Transcript: Nightly Business Report- March 17, 2016

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

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Green for the year on this St.
Patrick`s Day. The Dow goes positive for 2016, erasing all of the turmoil
of January and February.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Tackling entitlements.
What the speaker of the House wants to do with social programs you want to
touch.

HERERA: Fill her up. Grab a taco or go for a swim. An entrepreneur`s
journey that prove everything is bigger in Texas.

All that and more tonight on NIGHTLY BUSINESS REPORT for Thursday, March
17th.

MATHISEN: Good evening, everyone, and happy St. Patrick`s Day.

A stunning turnaround. The blue chip Dow index is now positive for 2016,
who`d have thunk it? It erased losses from the market`s worst start to a
year ever and reversed a remarkable 2,000-point drop from the recent low.

Today`s climb was helped by a rise in oil prices and continued enthusiasm.
Following yesterday`s Fed decision to alter its interest rate hike
forecast. The Dow Jones Industrial Average gained 155 points to 17,481,
NASDAQ added 11, the S&P 500 briefly positive for the year too climbed 13.

So, while there are a number of things working in the market`s favor there
are also a host of things that aren`t.

Bob Pisani explains.

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: It was another up day,
this time on the weak dollar. And yet, there`s a lot of skepticism.

What`s the problem? Here`s the good news. What some are calling the
goldilocks market. First, there`s no recession in sight. Second, interest
rates are low. Third, inflation`s up a little bit but not significantly.
And most importantly, the jobs market is in good shape.

Given that, why does the market continue to have such a tentative feel to
it? And why did Janet Yellen seem to reflect that tentative feel? It
seems to go beyond the somewhat boiler plate FOMC statement that global
economic and financial developments continue to pose risks.

The short answer is that there is far more pain, anxiety, and danger in the
U.S. economy than the statistics suggest. Growth is slow. Wages are
stagnant. And it`s a lot of sort of disappeared workers in the economy who
don`t look for jobs or don`t even qualify for jobless benefits anymore.

And that`s why we have Donald Trump and Bernie Sanders. And this is why we
have a very cautious Fed. They are not just looking at jobs and inflation,
which is theoretically their sole mandate. The FOMC is looking at the
overall state of the economy and the fact that Trump and sanders have gone
so far this year on the dissatisfied vote is not lost on Yellen and
company.

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

(END VIDEOTAPE)

HERERA: So, let`s turn now to two market pros to discuss what they think
is working in the market and what is not.

Joining us is David Kelly, chief global strategist with JPMorgan (NYSE:JPM)
Funds, and Jack Ablin, chief investment officer at BMO Private Bank.

Jack, I think you err on the side of things are not quite as good as a lot
of people think they are in this market.

JACK ABLIN, BMO PRIVATE BANK CIO: Yes, you know, if you look at some of
the metrics we look at, yes, I think the economy is doing OK. And jobs are
certainly being created. But if you really look at valuation, if you just
try and tie it back to profits, there really isn`t a very strong
connection. In fact, part of the reason why we have such trouble in
January was because we were going through fourth quarter earnings results.

My sense is, as we start moving into April, we`re going to have the same
problem once we look at first quarter numbers.

MATHISEN: David —

ABLIN: The other thing is liquidity. I mean, that`s drying up as well.

MATHISEN: David Kelly, address Jack`s concerns here, particularly the one
having to do with profits. My guess would be that maybe the market is
looking six to ten months ahead and saying, by the time we get into the
summer and fall, profits may be improving.

DAVID KELLY, JPMORGAN FUNDS: Well, what happened in the first quarter is
we had a panic attack. It wasn`t a heart attack, it was a panic attack.
People got unreasonably scared about what was going on in China, a lot of
people started talking about recession.

Bob Pisani was talking about pain and anxiety and danger. I don`t agree
with the pain. I don`t agree with the danger. But there is a lot of
anxiety.

I mean, the media latched onto this idea of recession. Even though there`s
no basis for it whatsoever. And then we saw also the political candidates
talk about America being in decline. We`ve got — of course, Janet Yellen
herself, in order to justify this extreme policy, the Fed itself was
talking down the economy.

So, all this I think is adding to anxiety. But the economy itself? It`s a
slow-going economy, that`s all we`ve got. But the profit decline I do
think is temporary. It`s about the dollar, it`s about oil. They reversed.
I think you`ll see a big reversal in profits by the end of this year.

HERERA: OK, Jack, so do you think that we are going to see a fairly decent
market year given the recovery that we`ve seen, even if there is some pain
out there?

ABLIN: Well, I think we have maintained our defensive position —

MATHISEN: David, let me pick up with you as we try to restore our signal
with Jack Ablin. As we move into this first quarter profit reporting seen
which will happen about three weeks from now what do you expect to see? Is
it likely to be unsetting or encouraging?

KELLY: No, I think it should be basically encouraging. The key thing is
to separate out the dollar effect, which still — the dollar will still be
up year over year and that`s hurting, particularly the oil effect. And
once you look past those, and I think people get used to looking past
those. I think things will look better.

And also, we`ll get an employment report which should look pretty good.
And so long as things are calm in China, I think we can build on the recent
momentum.

HERERA: So, what does that — where does that put the Fed at this point,
David? They didn`t move this time. And they slashed the number of times
that they are expecting to be able to raise rates this year.

KELLY: Yes, I honestly think they keep on getting this wrong. I don`t
think these low rates are stimulating the economy. The economy is doing
OK, but it`s not because of what the fed`s doing. The problem is they push
out the day they`re going to raise rates. Someday, we will have a
recession, someday we`ll need them to cut rates. But if they never raise
rates they`ll never be able to cut them.

So, I think they`re making a grave mistake keeping rates this low for this
long. They should have raised it last summer, they got scared out of doing
it then, they got scared out of doing it now. And now, they`re sort of
saying they`re going to take it easy here. I just think they`re way too
easy and this is — eventually, this is going to end badly. I don`t think
it`s going to end badly this year.

HERERA: All right. David Kelly with JPMorgan (NYSE:JPM) Funds, thank you.

And, Jack Ablin, we apologize for the technical glitch. He`s with BMO
Private Bank.

Ty?

MATHISEN: Some positive news today. If you`re looking for a job, the
number of job openings rose to more than 5.5 million in January. But the
Labor Department also reports that actual hiring to the lowest level since
late 2014. A separate report showed that initial claims for state
unemployment benefits rose from a five-month low by 7,000 last week.

Despite the rise, the level is still consistent with a strengthening labor
market.

HERERA: The current account deficit which measures the flow of goods,
services and investments in and out of the country narrowed in the fourth
quarter. But for all of last year, the deficit jumped to its highest level
in seven years. Weakness in major overseas economies and the stronger
dollar have reduced our export sales.

MATHISEN: Investors are always on the hunt for yield, even in an up
market. The most popular place to find that income is with dividends. But
as Mike Santoli tells us, it`s not just the payout that investors need to
pay attention to.

(BEGIN VIDEOTAPE)

MIKE SANTOLI, NIGHTLY BUSINESS REPORT CORRESPONDENT: Dividends have always
been an important driver of investors` long-term stock returns. With
global interest rates so low and same sources of yield growing scarce,
dividends have become even more crucial for income-oriented investors. The
central banks around the world having bought trillions in bonds to help
suppress interest rates. Many investors feel forced to use blue chip
stocks to earn reliable income.

And such companies seem happy to my knowledge. The total dollar value of
S&P 500 dividends is up 95 percent since 2009. This helps explain why such
steady dividend players as Coca-Cola (NYSE:KO), Waste Management (NYSE:WM),
and Kellogg (NYSE:K) have seen their shares hit new highs lately.

Now, while demand might be helping support the market in this uncertain
economic environment, investors should be aware that stocks are not good
outright substitutes for ponds. They can swing dramatically in value and
won`t stabilize a portfolio the way bonds can. And many dividend-rich
sectors of the market already appear richly valued such as utilities,
telecom, and consumer staples.

This may restrain these stocks` long-term appreciation potential. So, if
you buy a stock mainly for its dividend, it helps to be content with
collecting that income alone, and to be tolerant of possible down turns
along the way.

For NIGHTLY BUSINESS REPORT, I`m Mike Santoli.

(END VIDEOTAPE)

HERERA: So, while the stock market is climbing, there`s one stock that is
not participating, Valeant. Earlier this week, the company slashed its
revenue forecast and delayed its 10k filing. But the selling in the stock
began months ago on accusations by a short seller and scrutiny from
Washington over drug price increases. This year alone, shares are down
about 70 percent.

And as Meg Tirrell reports, Valeant`s creditors are starting to get antsy.

(BEGIN VIDEOTAPE)

MEG TIRRELL, NIGHTLY BUSINESS REPORT CORRESPONDENT: The uncertainty
continues for Valeant pharmaceuticals. The biggest immediate concern: the
company`s more than $30 billion of debt, because the embattled drugmaker
hasn`t filed its annual report for 2015, it risks triggering defaults with
its bondholders. The company says it will negotiate with creditors to
extend the deadlines, though some fear the terms may become onerous.

Valeant may pursue asset sales to pay down its debt faster, BMO Capital
Market estimates the company has about $6 billion of assets it could
potentially divest, ranging from its neurology business to prescription eye
drugs and its dentistry unit. The company has said paying down debt is a
key priority for the year.

And, finally, investors are wondering where growth will come from for
Valeant. The company this week outlined six of its leading drivers but
some doubt their prospects. The first is a bowel drug Valeant acquired in
its $11 billion purchase of Salix last year. The problem: a patent
challenge from rival Allergan (NYSE:AGN). Though analysts expect the drug
is protected from generic competition into the 2020s, some see reason for
caution. Intellectual property analysis firm M Cam raising some red flags
around the defense ability of some of the drug`s patents.

Another growth driver Valeant highlights, a experimental psoriasis drug.
Though there`s a need for new psoriasis drug, this one has run into
problems in the past. Amgen (NASDAQ:AMGN) discontinued a partnership on
the medicine, because it was associated with suicidal thoughts.
Nonetheless, some analysts say with proper drug safety levels, the drug may
find a place on the market are the best thing shareholders may be able to
hope for in the near term is stability.

For NIGHTLY BUSINESS REPORT, I`m Meg Tirrell.

(END VIDEOTAPE)

HERERA: And still ahead, SeaWorld`s decision to phase out its most famous
attraction.

(MUSIC)

HERERA: SeaWorld is getting a makeover. Under pressure from critics, the
theme park operator is getting rid of its killer whale shows, the one thing
it`s best known for. The company`s new direction was cheered by investors
who sent the shares higher.

Morgan Brennan has more now on SeaWorld`s big changes.

(BEGIN VIDEOTAPE)

MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: SeaWorld is phasing
out its most famous attraction, killer whales. Bowing to years of public
pressure, the theme park operator will stop breeding them immediately,
meaning its 24 existing orcas across three marine parks will be the last
generation in company captivity.

And that`s not all. SeaWorld also announcing it will end theatrical shows
involving the whales at all of its locations, from California to Texas to
Florida, replacing them with new orca encounter exhibits that will begin
rolling out next year.

It`s a huge shift for a company that became a top tourist draw in the 1970s
thanks to its Shamu shows. Times have changed and today`s move is in
response to backlash in the wake of “Blackfish,” a 2013 documentary
critical of SeaWorld`s treatment of orcas leading to battles with animal
rights activists and state regulators in California where the uproar has
been most pronounced. That`s resulted in falling earnings, waning
attendance, and ballooning costs as the company has tried to resuscitate
its brand.

The results, a stock punch of nearly $40 a share in mid-2013 to about $18
today. In a “Los Angeles Times” op-ed, SeaWorld CEO Joel Manby writing,
quote, “We are proud to contribute to the evolving understanding of one of
the world`s largest marine mammals. Now, we need to response to the
attitudinal change that we help create.” Part of that is a new educational
partnership with a previous critic, the Humane Society.

Shares of SeaWorld jump on the news today and analysts applauded the
changes. KeyBanc`s Scott Herman believes it will have a positive impact on
the public`s perception, a, quote,”step in the right direction” in terms
stabilizing current trends and setting the company up for longer-term
growth.

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan.

(END VIDEOTAPE)

MATHISEN: Caterpillar (NYSE:CAT) lowering its first quarter guidance.
That is where we begin tonight`s “Market Focus.”

The world`s largest mining and construction equipment maker sees its
quarterly earnings up to one-third lower than Wall Street expected, the
company also taking down its revenue target. Yet it maintained its full-
year forecast. Despite the weekend guidance, shares ended the day up a
little more than 2 percent to $75.90.

The retailer Lands` End saw a loss in its fourth quarter due to declining
sales among other things. While the company saw its profits fall sharply,
its revenue decline was less than analysts expected. The overall results
were enough to keep investors happy with shares up on this positive day
well over 3 percent to $25.15.

Profit at the arts and crafts supplier Michael`s grew 17 percent in the
fourth quarter of last year. Despite the strong results, the company
warned investors it faces challenges this year such as unfavorable exchange
rates. The stock getting a sizable lift on the results, up more than 12
percent to $27.44.

HERERA: Drug distributor McKesson (NYSE:MCK) announcing a series of
layoffs late Wednesday night as it looks to cut costs. The company said it
will lay off about 1,600 jobs in the U.S. That`s about 4 percent of its
work force. Shares fell more than 2.5 percent to $151.69.

Software maker Adobe saw record revenue last quarter, thanks to strong
growth in its cloud products. Adobe also raised its full year guidance
based off those strong results. Shares of adobe initially rose following
the after the bell news after closing the regular up 2 to $89.96.

Earlier this week, we told you about a possible deal in the energy sector
and now, TransCanada announced after the bell that it is buying Columbia
Pipeline group for $25.50 a share in a deal valued at about $13 billion.
U.S.-based shares of TransCanada down initially in after hours trading.
While shares of Columbia Pipeline sparked initially in the after-hours.

MATHISEN: Social Security, Medicare, reforming these entitlement programs
is a big issue on the campaign trail. Republican front-runner Donald Trump
has said he won`t touch them. That`s not what House Speaker Paul Ryan
thinks should be done.

John Harwood spoke to Mr. Ryan exclusively.

(BEGIN VIDEOTAPE)

REP. PAUL RYAN (R-WI), SPEAKER OF THE HOUSE: If we do not prevent Medicare
from going bankrupt, it will go bankrupt, and that will be bad for
everybody. We have to tackle our debt crisis. We have to tackle the
drivers of our upcoming debt. And I think — I think — I hope that
whoever our standard bearer is going to be will acknowledge that.

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT: But if presidential
leadership is the indispensable ingredient for entitlement reform, as
everybody said and has for a long time, doesn`t it mean if you nominate and
elect a candidate who says, don`t touch them, it`s not going to happen?

RYAN: Well, I`d like to think that he will see what is going on with these
programs.

HARWOOD: He says don`t touch anybody, though.

RYAN: Well, I disagree with that. I think for younger people like myself,
they`re not going to be there for my generation when we retire. You have
to change these benefits to prevent them from going bankruptcy.

HARWOOD: But Donald Trump is running against candidates in the Republican
primary who agree with you on entitlement reform and beating them. What
does that mean?

RYAN: Well, I think that`s lots of reasons. Do we have a debt crisis
coming in America? Yes, we do. Should we do something to prevent that
from happening? Yes, we should.

HARWOOD: On taxes, your predecessor as Ways and Means Chair Dave Camp,
when he came out with comprehensive tax reform, he adopted as a principle
that it was going to be distributionally neutral. It wasn`t going to
advantage any group over the current system. Is that still a principle
that you think is appropriate for —

RYAN: Yes. So, I do not like the idea of buying into these distributional
tables. What you`re talking about is what we call static distribution.
It`s a ridiculous notion. What it presumes is, life in the economy is some
fixed pie. And it`s not going to change and it`s really up to government
to redistribute the slices more equitably. That is not how the world
works. That`s not how life works.

HARWOOD: You`re not worried —

RYAN: It can change or expand the economy, and what we want to maximize is
economic growth, in upper mobility so everybody can get a bigger slice of
the pie.

HARWOOD: But you`re not worried with those blue collar Republican voters
who are voting in the primaries right now are going to say, hey, wait a
minute, you`re taking care of people at the top more than you`re taking
care of me?

RYAN: Most people don`t think John`s success comes at my expense or my
success comes at your expense. People don`t think like that. Bernie
Sanders talks about that stuff. That`s not who we are.

(END VIDEOTAPE)

HERERA: John Harwood joins us now.

John, great interview, first.

HARWOOD: Thank you, Sue.

HERERA: Can the Republicans really bridge that gap that you mentioned
between Paul Ryan and Donald Trump?

HARWOOD: Well, in some areas they can. Donald Trump`s tax plan is like
many other Republican tax plans, only bigger. So, I`d expect that Paul
Ryan and Donald Trump could do some business on taxes.

Much harder on issues like trade. Although when I talk to Ryan he said,
well, Republican voters, they`re not against trade deals, Donald Trump`s
not against trade deals, they`re against bad trade deals.

But we do have one on the table right now, the Trans Pacific Partnership,
which Paul Ryan is for. So, that is a difficult gap to bridge. Donald
Trump says the Trans Pacific Partnership is the worst deal ever negotiated.

MATHISEN: So what about bridging the gap between Mr. Ryan, the Republican
Congress, and Hillary Clinton if she is the eventual winner in November?
Can they do that, can they do business?

HARWOOD: Well, Tyler, that`s what`s interesting. You know what Paul Ryan
told me was we need a clarifying election in this country in order to solve
our big problems. And I said, “Well, what if a Democrat wins that?” He
says, “It`s going to be more of the same like we`ve had over the last
several years. We`re not going to make progress on our problems.”

So, if that happens, if Republicans hold the House and a Democrat wins the
White House, it is not looking to be a pretty picture in terms of
compromise unless somebody changes course in a significant way.

HERERA: You have the best beat in the world, especially this year, John.
Thanks so much.

HARWOOD: Thank you, Sue.

HERERA: John Harwood in Washington.

Ty?

MATHISEN: And coming up, it is giant. It is odd. And it is very
lucrative. Meet the entrepreneur who turned a truck stop into a whole lot
more.

(MUSIC)

HERERA: Most every car in the U.S. will have automatic emergency braking
by the year 2022. Yesterday, we told you the deal was close to being
announced. And today, 20 automakers made it official. The safety feature
will be standard on most new cars in just a few years.

MATHISEN: Nike (NYSE:NKE) goes back to the future with self-tying
sneakers. The shoes have power-operated laces. As soon as you put your
foot in, you press a button and they tighten up. Look at that. Whoa.

(BEGIN VIDEO CLIP)

MARK PARKER, NIKE CEO: I think there`s a wide range of people that are
really interested in this whole self-lacing adaptive performance.
Obviously, you have the sneakerheads who are all over it. This has been a
buzz for them for years. There was actually a write-in petition to Nike
(NYSE:NKE) to power through and get the power laces in a product. So, it`s
great to be able to put a product out there that is a step toward the
future of adaptive performance.

(END VIDEO CLIP)

MATHISEN: And Nike (NYSE:NKE) plans to sell them later this year in the
increasingly tech-driven athletic market.

HERERA: As they say, if you build it, they will come. And that`s exactly
what happened to one entrepreneur who opened a gas station in Dallas. But
not just any old gas station.

Jane Wells has the story.

(BEGIN VIDEOTAPE)

STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Fuel City is a gas
station with cheap gas and easy freeway access in the middle of downtown
Dallas.

Last year, sales reached $25 million. What? How?

JOHN BENDA, FUEL CITY OWNER: We`ll have eight or ten people here at night
making tacos. Karaoke is in front palm tree on the weekends are. We got a
swimming pool which is fun. We have a dinosaur.

WELLS: You might call it a truck stop, but owner John Benda won`t.

BENDA: I say, it`s someplace where dreams come true, Fuel City.

WELLS: This is our strangest success yet.

BENDA: I love to work. I worked in department stores, was a lifeguard,
was a substitute teacher, interviewed to be Bozo the Clown in south Texas
when I was going to college.

WELLS: This cereal entrepreneur started Fuel City in his late 40s.

BENDA: I was doing jury duty down the street. During the lunch break I
found this spot.

WELLS: This spot is eight acres where in 1999 he hoped to recreate his
childhood ranch.

BENDA: I wanted a way to enjoy a ranch but have it in the city, and let
people see what Dallas looked like before it was a city. When I got
started in `99, it was real hard to sell to it a bank. Because when I
showed them the swimming pool, they said, a swimming pool at a convenience
store? I said, no, no, no, it will be cool, people will want to come.

The store cost $4.5 million. I borrowed $3.5 million. I put up $1 million
to buy the land and finances, and I`d have to put a second mortgage on my
house. And then it was such a phenomenon, when I opened up I thought,
nobody`s going to come.

WELLS: How many tacos do you sell a day?

BENDA: A lot. I had a graph on the wall and I would graph my bank balance
every day. If I was going up, I was making it. If I was going down, I
wasn`t going to make it.

WELLS: Seventeen years later, Benda has expanded to two Fuel Cities which
did $39 million in sales last year, 80 percent from fuel. Two more are
planned, even as Benda keeps testing what you might call city limits.

BENDA: We`ve had white buffalo, got a ticket from the city because they
said you can`t have buffalo in downtown Dallas, zebras and camels and got
in trouble for that. Had to take them out. I`m thinking about putting in
kangaroos.

I think in the next five years,. I`ll have a couple of giraffes. Wouldn`t
that be cool?

WELLS: The rest of the 65-year-old`s bucket list isn`t nearly so strange.

BENDA: I have goals in increasing my net worth, probably my number one
thing.

WELLS: To?

BENDA: $70 million by 70.

WELLS: How much are you making?

BENDA: How much am I making? A lot.

WELLS: For NIGHTLY BUSINESS REPORT, I`m Jane Wells.

(END VIDEOTAPE)

HERERA: Stories you will only see here on NIGHTLY BUSINESS REPORT.

MATHISEN: A six-pack and a giraffe?

HERERA: And a swimming pool.

MATHISEN: And fill her up, whoa.

All right. Before we go, let`s take another look at the rally on Wall
Street, shall we? The Dow Jones Industrial Average gained 155 points
positive for the year now at 17,481. NASDAQ added 11. And the S&P 500
nipped into positive territory, couldn`t quite hold it, it finished higher
by 1,337.

HERERA: I think you might have trouble with the kangaroos.

MATHISEN: Yes.

HERERA: That does it for NIGHTLY BUSINESS REPORT. I`m Sue Herera. Thanks
for watching. We want to remind you. This is the time of year your public
television stations seek your support.

MATHISEN: And thank you from me as well. I`m Tyler Mathisen. Have a
great evening, everybody. We`ll see you tomorrow.

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