Transcript: Nightly Business Report – March 10, 2016

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

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR:  Fightin` words.  The
government says Apple`s rhetoric is false and it should open an encrypted iPhone used by a                                                                                       California gunman.

Rally fizzles.  The European Central Bank cut rates and stocks take off.
But then the air came out of the balloon.  So, what happened?

And muscling up.  Why General Motors (NYSE:GM) thinks a legendary brand is
ready to roar again.

All that and more for Thursday, March 10th.

Good evening, everyone, and welcome.  Tyler Mathisen is on assignment
tonight.

The Justice Department filed its latest response in the fight over
encryption, calling Apple`s rhetoric false and corrosive.  The government
wants Apple (NASDAQ:AAPL) to comply with the FBI to unlock an iPhone used
by one of the gunmen in a December attack in San Bernardino, California,
which left 14 people dead.

The government also said in this case, Apple (NASDAQ:AAPL), quote,
“deliberately raised technological barriers”, end quote, and that Apple
(NASDAQ:AAPL) can remove those barriers.

So, let`s bring Eamon Javers in, who`s been following this story from the
beginning for more.

The Justice Department wording was extremely strong, Eamon.

EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Yes, really tough
language here from DOJ, Sue.  And I want to read an excerpt to give you a
sense of just how strong this language was.  The DOJ writing here that
Apple (NASDAQ:AAPL) attacks the All Writs Act, that 1789 law that the
government is relying on here.

“Apple (NASDAQ:AAPL) attacked the All Writs Act as archaic, the court`s
order as leading to a police state, and the FBI investigation as shoddy,
while extolling itself as the primary guardian of Americans` privacy.”  So,
here is the Department of Justice saying that Apple (NASDAQ:AAPL) is
holding itself up on a pedestal as the guardian of America`s privacy when
in reality, the Department of Justice says, this is about terrorism and
access to a particular phone under a legal warrant.

So, this is this back and forth blizzard of paperwork that we`re going to
see now between Apple (NASDAQ:AAPL) and the government ahead of this March,
end of March hearing, where we`ll see both of those parties in court and
they could argue it out in front of the judge.

HERERA:  You know, the public opinion is so divided on this, Eamon.  The
latest NBC News/”Wall Street Journal” poll basically said 47 percent say
that Apple (NASDAQ:AAPL) should not cooperate and open the phone, 42
percent say it should.  It`s fascinating.

JAVERS:  Right.  Yes, it is very tight.  And, of course, you notice there,
both sides below 50 percent.  So there`s no real consensus in the country
at all on what ought to be done here.

This is a case everyone who`s watching it thinks might be headed to the
Supreme Court because it`s one of those fundamental tests of America`s
liberties versus law enforcement`s ability to go after criminals that`s
going to have to be decided by a high court because a lot of this
technology, these questions of encryption, are so new to the courts and to
the legal system.

HERERA:  Now, one of Apple`s claims is that they would have to devote an
enormous amount of manpower and a lot of hours to — if they decided to
cooperate with the government.  The government counters it would probably
take six engineers and two weeks.

JAVERS:  Right.

HERERA:  So, there`s some ground somewhere in there.

JAVERS:  That`s right.  Look, the government doesn`t buy Apple`s argument
that this would be unduly burdensome on Apple (NASDAQ:AAPL) to create this
software that the government wants Apple (NASDAQ:AAPL) to create here.
They also say that Apple (NASDAQ:AAPL) doesn`t have any First Amendment
rights or Fifth Amendment rights that pertain to this specific request from
the government.

So, the government very skeptical of Apple (NASDAQ:AAPL) here, as you would
expect them to be in these court filings.  It`s very argumentative and it`s
an intense argument.

HERERA:  All right.  So, the next date is when?  When are we going to —

JAVERS:  End of March.  I believe the hearing will be March 22nd.  That`s
when we`ll see both sides have a chance to argue in front of the judge, who
issued the original order in favor of the government`s position here,
presumably whichever side she comes down on, the person, the party that`s
not happy with that is going to appeal it.  So, I think this will go to the
Ninth Circuit after that, then possibly up to the Supreme Court.

HERERA:  Eamon, thank you so much.  We appreciate it.

JAVERS:  You bet, Sue.

Well, for most of the day, the story was the European Central Bank`s
decision to cut interest rates and expand its economic stimulus programs.

Julia Chatterley has the details from Frankfurt, Germany.

(BEGIN VIDEOTAPE)

JULIA CHATTERLEY, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Investors were
hoping for a bazooka.  Mario Draghi, president of the European Central
Bank, more than obliged.  He announced his 25 percent increase in the
monthly asset purchases.  This in an effort to keep bond yields down, keep
mortgage costs and consumer loan costs down.

He also announced four big new lending facilities, four-year money that can
be borrowed at zero rate.  And get this — he said if the banks can get
their net lending above a certain threshold, they`ll be paid to do it.

So, all the focus really in this meeting about pushing cash out to the real
economy and making sure the banks aren`t being damaged too much by negative
deposit rates.  He did take those further into negative territory but at
the same time you see this effort to offset some of the impact that`s
having on bank profitability.

We saw bank stocks certainly rally in the European session today.  What
else he announced, though, and this is the big one, they`re going to be
buying corporate bonds in Europe as well.  They won`t buy bank bonds but
we`re still seeing a huge increase in the available assets that they`re now
willing to buy.  I have to say, he also mentioned the fact that rates in
Europe will remain significantly low beyond the end of this program, which
is March 2017.

So, while there was an effort to get cash up to the real economy, protect
the profitability of banks, you have to feel sorry for savers both in
Germany and more broadly in the eurozone.

For NIGHTLY BUSINESS REPORT, I`m Julia Chatterley, in Frankfurt.

(END VIDEOTAPE)

HERERA:  So, those moves by ECB were originally welcomed by investors.
Stocks jumped at the opened but quickly reversed course, at one point down
1 percent during the day.

But then in the end, stocks recovered and kind of hugged the flat line.
The Dow losing 5 points to 16,995.  The NASDAQ dropped 12.  The S&P 500 was
able to scratch out a fractional gain.  All of that had some people asking,
what happened?

Bob Pisani explains.

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT:  What happened to our
rally?

ECB Head Mario Draghi initially did everything the market expected.  He
reduced rates, he expanded the QE program, he announced they will be buying
corporate bonds, so stocks went up, euro went down, bond yields went down,
at least in Europe.

But then at the end press conference, a remark sort of changed everything.
He said he didn`t anticipate the need to further reduce rates.  OK.  Well,
that doesn`t sound like much.

But suddenly, everything reversed.  Stocks in Europe and the U.S., futures
started dropping.  Germany ended down 2 percent for the day.

Now, why did that happen?  That doesn`t sound very controversial, maybe
Draghi just wanted to send a more balanced message that rates will keep
going down forever.  Well, that sounds reasonable.

But for whatever reason, the market seemed surprised by that, and at the
very least indicates that the market`s addiction to stimulus programs is
still very strong.

It didn`t help that oil dropped at the open.  So many big oil names like
ExxonMobil (NYSE:XOM) struggled all day to get into the green.

Now, one positive aspect of the ECB moves was the dollar weakened against
euro.  A weaker dollar is good news for multinational companies because it
makes exports cheaper for others to buy.  So, companies like Coke and
Philip Morris and Pepsi and Clorox (NYSE:CLX) did go into the green
although only fractionally.

For NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock Exchange.

(END VIDEOTAPE)

HERERA:  Bill Adams joins to us talk about the European Central Bank`s move
and what it might mean for the U.S. economy and the Federal Reserve.  He`s
senior international economist with PNC financial.

Bill, welcome back.  Nice to have you here.

BILL ADAMS, PNC FINANCIAL SENIOR INTERNATIONAL ECONOMIST:  Good to be back,
Sue.

HERERA:  I guess the question is, what does it mean to those of us here in
the United States that have investment dollars committed?  Because now our
Fed is going in the opposite direction of the European Central Bank and
many other central banks around the world.

ADAMS:  Well, it was a tricky easing measure from the EDCB.  There were a
couple of different tools that they used to ease.  They used them in
different degrees today.

I think the takeaway is that monetary policy is getting easier overseas.
You would expect that to cause a stronger dollar over the course of this
year.  But markets had expected more than we got today.

I think this reaction with a weaker dollar, stronger euro, might not last.
But in either case, I think it`s probably not going to be enough to stop
the Fed from continuing to gradually raise rates in the United States in
2016.

HERERA:  What about our economy here at home?  Europe obviously is
struggling and in many cases has not recovered at all from the financial
crisis.  Yet our economy, we`re getting some mixed data, but in general,
things look like we`re on an upswing.

ADAMS:  Well, the U.S. economy now, we see the sharp divergence between the
domestic side of the U.S. economy, and the service sector, and the labor
market, which looks like they`re fairly good and getting better.  And then
the export side of the U.S. economy and energy and manufacturing that are
really struggling to get the strength of the U.S. dollar.

HERERA:  What about those two sectors, because some people look at the
whipsaw that we`re seeing in oil and the downdraft we`re seeing in other
areas as recessionary, or deflationary.

Do either of those two terms fit with your scenario for the economy?

ADAMS:  I don`t think those apply to the U.S. economy.  In the U.S. we`re
looking to real GDP growth of 2 percent in 2016 or maybe a little better.
The unemployment rate will probably continue to move, edge lower over the
course of the year, maybe reach 4.7 percent by the end of the year.  That`s
pretty good by U.S. standards.

For low oil prices, obviously, it`s negative for oil producers, but it`s
like a tax cut for American consumers and it should boost consumer spending
power.  And that will mean more spending on other goods and services in the
U.S. economy.  On net, low oil prices should be good for U.S. growth.

HERERA:  Are you happy with wage growth?  Because we`re starting to see a
little bit of — not wage inflation necessarily, but growth in wages.

ADAMS:  It`s encouraging that we are seeing wage growth start to trend
higher.  It`s not where we expect it to be.  I think we`ll probably see
faster wage growth by the end of this year and that`s because the labor
market in the United States is tightening and this is the part of the
business cycle where we traditionally do see wages accelerate.

HERERA:  All right.  On that note, Bill, thank you so much for your
perspective, we appreciate it.

Bill Adams with PNC Financial.

ADAMS:  Thanks for having me.

HERERA:  Meantime, American Express (NYSE:EXPR) (NYSE:AXP) is talking
directly to investors and addressing their concerns that the company`s
business model is broken.

Kayla Tausche has more from San Francisco.

(BEGIN VIDEOTAPE)

KAYLA TAUSCHE, NIGHTLY BUSINESS REPORT CORRESPONDENT:  American Express
(NYSE:EXPR) (NYSE:AXP) has evolved from freight mail to travelers checks to
being the largest U.S. credit card issuer by purchases.  But investors are
now doubting that its business model can withstand customer defections,
regulatory challenges and a rapidly changing competitive landscape.

CEO Ken Chenault, helming the company for 15 years, addressed those
concerns head-on Thursday at the start of American Express` investor day.

KENNETH CHENAULT, AMERICAN EXPRESS CEO:  Let me start with the first
question I mentioned.  Is the American Express (NYSE:EXPR) (NYSE:AXP)
business model fundamentally broken?  I can tell you with complete
confidence that the answer here is, no.  Some elements of our business
haven`t performed as well as we`d like in this environment.

Yes, we`re ending our Costco (NASDAQ:COST) partnership.  But our model
isn`t broken, nor is it static.

TAUSCHE:  But the Costco (NASDAQ:COST) agreement will hurt.  AmEx hit half
its U.S. consumer billing target, mainly due to Costco (NASDAQ:COST).  Amex
is also being dropped by Fidelity and JetBlue.

Due to this environment, Chenault said the prior earnings target of 12
percent to 15 percent earnings per share of growth would no longer be
appropriate though he declined to set a new target.

Now, despite Warren Buffett holding a more than 15 percent stake in the
company, it was the Dow`s worst performer this year, before news of
executive reorganization and cost-cutting plan pulled it off the lows.

Chenault also addressed that plan.

CHENAULT:  We`ve demonstrated we can hit the expense goals we set for
ourselves and I`m confident we can achieve our most recent billion-dollar
target.

The priority for me and for all of our business leaders is sustainably
growing revenue.  Our board is fully supportive of our plans.

TAUSCHE:  That support he mentioned, though, dampened investor speculation
the company could pursue a merger, acquisition, or even CEO change.
Instead, AmEx is refocusing on one of its existing revenue streams,
lending.  Now a, quote, “major strategic thrust” though the company`s Web
site boasts its one competitive advantage is not having to rely on it.

As the strategy was unveiled, AmEx shares fell.  Analysts at Stifel said a
focus on organic growth wouldn`t necessarily be surprising, but also
wouldn`t be likely to change what it called, quote, “increasingly negative
investor sentiment.”

For NIGHTLY BUSINESS REPORT, I`m Kayla Tausche.

(END VIDEOTAPE)

HERERA:  Coming up, small business gets some help fighting regulation and
some very onerous licensing laws.

(MUSIC)

HERERA:  When it comes to small business owners, regulation is always near
the top of their concerns, even more so than the economy.  And in our
latest look at “Small Business Matters”, small business owners have an
advocate challenging some of these laws.

Kate Rogers (NYSE:ROG) has more from Charleston, South Carolina.

(BEGIN VIDEOTAPE)

KIMBERLY BILLUPS, ASPIRING CHARLESTON TOUR GUIDE:  So I have flash cards
here that I made up, hundreds of them.

KATE ROGERS, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Kimberly Billups
studied three months to pass the tour guide exam in the hopes of opening
her own historic tour business.  But Billups, who once gave historic home
tours in Savannah, Georgia, says a city law requiring a 200-question test
based on a 500-page book and an oral exam stands in her way.

BILLUPS:  The fathers, the authors, the signers of the Declaration of
Independence and the Constitution are buried here in our backyard.  The
hypocrisy of all of this, you know — I know they`re rolling over in their
grave.

ROGERS:  Around the country, government regulations and red tape have long
plagued Main Street but now would-be entrepreneurs like Billups are
fighting back with the help of D.C.-based nonprofit law firm the Institute
for Justice.  I.J. filed suit on Billups` behalf in January.

ROBERT MCNAMARA, INSTITUTE FOR JUSTICE SENIOR ATTORNEY:  There`s nothing
more fundamental to the idea of the American dream is the idea that you can
start your own business, be your own boss.  The last thing we need is for
the government to stand in between a would-be entrepreneur and a willing,
fully informed customer.

ROGERS:  The city of Charleston says its tourism industry reaches nearly 5
million visitors and it has a responsibility to regulate it in a manner
that, quote, “provides for continued success and prosperity while
protecting the public.”

In Wisconsin, the controversy is over cookies.  Lisa Kivirist takes pride
in the muffins and cookies that she serves to guests at her bed and
breakfast in Browntown, Wisconsin.  But selling those same goods to
customers could potentially land Kivirist in jail for up to six months.

The reason?  The state doesn`t allow for the sale of baked goods not made
in a licensed commercial kitchen, which Kivirist says could cost nearly
$50,000.  So she can serve her guests the treats, but if they want to buy
some extra for the road, it`s against the law.

LISA KIVIRIST, INN SERENDIPITY FARM AND BAR OWNER:  Over the last 20 years,
I`ve lost thousands of dollars of income of these muffins that I could be
selling, along with other baked goods, to guests as they head home after
staying here.

ROGERS:  I.J. filed suit in January against the Wisconsin Department of
Agriculture, Trade and Consumer Protection on behalf of Kivirist and two
other entrepreneurs.  The Wisconsin DOJ says it`s reviewing the complaint.

KIVIRIST:  So, if we could help home bakers like myself with that on-ramp,
we could really revitalize our economy on a lasting local level.  And
that`s the important ingredient to all of this.

ROGERS:  For NIGHTLY BUSINESS REPORT, in Charleston, South Carolina, I`m
Kate Rogers (NYSE:ROG).

(END VIDEOTAPE)

HERERA:  Dollar General (NYSE:DG) raises its dividend and that is where we
begin tonight`s “Market Focus.”

The discount retailer is increasing its quarterly dividend to 25 cents from
22 cents.  The company also will buy back about $1 billion in shares.
Dollar General (NYSE:DG) also saw sales rise 7 percent as demand rose for
candy and perishables and tobacco.  Shares surged more than 10 percent to
$83.23.

Party City issued better than expected earnings in the latest quarter.
Sales growth increased more than 2 percent for the party supply retailer,
thanks to a robust hall bean shopping season.  The company did however miss
on revenue targets and it expects sales to come in below expectations for
the year.  Nonetheless, shares surged 14 percent to $12.50.

TransCanada is reportedly in talks to buy natural gas company Columbia.
TransCanada issued that statement confirming it was in talks with an
unnamed company and that no agreement had been reached.  Columbia Pipeline
shares rose more than 8.5 percent to $21.43.  Shares of TransCanada fell
nearly 4 percent to $35.66.

Software-maker Nuance Communications (NASDAQ:NUAN) will buy back $500
million of its shares from billionaire Carl Icahn and some of his
affiliates, the deal expected to close next week.  Shares fell nearly 2
percent to $19.81.

Straight ahead, how General Motors (NYSE:GM) hopes low gas prices will help
brighten up one of its legendary brands.

(MUSIC)

HERERA:  Lockheed Martin (NYSE:LMT) is best known as an aerospace
contractor whose products are used by the military.  But now, the company
has something for the commercial market and it`s unique, so much so that
you might say it`s a bird.  It`s a plane.  It`s — well, Jane Wells
explains.

(BEGIN VIDEOTAPE)

JANE WELLS, NIGHTLY BUSINESS REPORT CORRESPONDENT:  One morning ten years
ago, a bizarre aircraft flew out of Lockheed Martin`s secretive works in
the California high desert.  It was a helium-filled hybrid air ship, which
was part blimp, part wing, with four external diesel engines to control
movement.

Lockheed wondered if it could find customers willing to carry cargo this
way to remote areas of the world.

BOB BOYD, LOCKHEED MARTIN:  You back your truck and load and unload from
the back side.

WELLS:  Ten years later the company thinks it has found customers willing
to buy the airship, the LMH1, as a less-expensive way to deliver equipment
or products to areas without infrastructure — every one from mining
operations to UPS.

And how much will it cost?

BOYD:  Over $40 million list price, which is pretty affordable for an
aircraft.

WELLS:  I`m inside one of the three so-called lobes in the prototype.  It`s
like being in a really big bounce house.  When the real airship is built,
they think they`re going to be three types bigger and longer and in total,
it will be able to carry 47,000 pounds of cargo.

GRANT COOL, LOCKHEED HYBRID ENTERPRISES:  This is something that`s going to
dramatically change the way we move cargo around the world.

WELLS:  Grant Cool is in charge of selling the LMH1 to the commercial
market.  He brings in potential customers to this mock-up of the 19-
passenger gondola which lockheed had built by a Hollywood set designer.
There`s a simulator to play with.

Did we land?

COOL:  Yes.

WELLS:  Oh my gosh, thank you.

All of this in a place not used to letting in the media.  I mean, this is
where they built the SR-71.

How unusual is it for Lockheed to have kind of a separate sales segment, if
you will?

COOL:  From what I understand, it`s totally unique.

WELLS:  The airship geese on sale at a time when the defense side is
slowing down and Lockheed just announced 1,000 voluntary buyouts.  While
there are competitors creating other airships, Lockheed hopes to be first
to market by the end of 2018.  It also hopes to sell hundreds of them.  And
the first orders are expected in the next few weeks.

BOYD:  Our goal has always been to do the lowest possible cost.  We`re
focused on the cargo market.  We believe that`s the initial market for
that.

WELLS:  Boyd said Lockheed Martin (NYSE:LMT) has put in over $100 million
to fund this product.  Whether a place known for stealthy military projects
can succeed in the open commercial world remains up in the air.

For NIGHTLY BUSINESS REPORT, Jane Wells, Palmdale, California.

(END VIDEOTAPE)

HERERA:  From the air to the road.  And this one is for all of you muscle
car fans.

Chevy is rolling out two new versions of the Camaro and making a push to
gallop right past the Mustang in sales.

Phil LeBeau has more on the Camaro comeback.

(BEGIN VIDEOTAPE)

PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Top down, engine
roaring.  Chevy believes this will be the summer Camaro comes back.
Leading the charge, two new versions, including a convertible.

MARK REUSS, GM EXECUTIVE VICE PRESIDENT:  The first month in here, our
sales are up 44 percent.  So, we know why people are waiting for the new
for the car.  And when we introduced the new car, it was like, wow, this is
great.

LEBEAU:  The Camaro still has the sound and look that he wanted it define
the muscle car.  And yes, you can get six and eight-cylinder versions.

But in a change that may assemble strange to Camaro fans, there`s a new
addition with a four-cylinder engine.

With gas at well under $2 a gallon, Chevy believes muscle cars will be even
more attractive, not only because people will spent less at the pump, but
they`ll also have more money to pay for a muscle car like the new Camaro.

ERIC NOBLE, THE CAR LAB:  In order for these new vehicles to survive for a
business case stand point, they`ve got to get repeat sales, which means the
woman or guy that has one today has to feel good enough about that
ownership that in two, three or four years, they`re going to buy again.
Cheap fuel makes that an easier decision.

LEBEAU:  The muscle car war between Chevy and Ford has seen the latest
version of the Mustang race ahead of the Camaro in the last year when sales
dipped.  Still, GM says Camaros in a showroom will bring in buyers.  But
increasingly, those buying a Camaro or a Ford Mustang are looking for more
than pure power and a throaty roar.

REUSS:  The cars we`re driving today are all about, you know, handling and
precise steering and brakes.  That`s a different formula than what the
muscle car`s known for.  So, I think we`re going to open this up to a whole
bunch of new buyers.

LEBEAU:  A new age for an iconic car, still pushing the thrill of opening
it up and cruising down the highway.

Phil LeBeau, NIGHTLY BUSINESS REPORT, Las Vegas.

(END VIDEOTAPE)

HERERA:  A few months ago we told you about the spending controversy at the
Wounded Warrior Project.  Now, CBS (NYSE:CBS) is reporting the CEO and COO
of that organization have been fired.  The charity came under fire when a
CBS (NYSE:CBS) investigation revealed lavish spending.

And that is NIGHTLY BUSINESS REPORT for tonight.  I`m Sue Herera.  Thanks
for watching.

We want to remind you, this is the time of year your public television
station seeks your support and we thank you for that.  Have a great
evening.  We`ll see you tomorrow.

END

Nightly Business Report transcripts and video are available on-line post
broadcast at http://nbr.com. The program is transcribed by CQRC
Transcriptions, LLC. Updates may be posted at a later date. The views of
our guests and commentators are their own and do not necessarily represent
the views of Nightly Business Report, or CNBC, Inc. Information presented
on Nightly Business Report is not and should not be considered as
investment advice. (c) 2016 CNBC, Inc.

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