Transcript: Friday, February 13, 2015

NBR ThumANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and
Sue Herera.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Record Friday. The
S&P 500 closes at a new high, so do small cap stocks and the Dow Jones
industrial average break through 18,000 for the first time this year. Are
there more big gains ahead and where should you put your money now?

Fighting cyber crime. It is one of the biggest threats to business.
And today, at a summit in Silicon Valley, President Obama urged cooperation
with the private sector to make the Internet safe.

All that and more tonight on NIGHTLY BUSINESS REPORT for Friday,
February 13th.

Good evening, everyone. I`m Tyler Mathisen. Sue Herera is off
tonight.

Well, the bulls are back on Wall Street turning Friday the 13th into a
lucky day. The S&P 500 ends the week at an all-time high. The blue chip
Dow index breaks above 18,000 for the first time this year. And not to be
outdone, small caps also finished the day at a record. Strong economic
data out of Europe gave the markets a lift early on and hopes that Greece
and its creditors will reach some sort of deal when they talks resume on
Monday.

At the close, the Dow Jones Industrial Average rose nearly 47 points
to 18,019, NASDAQ gained 36 points to a fresh 15-year high, and the S&P 500
was up 8. For the week, the Dow rose 1 percent. The NASDAQ up more than 3
percent, best week since last October, and the S&P 500 gained 2 percent.

The energy sector was helped by a 3 percent rise in West Texas crude.
It is now up nearly 20 percent from its lows last month. Brent Crude back
up above $60 a barrel, actually, above $61 for the first time this year.
Both benchmarks have now risen for three consecutive weeks.

What`s behind the broad based run-up and is a sign the bulls will stay
in control?

Dominic Chu reports.

(BEGIN VIDEOTAPE)

DOMINIC CHU, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): It
may not feel like it for many investors but we are once again at record
high levels in the stock market, at least when you look at the S&P 500.
The broader large cap stock index set a record intraday high today, led by
energy stocks, which rallied in the back of high oil prices, and a whole
slew of other companies that hit record highs as well, including coffee
giant Starbucks (NASDAQ:SBUX), home improvement retailer Home Depot
(NYSE:HD) and toy maker Hasbro (NYSE:HAS).

So, will this upward move continue, and will it get more people
interested in buying stocks? Uncertainty about global risks holding some
investors back, but if that changes, that could help the bull run continue.

ROBERT PAVLIK, BOSTON PRIVATE WEALTH: Right now, we have some
possible resolutions to things. We have Russia agreeing to a ceasefire
with the Ukraine. We have the Greeks talking to the ECB and the E.U.
trying to renegotiate their debt package. We have the Chinese reducing
reserve requirements, and trying to expand their global economy.

CHU: And it`s not just overseas developments to keep an eye on. If
the U.S. economy continues to gradually improve, that`s an upside catalyst
as well.

DARIN RICHARDS, AKT WEALTH ADVISORS CIO: Our employment rate
continues to move lower. The consumer is in a great spot. Consumer
confidence is very high. And we could see, I think, additional spending on
the retail side, which again, consumer spending is 70 percent of our
economy.

CHU (on camera): Of course, those are the positive takes. The more
cautious in the marketplace point out the fragility of the global economic
recovery and they say that markets are priced for perfection. Meaning, if
anything upsets the balance, we could be set up for more volatility ahead.

For NIGHTLY BUSINESS REPORT, I`m Dominic Chu.

(END VIDEOTAPE)

MATHISEN: Here to talk more about the record-setting day on Wall
Street and his stock picks is this week`s market monitor, Eric Marshall,
president and portfolio manager of Hodges Capital Management, the Dallas-
based fund group that runs more than $2 billion.

Welcome, Eric. Good to have you with us.

How do you explain the market turnaround these past couple of weeks?

ERIC MARSHALL, HODGES CAPITAL MANAGEMENT PRESIDENT: Well, I think
it`s really been a response to the commodity and some of the volatility
that we`ve seen in currency markets and so forth, just kind of settling
down. We`ve gotten into earnings season, corporate earnings and the
outlooks that we`re hearing from companies are relatively positive, and I
think it`s been a normal, you know, one step back, two steps forward.

MATHISEN: What`s it like down there in Dallas, not really the
epicenter of the energy world in Texas, I guess you`d say Houston is, but
you`re very close to it. A lot of the economy is dependent on it. What
are people saying?

MARSHALL: Well, you know, in Dallas and in north Texas, we really
haven`t seen much of an impact of lower oil prices. If you look at the
Texas economy, it`s much more diversified than it was back in the early
`80s when we had the big oil bust. And so, in Dallas, we haven`t seen it,
and anecdotally, you hear some things from Houston but hasn`t had as big of
an impact yet.

MATHISEN: Uh-huh. You know, we were speaking a couple of weeks ago
here internally that we wanted to have somebody on who follows small cap
stocks as we focused a lot on the blue chips and here, lo and behold, we
have you on a night when the rustle is at a record high. Why? Make the
case for small caps this year and I suspect that one of the arguments is
that they are less prone to be whip-sawed by currency moves.

MARSHALL: Yes. We, you know, at the Hodges Funds, we don`t get too
caught up in the absolute level of any market index. But within small
caps, you can always find secular growth opportunities in just any type of
market and to your point, they are more domestic-centric. Meaning that
they have less foreign exchange exposure, they have more simplified capital
structures.

So, I think it`s really a good place for active portfolio management
where you can get in there and do some individual stock picking.

MATHISEN: Let`s go through some of your individual stocks beginning
with Eagle Materials (NYSE:EXP). You mentioned last time you were here
about a year ago, what`s been going on there? It`s down a little since
then.

MARSHALL: Yes. They`re a manufacturer of cement and gypsum and
wallboard. Both of those have seen very good demand, very good pricing
power. The prices of both of those commodities have been rising, as the
housing market and construction market continues to improve in different
areas of the country.

And we really like the earnings profile of the company, the earnings
power over the next couple of years. They do have a segment of their
business that`s relatively small that does provide frack sand to the oil
and gas industry. And as a result of that, that`s the reason why the stock
is down over the past year.

But we really think you`re buying the long-term cement and gypsum
wallboard business. You get the rest of the business for free at these
price levels.

MATHISEN: All right. So, that`s the reason it`s been stuck in the
mud there.

Jarden (NYSE:JAH) Corporation trading now at $51 and change.

MARSHALL: Yes, and this is more of a mid cap stock than a small cap
stock, but it`s one we like here. They do over $8 billion in revenues and
they are consumer product company. They own brands like Coleman, camping
equipment, Rawlings, sporting goods. They have Mr. Coffee. They bought
Yankee Candle Company here about a year and a half ago and they have a
number of other brands.

And they`re seeing very good organic revenue growth in these areas, as
well as some acquisition opportunities. The company throws off a lot of
cash flow. They`ve been aggressively buying back their stock with that
cash. And it only trades about 15 times for earnings.

MATHISEN: Quick thought on Swift Transportation, big trucker.

MARSHALL: Yes. This is another area — when you look at the trucking
business, it hasn`t been very good over the last ten years. And they`re
starting to see pricing power with some of the long haul truckers, and
Swift is really well-positioned to take advantage of that. They`ve started
to raise prices for the first time in about 10 years. And we think with a
lot of the driver shortages and lack of investment this space, we think
they`re going to be very well positioned to take advantage of these trends
over the next couple of years.

MATHISEN: All right. Eric, thank you very much. Have a great
weekend. We appreciate it.

MARSHALL: Thank you, Tyler.

MATHISEN: Eric Marshall with Hodges Capital Management.

Well, despite higher stock prices, the sentiment unexpectedly fell in
February for the first time in seven months. This is according to
University of Michigan`s preliminary sentiment index. The drop in
sentiment due in part apparently to the recent rise in gasoline prices,
energy workers concerns about possible job losses and even the harsh winter
weather in the Northeast and parts of the Midwest.

Now to what the White House calls a defining challenge of the 21st
century: Cyber crime. President Obama held a summit in Silicon Valley with
chief executives from companies like Apple (NASDAQ:AAPL), Bank of America
(NYSE:BAC), Intel (NASDAQ:INTC) and Walgreens, urging the private sector
and the government to work together to make the Internet and business
safer.

But as Eamon Javers reports, some big tech CEOs were no-shows.

(BEGIN VIDEOTAPE)

EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): A
clash of cultures today at Stanford University in tech-centric Silicon
Valley as some of the top federal cyber security officials came here for
President Obama`s cyber security summit. Raising eyebrows, some of the
biggest names in technology were conspicuous no-shows, including the CEOs
of Google (NASDAQ:GOOG), Facebook (NASDAQ:FB), and Yahoo (NASDAQ:YHOO).
Silicon Valley insiders attribute the snub to continuing fallout from the
Edward Snowden NSA spying revelations.

Despite that bit of tension between the East and West Coast, the
president signed an executive order to encourage more cooperation between
the private sector and government. And he told his audience the country
needs to come together to deal with a common problem.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Foreign governments and
criminals are probing these systems every single day. We only have to
think of real life examples. Air traffic control system going down and
disrupting flights, or blackouts that plunge cities into darkness. To
imagine what a set of systemic cyber attacks might do. So, this is also a
matter of public safety.

JAVERS: Also here, Tim Cook, the CEO of Apple (NASDAQ:AAPL).

TIM COOK, APPLE CEO: If those of us in positions of responsibility
fail to do everything in our power to protect the right of privacy, we risk
something far more valuable than money. We risk our way of life.

JAVERS (on camera): Part of that clash of cultures between the
government guys and the techies is the arms race to recruit top technology
talent. Federal officials here say they know they can`t compete with the
Googles and the Facebooks of the world directly on salary, but they said
they find ways to work around that.

ED LOWERY, U.S. SECRET SERVICE ASSISTANT DIRECTOR: We have a lot of
imbeds. We put agents out here in the Silicon Valley working with the
technology companies. We leverage what they can do. And again, I don`t —
the government is never is going to be able to match the pay scale,
obviously, but there are plenty of patriots out there who want to be in law
enforcement.

JAVERS (voice-over): For the president today, this visit to heart of
the technology community, to the president it was all about bridging the
differences between government and the private sector.

For NIGHTLY BUSINESS REPORT, I`m Eamon Javers in Stanford.

(END VIDEOTAPE)

MATHISEN: MasterCard (NYSE:MA) and Visa (NYSE:V) both announcing
plans to expand their security features for online shopping. Visa (NYSE:V)
plans to do away with traditional account numbers and instead use a unique
series of numbers that can authorize payments. MasterCard (NYSE:MA), which
plans to spend more than $20 million on its initiative, will let customers
verify transactions using voice and fingerprints. MasterCard (NYSE:MA)
plans to launch that program in the spring.

Now to the West Coast port labor dispute and Conagra. It became the
latest company to blame its weak profit forecast on the traffic congestion
out there. The package food company said the slowdown is hurting some
products it exports. Shares of the company off 4 percent.

And as the slowdown drags on at the West Coast ports, one sector most
at risk: retail. We may learn more about the extent of the impact when
retailers begin reporting earnings next week, including the world`s
biggest, Walmart.

As Courtney Reagan tells us, investors will pay close attention.

(BEGIN VIDEOTAPE)

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Consumers may be looking forward to ditching winter coats for spring
apparel, but retailers are having trouble getting that spring merchandise
in stores. As disputes over labor contracts continue, the West Coast ports
responsible for nearly 40 percent of all U.S. cargo are shut down for a
second straight weekend, which means merchandise is stuck at sea or in
containers, far from the intended retail destination.

RICHARD JAFFE, STIFEL NICOLAUS RESEARCH ANALYST: I see some stores
that are out of balance, still featuring what I`ll call winter and holiday
goods when at this time of year, that should be relegated to the back racks
on sale and the front should be all fresh new merchandise. So, the balance
isn`t right.

REAGAN: Target (NYSE:TGT), Best Buy (NYSE:BBY), Michael Kors and
Ralph Lauren are among the retailers that have brought in orders early to
protect inventory levels and are using other points of entry and
distribution to get merchandise into and through the country. Container
volume at L.A., Long Beach and Oakland ports dropped 25 percent or more in
January from the year prior, but despite the lower volume, the journal of
commerce said some West Coast shipments that normally take two to six days
to unload are now taking up to three weeks.

(on camera): Circumventing West Coast ports helps get merchandise on
the shelves but it comes at a cost, up to $7 billion this year, according
to some estimates. Getting cargo from Asia to the East Coast takes longer
and adds to expense. Air freight is also more expensive. Both back-up
plans crimping profit margins.

(voice-over): As retailers reroute goods from Asia to East Coast
parts, Stifel analyst Richard Jaffe points out overflow puts those ports at
max capacity.

JAFFE: The doomsday scenario, the product comes in late. The season
therefore shortened. Retailers have to accelerate sales using discounts.
The consumer benefits with discounted prices, but the retailers suffer
because short and credit discounts.

REAGAN: Credit Suisse says brands diversified points of distribution
including Nike (NYSE:NKE), Tumi, and VF Corp. should be more insulated in
the short-term while Lululemon and Deckers cold suffer more because of
concentrated West Coast distribution.

While contingencies are working to avoid a material impact on
business, if an extended shutdown or strike occurs, industry-wide
consensus, no retailer goes unaffected.

For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan.

(END VIDEOTAPE)

MATHISEN: Still ahead, how the steep drop in crude prices in recent
months has one city on edge, wondering if its housing rebound could fall
apart.

(MUSIC)

MATHISEN: The number of U.S. oil rigs continues to fall according to
Baker Hughes (NYSE:BHI). Drillers idled 98 rigs this week bringing the rig
count down 30 percent since October, a very steep fall there. Some look to
rig counts as a leading indicator of production since they are used to
drill new wells. U.S. oil production overall remains at multi-decade
highs.

Now to Texas, the state driven by a strong energy focused economy. It
is suddenly now feeling the impact of oil prices that are now about half
their year-ago levels, though up from their lows. Layoffs being announced
at big energy firms and if the unemployment rate rises, the Houston housing
market could eventually feel a bit of a chill.

Diana Olick has more.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
David Hopkins sold his Houston-area home last fall for top dollar. He says
he timed the market just right.

DAVID HOPKINS, HOME SELLER: I feel really glad. I`m like that guy
that sold his oil company last year. He`s feeling pretty good too. I feel
the same way.

OLICK: Both home sales and prices hit record levels in Houston last
year fueled by a booming energy sector. With oil prices now cut in half,
Houston is already losing jobs, the primary driver for housing.

MICHELLE MORANO: Now that oil prices are down, things haven`t
completely changed but let`s just say that things have come to more a
stall.

OLICK: It will take significant time for the drop in oil prices to
trickle down to Houston`s housing market. In previous oil downturns, it`s
taken eight months to two years for job losses to factor into home prices.
But all eyes are on Houston now with the oil industry accounting for about
5.6 percent of its jobs. This especially because it was the nation`s
hottest housing market barely a year ago and is still growing. Single
family Houston home sales jumped 6 percent in January from a year ago and
prices hit a record high up 7 percent from a year ago.

The only problem now is supply, barely 2.5 months due to all the
demand.

This as builders start to get careful. KB Home`s CEO last month said
the builder had pulled out of a couple of land transactions in the fourth
quarter because of, quote, “sensitivity” there. But they claim they are
not seeing any pullback yet by consumers.

RICK SHARGA, AUCTION.COM: Because it hasn`t been hit yet doesn`t mean
it`s not going to happen. So, I think patience is the buzz word. We`re
expecting that Houston will cool down significantly on the residential
side.

OLICK (on camera): Just for context, energy has really pushed housing
recently. According to Trulia, in the seven large metros where oil-related
jobs are at least 2 percent of the total, home prices rose 10.5 percent
year over year last year. That`s a lot faster than the rest of the nation.
Now the reverse is in play.

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

(END VIDEOTAPE)

MATHISEN: For more on the state of housing in Houston, head to our
Web site, NBR.com.

Well, powerhouse brands help bolster VF Corp`s results. And that is
where we begin tonight`s “Market Focus”.

The parent of brands like the North Face and Vans reported results
that matched on both the top and bottom lines. Profit did fall from last
year, as the company booked a write-down on the value of some of its brands
and the company warned investors about negative effects from currency
fluctuations for 2015. But revenue still rose on strength in its outdoor
and action sports division. I know no kid in my town who doesn`t own a
North Face jacket. Shares popped 6 percent to $75.26.

Nordstrom (NYSE:JWN) is jacking up its dividend by 12 percent to 37
cents a share. The new payout will be made to shareholders in March. The
yield on the dividend is up more than 1.5 percent. Shares spiked initially
in after-hours trading. Before the close, the stock was up a fraction to
$79.41.

And Smucker — J.M. Smucker (NYSE:SJM) that would be — reported mixed
results today, with revenue missing estimates. The owner of Folgers coffee
said weakness in its coffee business weighed on results, but it`s expecting
business to get caffeinated again this year as prices stabilize. Shares
were up more than 1 percent to $113.89.

And Alibaba has received a request for information from the SEC. The
agency is looking for information related to its interaction with a Chinese
regulator. Alibaba says it`s cooperating with the request. Shares fell
initially in after-hours trading. Before the bell, the stock was up 2
percent to $89.05.

A rising economic tide lifts all boats and that is especially true for
the boating industry as the economy improves and people feel better about
making big purchases. Boat manufacturers expecting solid sales growth this
year and they`re kicking off their season as they so often do in Miami
where thousands of boats are on display at two separate shows.

Morgan Brennan is there.

(BEGIN VIDEOTAPE)

MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): A
big weekend for boat enthusiasts as more than a hundred thousand people
descend in Miami for two annual boat shows. Brokers say business is
finally recovering.

MARK ELLIOTT: Over the last two years, we`ve seen slow improvement
and it`s directly related to the stock market. As the stock market inches
up, our phone calls increase. So, with the stock market being in chartered
territory and demand pent up, people are buying yachts.

BRENNAN: And it`s not just luxury, but water crafts. The National
Marine Manufacturers Association estimates sales of new recreational boats
grew as much as 8 percent last year and it expects that momentum to
continue.

THOM DAMMRICH, NATIONAL MARINE MANUFACTURERS ASSOCIATION: As we look
out over the next few years, we think we`ve got three or more years of
pretty good growth in new boat sales.

BRENNAN: That`s good news for an industry rocked by the recession.
When new sales plunged to 60 percent and one third of retailers closed up
shop. Since then, to recapture consumers, companies have had to change
their strategies rolling out new models at lower price points.

Industry leader Brunswick (NYSE:BC) Corporation says demand comes from
both ends of the consumer spectrum.

DUSTY MCCOY, BRUNSWICK CORP. CEO: A lot of bigger models completely
sold out over a year and then pontoons, fishing boats which tend to be
smaller, different income level have also now begun to reach prerecession
level. So, at one at the end market, the other end, market is very
powerful, very strong and growing very much.

BRENNAN (on camera): So, what`s fueling demand for all of these
boats? An improving labor market, rising consumer confidence and
increasing disposable income thanks in part to lower gas prices.

(voice-over): But for now here in Miami, people are buying boats and
with thousands to choose from, from inflatables to runabouts to yachts,
there`s something here for everyone.

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan in Miami.

(END VIDEOTAPE)

MATHISEN: Coming up, money and marriage. Why planning a different
kind of date this Valentine`s Day could lead to not only marital bliss but
also financial harmony.

(MUSIC)

MATHISEN: The window to enroll in health care under the Affordable
Care Act quickly closing. Midnight Sunday is the deadline for coverage
this year and those who don`t enroll may be subject to a penalty. Federal
officials say they`ve seen a big pick-up in traffic on the healthcare.gov
Web site over the past few days.

Well, 2014 was a rough year for Atlantic City but this year, so far,
off to a more encouraging start. Casino revenue for January was up almost
19 percent compared with a year ago, even though they`ve shut down a lot of
casinos. Part of the reason is less competition for the eight casinos that
are still there.

Well, looking for a Valentine`s Day gift for your significant other?
You might want to forget the flowers and chocolate and instead plan a date
— a money date — because as Sharon Epperson tells us, that could be the
most valuable gift of all.

(BEGIN VIDEOTAPE)

SHARON EPPERSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Mark and Evan Elkowitz have been married for 18 years. They like to talk
about everything, even money.

MARC ELKOWITZ, HUSBAND: We certainly have conversations about money.

EVAN ELKOWITZ, WIFE: Sometimes they`re not called conversations.

MARC ELKOWITZ: Sometimes, they are more like avoiding injury than
conversation.

EPPERSON: Like many couples, they have occasional arguments about
money, too.

ELLEN ROGIN, AUTHOR: Many people weren`t brought up learning how to
talk about money with their partners. So, maybe your parents didn`t talk
about money in front of you or maybe didn`t even talk about money at all,
or they thought about it.

EPPERSON (voice-over): It`s a crucial conversation to have. But
nearly 40 percent of couples in a Citi Double Cash survey said they haven`t
set aside time to talk about their finances in the past year. About 30
percent wish they discussed it more.

ROGIN: Yes, scheduling a time to get together, it can be a fun, like,
go out and have a date. It doesn`t have to be something hard and boring to
sit and talk about.

EVAN ELKOWITZ: I think planning a date in general is a hard thing.

MARC ELKOWITZ: A fun date, let alone an accounting date.

EVAN ELKOWITZ: Right.

EPPERSON: The Elkowitzes find the time to have their money talks in
other ways. They divide and conquer when it comes to managing the family
finances.

EVAN ELKOWITZ: I pay all the bills, by the way. Yes, I pay all the
bills.

EPPERSON: Marc, a plastic surgeon, the primary bred winner, while
Evan, a personal stylist, handles everyday spending.

MARC ELKOWITZ: It stresses me out. I don`t want to know. I`d rather
be in the OR taking care of stuff than look at a phone bill.

EVAN ELKOWITZ: A phone bill isn`t bad.

MARC ELKOWITZ: Or a credit card bill.

EPPERSON: The Elkowitzes try to strike a balance that keeps both of
them involved and honest about what they own and what they owe.

But when it comes to love and money, not all couples are as
transparent. In the Citi survey, nearly one in four in a committed
relationship admit they have a private account that their significant other
doesn`t know about. Yet many more admits they would prefer if their
significant other discuss finances more often.

ROGIN: You really need to come clean with your money. So, if you
have a secret, whether a hidden account or debt that`s out there or
spending that you`re not telling your partner about, maybe you spend cash
that they don`t know what you spend money about, or you hide bags in your
trunk or in the back of your closet, and come clean, because it`s really
hard to have marital bliss if there`s not financial harmony.

EPPERSON: Money advice to whether those challenging times for better
or worse.

For NIGHTLY BUSINESS REPORT, I`m Sharon Epperson.

(END VIDEOTAPE)

MATHISEN: And that is NIGHTLY BUSINESS REPORT for tonight. I`m Tyler
Mathisen. Thanks for watching. Have a great long weekend, everyone, and
we`ll see you back here Monday for a special holiday edition of NIGHTLY
BUSINESS REPORT.

END

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