be waiting for those results just a few
days to go, John, thank you so much.

HARWOOD: You bet.

GHARIB: John Harwood in Washington.

MATHISEN: The government is suing AT&T (NYSE:T), saying it misled
millions of wireless customers who signed up for unlimited data plans. The
FTC alleges that AT&T (NYSE:T) failed to tell those customers that it would
reduce data speeds sometimes by up to 90 percent once they went over a
certain amount of data use. It`s a practice known as throttling. Nice
word.

AT&T (NYSE:T) says the charges are baseless, and unlimited plan
customers are notified about the practice right on their monthly bill.

GHARIB: Apple (NASDAQ:AAPL) and Alibaba, the Chinese e-commerce
giant, might be teaming up. At a “Wall Street Journal” conference late
money, Apple (NASDAQ:AAPL) CEO Tim Cook boasted that Apple (NASDAQ:AAPL)
Pay had over 1 million activations in just its first three days online.
And despite CVS (NYSE:CVS) and Rite Aid (NYSE:RAD) stores already disabling
the system, Apple (NASDAQ:AAPL) Pay is just getting started.

(BEGIN VIDEO CLIP)

TIM COOK, APPLE CEO: We`ve got a lot more merchants to sign up.
We`ve got a lot more banks to sign up. And we have the whole rest of the
world. We`re only in the U.S. right now. And so, we`re just getting
started. But the early ramp looks fantastic.

(END VIDEO CLIP)

GHARIB: At the same conference, Alibaba CEO Jack Ma said he`s open to
using Apple (NASDAQ:AAPL) Pay in China, but says both companies have to
work together.

(BEGIN VIDEO CLIP)

JACK MA, ALIBABA CEO: As always, you know, good marriage needs both
sides hard working. And I — I respect Apple (NASDAQ:AAPL) and I respect
Tim very much. I think he is doing a fantastic job, I hope we can do
something together.

(END VIDEO CLIP)

GHARIB: Well, investors like the idea. Shares of Apple (NASDAQ:AAPL)
hit an all-time high today, closing at nearly $107 each. Alibaba shares
rose about 2 percent to just below $100.

MATHISEN: Coach (NYSE:COH) posts results that beat forecasts, but
investors are not convinced the company can turn around. And that is where
we begin tonight`s “Market Focus”.

The handbag maker saw its sales fall in the latest quarter and it
predicts a continued plunge in revenue this year. The company also saw its
slowest quarterly sales growth in China in two years and it was relying on
that country to help make up for lost market share to retailers in the
U.S., to retailers here in the U.S. like Michael Kors. Shares tumbled
about 6 percent today to $34 even.

Aetna`s quarterlies topped estimates and it raised its forecast for
the year, but still, its shares slipped just a bit. That`s because the
insurer said medical costs for some of its small business coverage came in
higher than projected and operating expenses were up.

The CEO tried to reassure investors.

(BEGIN VIDEO CLIP)

MARK BERTOLINI, AETNA COACH: In the end, we`ll meet annual guidance,
and again, we beat and raised for the third quarter in a row. So, we
anticipate overall that our earnings and revenue will all come in fine for
this year.

(END VIDEO CLIP)

MATHISEN: Shares down about 2 1/2 percent, or $1.95 to $77.23.

Whirlpool (NYSE:WHR) missed profit estimates, but that didn`t seem to
agitate investors. Its earnings were up in the third quarter because of
strong sales growth in North America. The appliance maker lowered its
full-year profit outlook, though, because of recent acquisitions. That
didn`t faze investors either. Shares popped almost 7 percent to $168.06,
up 10.66.

And higher used car sales helped AutoNation (NYSE:AN) deliver strong
results. Also, the auto dealer group said it would spend a quarter of a
billion buying back shares. The stock rose almost 7 percent to $55.58.

GHARIB: Big Blue also out with a buyback. IBM`s board of directors
authorized an additional $5 billion worth of stock to be repurchased. The
company says it will make the purchases depending on market conditions.
Now, this comes on top of the remaining $1.4 billion left on its current
buyback plan. The stock rose 1 percent to $163.60.

Madison Square Garden (NASDAQ:MSG) may be looking to split up, a trend
that we`re seeing with a lot of companies these days. It`s exploring
separating its entertainment business from its media and sports operations.
Its sports business owns teams like the Knicks, the Rangers and regional
sports networks like MSG. Its entertainment business hosts concerts.
Shares were up about 11 percent to $72.99.

Receptos surged in today`s session on word that the drug developer`s
experimental bowel disorder drug met its main goal in a mid-stage study.

The CEO explained the potential for the drug.

(BEGIN VIDEO CLIP)

FAHEEM HASNAIN, RECEPTOS CEO: Seventy thousand patients get diagnosed
every year in the United States alone, approximately 700,000 patients in
the U.S. with ulcerative colitis. So, there`s a sizable opportunity here
to make a real difference for patients and, of course, to be able to see
substantive revenue as a result.

(END VIDEO CLIP)

GHARIB: Panera Bread (NASDAQ:PNRA) reported a drop in quarterly
profit and it lowered its full-year earnings forecast. This comes as the
food chain has been trying to speed up service at its restaurants. Shares
dipped initially in after hours trading, but during the regular session the
stock was up $1.41 to $171.

MATHISEN: Another report to tell you about, an interesting one. New
statistics show that men and women in the U.S. are living longer than ever,
according to the wild and crazy folks at the Society of Actuaries. The
average 65 year old is living well into his 80s.

But what does a longer life span mean for corporate pension plans and
your nest egg?

Rick Jones is here to tell us. He`s senior retirement consultant at
Aon (NYSE:AON) Hewitt.

Mr. Jones, welcome. Good to have you here.

These numbers are quite something. They indicate that life expectancy
in the United States for 65 year old, men and women, are up about two
years, for women — a 65-year-old woman can expect to live almost to 89. A
male, well past 86.

This means that pension funds will have to pay benefits longer.

How much more will comes have to put into those funds to cover those
benefits?

RICK JONES, AON HEWITT: That`s a great question. We anticipate that
over time, the average traditional pension plan will see its cost increase
on the order of 7 percent, following the release of the statistics
yesterday by the Society of Actuaries.

GHARIB: So, what does that mean? That you can`t count on your
company to help you through your old age and you`re pretty much on your
own? I mean, do we have to rely on our 401(k)s?

JONES: Well, the promises that have already been made in the pension
plans today need to be stood behind. And there`s federal laws, as well as
a federal insurance guarantee system, that suggests that those pensions
need to be secured. On a go-forward basis, many more companies are
shifting to 401(k) type of programs, so that individuals are responsible
for their own investments and managing their own stream of lifetime
payments.

MATHISEN: So, with respect to those existing obligations, which you
say are now going to be 7 percent more expensive, where does that money
come from? Does it come out of company profits? Does it come out of the
dividends that a company like General Electric (NYSE:GE) might otherwise
pay to its investors?

JONES: All the above. It could be a cash need that would otherwise
defray their ability to pay dividends or buyback shares or invest in other
parts of the business. And it will have income statement implications as
well.

GHARIB: You know, one of the good news that we`re saying is we`re
living longer. But the bad news is, that means we have to have enough
money for the retirement. How — what advice are you giving people about
how they should deal with their 401(k)s? How much should you contribute?
How often should you contribute? And what are the risks?

JONES: Well, starting early. You`ve all seen the studies that
suggest you start early. We suggest that you start at the beginning of the
career and save on the order of 15 percent.

Beyond that, there are things that you can do to control your own
retirement like thinking about the right retirement age for you so you have
accumulated the right amount. Relying on automated features, target date
funds and other investment techniques helped, which are intended to help
you best manage your investments, and then effective drawdown techniques so
that you can manage your dollars effectively over your life expectancy
during your retirement years.

MATHISEN: So, two questions here. When you say timing your
retirement age, I hear that as code for we better plan to work longer,
Rick?

JONES: That`s a good decoding, yes.

(LAUGHTER)

MATHISEN: Very well.

Now, let me ask you one other question without wonking out here.
There have been quite a few companies that have been taken their pension
obligations and basically bundled them and as I understand it, bought an
annuity from a large insurer, whether its prudential or whatever. What
does that do to their obligation? And does it take their pension out from
the insurance coverage under the PBGC?

JONES: Well, the part of your first question is yes, it does take the
obligation off of their books, to the extent that they`re fully relieving
their obligation and shifting it over to an insurance company. That does
mean that those individuals are no longer available for PBGC coverage,
which is a federal insurance guarantee program for pensions. They would be
eligible for the state insurance guarantees. So, there is a shift from the
federal pension guarantee to the state insurance guarantees.

MATHISEN: All right. Interesting conversation, Rick. Obviously,
work longer, save 15 percent and keep your fingers crossed.

Rick Jones, thanks very much.

JONES: You`re welcome.

MATHISEN: Rick`s with Aon (NYSE:AON) Hewitt.

GHARIB: Coming up on the program, a big Indian conglomerate that
thinks Americans are willing and able to travel around on little electric
scooters. That story next.

(MUSIC)

GHARIB: Two of the nation`s biggest airlines have already agreed to
merge and now, they`ll combine their frequent flier programs. Earlier next
year, American Airlines and U.S. Airways plan to merge their rewards
programs and they will continue to base upgrades and free flights on how
many miles customers fly instead of how much money they spent on tickets.

MATHISEN: For most Americans, the idea of an electric scooter sounds
like a quaint idea that will never take off here in the U.S., but one of
the world`s largest companies based in India thinks Americans are ready for
an eco-friendly two-wheel ride.

Phil LeBeau has more on Mahindra and its growing presence here in the
U.S.

(BEGIN VIDEOTAPE)

PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): It`s
called the Gen-Z, an electric scooter that goes as fast as 30 miles per
hour, travels up to 30 miles on a single charge, and comes with a battery
pack you can take out and recharge in your house.

It sounds great. But will Americans pay $30,000 for an electric
scooter? The chairman of Mahindra says yes.

ANAND MAHINDRA, MAHINDRA CHAIRMAN: We`re sitting here in Washington,
D.C. I went to a dinner last night, I had to walk the last four blocks.
It was as reminiscing to Mumbai as many other place with traffic. So, the
traffic everywhere in the world is converging and becoming nightmarish.
People are going to want very easy urban transport.

LEBEAU: Anand Mahindra runs a company his grandfather started almost
70 years ago in India. Since then, it steadily expanded. Its low cost
SUVs are popular in India and other Asian countries. And Anand Mahindra
says he`d like to eventually sell SUVs here in the U.S.

MAHINDRA: That is certainly on our radar screen. That`s one of our
aspirations. You really don`t make it in the vehicle business until you
made in the U.S.

LEBEAU: Mahindra knows how to compete here in America. Its tractors
have carved out a segment in a market dominated by John Deere`s green
machines. Mahindra`s red tractors have become popular with those in rural
America, looking for an option that is a little smaller, and a little less
expensive.

MAHINDRA: There is something going on here in the U.S., which is
about a transition to smaller horsepower tractors, as well as to tractors
that are simple, rugged and basic. And we seem to be in the right place at
the right time.

LEBEAU (on camera): Mahindra clearly has a foothold here in the U.S.
but Anand Mahindra says he`s just getting started. In fact, the CEO of
this Indian company calls America Mahindra`s emerging market.

Phil LeBeau, NIGHTLY BUSINESS REPORT, Houston.

(END VIDEOTAPE)

GHARIB: And finally tonight, if you`ve ever dreamed of owning an
entire town, here is your chance. The catch, no one lives there, it is a
ghost town with some saying the spirit of the former owner is still
haunting the area. All 62 acres of Johnsonville Village in Connecticut,
including a general store, an old mill and six other buildings will be sold
to the highest bidder through Auction.com, with the starting bid of
$800,000.

And, Tyler, you can just get it just in time for Halloween.

MATHISEN: It`s pretty. That was a nice little town.

GHARIB: And you can get the little scooter to go with it.

MATHISEN: All right.

GHARIB: That`s NIGHTLY BUSINESS REPORT for tonight. I`m Susie
Gharib. Thanks for watching.

MATHISEN: And I`m Tyler Mathisen. Thanks from me as well. Have a
great evening. We`ll see you right back here tomorrow.

END

Nightly Business Report transcripts and video are available on-line post
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on Nightly Business Report is not and should not be considered as
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