Transcript: Nightly Business Report – May 31, 2016

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

for the markets this May, but the blue chip index still managed to do something it hasn`t done since 2014.

new house to a new car to maybe even a new job.  The economy showing signs
of picking up.  So, is now a good time to make that big personal financial

HERERA:  Hot wheels.  The big money behind classic `80s cars.

All that and more tonight on NIGHTLY BUSINESS REPORT for Tuesday, May 31st.

MATHISEN:  Good evening, everyone, and welcome.

It was a gain for the month of May.  A small one for the Dow.  Still, a
gain.  That makes it four months in a row for the Dow Jones Industrial
Average to post a gain and that is something that hasn`t happened in about
two years.

And for a while today, it looked like that monthly win streak was going to
end at three.  But by the close, the blue chip index was off 86 points,
down but enough still to be positive for the month.  The NASDAQ gained 14.
The S&P 500 fell 2.

The big winner for the month of May was the NASDAQ, up more than 3.5
percent.  And according to Bob Pisani, the action we`ve seen is indicative
of a healthy market.


away?  Not really.  It wasn`t a spectacular month but it wasn`t a washout
either.  What we did see was healthy rotation.

So, for example, tech stocks were lagging going into May, they had a rough
April.  But tech was a big advancer this month.  The sector was up more
than 5 percent with double-digit gains in big names like Nvidia, Electronic
Arts (NASDAQ:ERTS), Micron, (NYSE:CRM).

Energy and material stocks performed exactly the opposite manner.  They
were gainers in April, but both of them were down slightly in May.

So, here`s the bottom line.  The S&P 500 eked out a respectable 1.5 percent
gain for the month and we are seeing some rotation in stocks at a time when
the major indices are less than 2 percent from historic highs.  That`s very
healthy for the market.

And if you`re bullish, here`s the best news, everyone still hates the
rally.  Sentiment hasn`t improved that much, even though we`ve rallied
almost 10 percent from the February lows.  That`s also bullish for the

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


HERERA:  Well, it may be a shortened week but it`s a big one for your
money.  From housing to gas prices to getting a job, over the next few
days, we`ll learn more about all of the things important to you.  And you,
the American consumer, seem to be doing your part keeping the economic
engine revving.

Consumer spending which accounts for more than two-thirds of overall
activity rose 1 percent last month, recording its biggest increase in more
than six years in the month of April.

And if you`re feeling good, that may bode well for other parts of the

Dominic Chu takes a look at what`s on tap the rest of the week.


coming out this week that`s going to have a real impact on both your wallet
and your portfolio.  Now, there`s a huge number of things to watch for but,
here`s some of the highlights.  And let`s take a look at perhaps some of
the big key data points coming out this week.

Today`s big data point, the S&P Case Shiller home price index, it`s a
mouthful but it gives a gauge about the health of the housing recovery.
And we did see prices improve slightly year over year.  So, perhaps that
housing recovery is still on track.  Real estate, of course, a big part of
the overall economy in the U.S.

On Wednesday may auto sales come out.  Remember, a lot of people are buying
cars.  We could be at near-record levels for auto sales.  It`s going to be
an indicator about whether people still feel healthy enough financially to
spend on big-ticket items like a new car.

Now, on Thursday, you may have seen gas prices rising at the pump and
that`s because they have been over the course of the past few weeks.  $2.32
at the average price of unleaded gasoline according to AAA.  A year ago,
it`s $2.74.  So, it`s been coming down over that span, but still.

OPEC, the global oil cartel that controls a lot of the oil market, is going
to be meeting on Thursday.  Not a lot is expected out of that meeting but
still something to watch for sure.

And then on Friday, of course, the granddaddy of them all in terms of
economic data.  That is the U.S. employment report, the jobs number.  And
whether or not more Americans are working and whether or not people are
actually finding the work that they want to find.

All of that`s going to be key.  Remember, these four items in addition to
many others are going to be things to watch here as the Fed weighs whether
or not in June, it will raise interest rates yet again.  So these are going
to be key items to watch.  Again, impacts on both your wallet and your



MATHISEN:  Well, as these fresh economic numbers roll in, the results seem
to suggest slightly that the economy is improving, at least from the first
quarter.  And that could mean more Americans are ready to make some big
financial decisions.

Joining to us talk about this and more is Peter Mallouk.  He`s CEO and
chief investment officer at Creative Planning.

Peter, welcome.  Good to have you with us.


MATHISEN:  The economy seems to be growing, albeit slowly, inflation is
slow, unemployment is down, interest rates are low but maybe starting to
move up.

If I`ve got some good ideas about what to do with my money, is there a
better time to make moves than right now?

MALLOUK:  Well, if you`re talking about personal moves in terms of making a
lifetime decision, I really think that there`s a macro element and a micro
element.  And people get caught up in the macro.  But for people making
individual decisions, they should be really focused on the micro, which is
their own situation.

You know, where do they stand today?  Do they have reserves?  Do they have
a secure job?  Sometimes the security of your job is not really tied to the
economy, it could be tied more to the industry that you`re in.  And you
should be making your decisions based on that.

Now, of course, there`s a macro backdrop which is all the things that
you`re talking about.  And we`re in a low-rate environment.  If you`re
talking about somebody making a major purchase like a car or a bigger one
like a new home, these are things that are very interest rate driven.  And
as the economy gets stronger, the Fed will raise rates.

And so, someone who`s looking at that sort of decision, the macro element
becomes a bigger factor, because if you, say, refinance your home today or
buy a new home today, you`re locking in a rate for 15 years, 30 years.

MATHISEN:  Right, right.

MALLOUK:  As rates go up, you`re at a much better spot.  If we call this
wrong, rates go down, turns out the economy is getting weaker, you refi.

HERERA:  Right.  Peter, you know, it also seems to go to having an overall
plan.  Whether you`re talking, you know, the equity side of things, I mean,
hopefully, you have a stock market or investment plan.  But from the
personal finance side of things, you also have to have that checklist.  You
also have to have a plan, do you not?

MALLOUK:  You always have to have a plan, because otherwise you make
decisions that are based on where interest rates are today.  Or what`s
going on with the terror meter.  And decisions like that that you have no
control over.

You really have to make decisions based on things you can control.  And if
you have a plan, it becomes easier to allot capital.  How much money should
I have invested in securities that are available in the short run to me,
regardless of what`s happening with the markets or interest rates?

And you have your long-term money allocated more toward equities, real
estate, things that are more volatile but tend to reward you over time.

Now, within those spaces you want to make decisions to match the market or
try to do better than the market.  The biggest factor is always the
allocation of capital and your personal plan should be driving that.

MATHISEN:  Peter, wise counsel, we thank you very much.  Peter Mallouk with
Creative Planning.

MALLOUK:  Great to be with you.

HERERA:  To deal news now.  Two Midwest utilities are merging.  Great
Plains Energy (NYSE:GXP) is buying West Star Energy for more than $8.5
billion.  It`s the largest deal in the U.S. electricity market so far this
year.  And that deal was driven by falling demand and the need to cut
costs.  Shares of West Star Energy gained 6 percent.  While Great Plains

MATHISEN:  Jazz Pharmaceuticals (NASDAQ:JAZZ) has agreed to buy rival
Celator for about $1.5 billion.  Celator has a promising leukemia drug in
its pipeline but no revenue.  The company is hoping to submit a new drug
application for its treatment to the FDA by the end of the third quarter.
Shares of Celator up 71 percent.  Jazz down fractionally.

HERERA:  Investors got their first chance to respond to Disney`s rough
weekend.  The company which had been on a hot streak hit some big bumps at
the box office.  And across the globe, tensions with a rival company in
China are escalating.  Shares of Disney (NYSE:DIS) fell about 1 percent in
trading today.

Julia Boorstin has the details.


Looking Glass,” a big bet for Disney (NYSE:DIS) with a reported $170
million budget, fell flat at the box office, grossing just $35 million in
the U.S. over the holiday weekend, about $25 million short of projections,
and far short of “Alice in Wonderland`s” massive hit in 2010.

ERIK DAVIS, FANDANGO:  It was right on the heels of Jim Cameron`s “Avatar
(NASDAQ:AVTR),” which is still the highest grossing movie of all-time.  If
any movie took advantage of “Avatar`s,” success it was that first “Alice in
Wonderland”, grossed over a billion worldwide.  Six years later, 3D is not
what it was then.

BOORSTIN:  This is particularly jarring because Disney (NYSE:DIS) has been
on a hot streak.  It sold nearly one-third of all ticket in the U.S. so far
this year, far ahead of Fox with just 18 percent of box office sales.

This has been a record-breaking year for Disney (NYSE:DIS), thanks to
“Captain America” and breakout hit “Jungle Book” and “Zootopia.”

DAVIS:  Don`t feel so bad for Disney (NYSE:DIS).  Disney (NYSE:DIS) is
already over $4 billion for ticket sales globally, and we`re not even in
June yet.  At a couple of weeks, they have “Finding Dory” coming out, which
I think is going to rival “Captain America” in terms of the biggest movie
of the summer.  So, they`re okay.  They can take a bit of a hit.

BOORSTIN:  But Disney (NYSE:DIS) has another headache.  Disney (NYSE:DIS)
characters spotted at the rival Dalian Wanda Group`s new theme park in
China.  Disney (NYSE:DIS) issuing a statement saying, quote, “We have a
good relationship with Wanda, particularly in the film distribution
business, including the United States.  We`re perplexed that Wanda`s
chairman Mr. Wang would choose to do public battle with us or attempt to
undermine our business in any way.”

With Disney (NYSE:DIS) preparing to open its shanghai park on June 16th,
the battle is on with the Chinese media giant.  Tickets to Wanda`s park
will cost about half of those to Disney (NYSE:DIS) Shanghai.  With Disney
(NYSE:DIS) preparing to open its Shanghai park on June 16, the battle is on
with the Chinese media giant.  Tickets to Wanda`s park will cost about half
of those to Disney (NYSE:DIS) Shanghai.

But the fact that Disney (NYSE:DIS) characters are popping up elsewhere
speaks to the value of the magic kingdom`s intellectual property.

For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Los Angeles.


MATHISEN:  An update on the saga some call the soap opera at Viacom
(NYSE:VIA).  Viacom`s board of directors vowing now to fight for control of
the company.  In a letter to shareholders, Viacom`s lead independent
director said the board is preparing a legal battle in the event they are
removed.  There are reports last week that controlling shareholder Sumner
Redstone, 93, and of indeterminate mental health, was considering just such
a move.  A spokesperson for him said he would act in the best interests of
all shareholders.

HERERA:  Still ahead, can Cadillac overcome its challenges, become cool
again, and keep pace with its rivals?


HERERA:  Volkswagen is profitable again.  The German automaker proved it
can still make money despite digging out from the diesel emissions scandal.
Results from Audi and Porsche helped offset its flagship VW brand which is
most closely associated with the test rigging.  The company says it`s well-
funded to deal with the costs of the recalls, fines and lawsuits.

MATHISEN:  Cadillac may not be the first thing that comes to mind when you
think of cool but the brand is trying to change that perception.  And
attract younger, helper buyers in an effort to keep up with other luxury

Phil LeBeau has more on what Cadillac is doing to overcome its challenge.


district of Manhattan, Cadillac is opening its Cadillac House, the latest
extension of the luxury brand from General Motors (NYSE:GM).

What`s the Cadillac House?  It`s essentially on the ground floor underneath
Cadillac headquarters.  They have some Cadillac vehicles that are going to
be on display.  But this is not about selling Cadillac vehicles.  It`s
about being a meeting place for people in the art community, fashion
designers, people in the tech community here in the New York City where
they can come in, have a cup of coffee, see some of the artwork that`s on
display, get a sense what Cadillac is trying to achieve here which is a
discussion, and perhaps in the process let people know Cadillac is on the
cutting edge.

The head of the brand says this is not about selling vehicles directly, it
is about giving people a different perspective about what Cadillac is all

JOHAN DE NYSSCHEN, CADILLAC PRESIDENT:  Cadillac House is about immersing
people into the grand experience, creating an environment where innovators,
creative thinkers, can meet, can find inspiration from one another, can
find space just to relax and contemplate.  And to do it in an environment
that really is very emblematic of what Cadillac brand stands for.

LEBEAU:  Cadillac is in the midst of a multi-year effort to boost its sales
not only here in the United States but around the world.  And here in the
U.S., in terms of market share this year, Cadillac lags the leaders of
Mercedes, Lexus, and BMW.

And also remember, we`re seeing this not just with Cadillac but other
luxury brands like Mercedes, opening a brand extension gallery/store in
Beijing.  It`s all about taking those luxury brands beyond the dealership.
What we`re seeing with Cadillac here in New York we`ll also see in other
locations around the world over the next couple of years.  The next
location, Shanghai, which opens in 2017.



MATHISEN:  Under Armour (NYSE:UA) cuts its sales guidance because of Sports
Authority`s bankruptcy, and that is where we begin tonight`s “Market

The sports apparel company will take a write-down and seize its net revenue
for the year lower than expected because of Sports Authority`s liquidation.
Under Armour (NYSE:UA) says it was only able to collect about one-quarter
of the sales it expected from Sports Authority so far this year.
Originally, Under Armour (NYSE:UA) didn`t think the bankruptcy would impact
it financially.  Shares fell more than 2.5 percent following the news after
the bell, but ended the regular session down a fraction at $37.70.

One billionaire is bullish on the pharmaceutical giant Allergan (NYSE:AGN).
Activist investor Carl Icahn disclosed he has acquired a, quote, “large
position” in the maker of Botox.  In a statement on his website, Icahn
showed support for the company`s CEO.  Allergan (NYSE:AGN) has responded to
the investment, saying it does not believe the large stake was made to
influence the actions of the company`s management.  Shares of Allergan
(NYSE:AGN) flat on the news at $235.93.

And quarterly sales rose in all four divisions at the medical device maker
Medtronic (NYSE:MDT), thanks in part to an increase in surgeries performed.
The results were ahead of analyst targets as were profits.  But shares fell
on a cautious outlook for full-year earnings.  Medtronic (NYSE:MDT) down
nearly 1.5 percent at $80.48.

HERERA:  Fidelity`s contrafund lighten its position in Chipotle by 21
percent in April.  Shares of the burrito chain are down about 40 percent
since the end of September as it continues to deal with fallout from
multiple outbreaks of food-borne illnesses last year.  But today, shares
didn`t react much to the news.  They ended the day down fractionally to

Office Depot (NYSE:ODP) is buying back up to $100 million of its shares.
Earlier this month, regulators blocked the proposed merger between Office
Depot (NYSE:ODP) and its rival Staples (NASDAQ:SPLS).  Shares of Office
Depot (NYSE:ODP) rose more than 1 percent to $3.58.

And speaking of Staples (NASDAQ:SPLS), the company`s CEO Ron Sargent will
resign from his position at the office supplies company by next month.
Sargent is expected to stay on the board until January.  The company`s
president of North American operations will take on the role of interim
CEO.  Shares rose fractionally following the news after-hours and ended the
regular trading day up a tick to $8.80.

MATHISEN:  The world`s largest hedge fund secured $22 million of financial
assistance from the state of Connecticut.  Bridgewater Associates which
manages about $150 billion overall is planning to expand its offices in the
state and create 750 jobs by the year 2021.  The company had made noises
about decamping for New York state.

Connecticut Governor Malloy said the agreement with Bridgewater will be a
good investment.

HERERA:  To politics now.  In a contentious news conference, the
presumptive Republican presidential nominee, Donald Trump, said that he
raised more than $5.5 million for veterans.  Meanwhile, Democratic front-
runner Hillary Clinton headed to the West Coast to focus on California.

John Harwood is following it all for us.

John, there was a lot of pressure on Mr. Trump from the press to detail
those donations.  And he did that today.  But I heard it was a little

testy, sue.  Donald Trump read out the names of those organizations that he
said he had raised $5.6 million for, said it had taken time to vet those
organizations.  But he got really hot and went after his critics in the
press, said the press were dishonest, bad people, called one reporter, one
of our colleagues from ABC, a sleaze.

And he went after Republican critics, too.  Whether it was Governor Susana
Martinez of New Mexico, who he hit last week.  Mitt Romney who he said
looks like a fool or Bill Kristol, the conservative publisher, former Bush
administration White House aide, who he said was a loser.

MATHISEN:  These are strong words.  What has the reaction been from either
the establishment Republicans or the press?

HARWOOD:  Well, to some extent, Tyler this isn`t new.  He`s done a lot of
this for the campaign.  And many Republicans for a long time have gone
after what they call the mainstream media and said they`re biased against

Of greatest concern to Republicans is continuing the attacks on fellow
members of his party now that he`s the presumptive Republican nominee.
Many have wanted him to say, OK, now that you`ve got the nomination, behave
differently, unite the party.  He`s done that at some of the grassroots
levels.  He`s getting in the high 80s of support among Republicans.

But people like Paul Ryan are not going to be happy to see him continuing
to go after Mitt Romney, who Paul Ryan ran with, Susana Martinez, the
Latina governor of New Mexico, all of those things are problematic as you
try to get a unified ticket.

HERERA:  Meantime, on the Democratic side, Hillary Clinton scrapped some
East Coast events.  She`s headed to California which would lead us to
believe that the June 7th primary there is very important to her campaign.

HARWOOD:  It is, Sue.  Look, whether she wins or loses California, she is
going to, from California in New Jersey, get enough delegates next week to
become the presumptive Democratic nominee to match Donald Trump.

However, she wants to have a victory in the nation`s largest state to kind
of conclusively put an end to Bernie Sanders` challenge.  Bernie Sanders
hasn`t indicated what he will do after June 7th but Hillary Clinton does
not want to mess around with a primary challenge anymore.  She wants to get
on to the general election.

HERERA:  Interesting times to say the least.  John Harwood, thank you so

MATHISEN:  Coming up, why the hottest cars from your childhood may now be
some of the hottest cars in the collectible market.


HERERA:  And here`s a look at what to watch for tomorrow.  Auto sales for
May are out.  Investors want to see how much of a role those incentives
played in the numbers.  And the Federal Reserve`s Beige Book will provide
an anecdotal look at the economy across the nation.  And the OECD releases
its global economic outlook.  That`s what to watch for on Wednesday.

MATHISEN:  The market for vintage cars may be slowing but there`s one
segment surging — classics from the `80s and `90s.  They`re hotter than

And as Robert Frank reports it may be a sign that generation X is the new
force to be reckoned with in the collectible car market.


performers is the Ferrari Testarossa.  This is a 1986 version, made famous
by Don Johnson who drove a white one in the “Miami Vice” series.  Now, they
were called the “cheese graters” because of those fins on the door.  But
they have soared in value.  These cars are selling for around $50,000 five
years ago, now trading for more than 100 grand.  So more than doubling in

MCKEEL HAGERTY, HAGERTY GROUP CEO:  We`ve been talking about Ferrari values
going up for years and years.  But what`s quietly happened is the next
generation has come along and said, “You know what?  These things have been
underappreciated.  These are the cars that were on the posters on our wall.
We want `em.”

FRANK:  So, the guys like you and I, that were teenagers in the `80s, now
have money, some of them do, and they want what they loved as teenagers.

The Lamborghini Countach, was one of the most desired cars of the period,
on the posters of every bedroom wall of teenage boys.  They had these cool
scissor doors, which were revolutionary at the time, made famous by that
opening theme of “The Cannonball Run.”  These cars were selling for around
$130,000 five years ago, now trading for up to $1 million.  So, more than
quintupling in value.

And, finally, the hated yuppie mobile of the 1980s is now cool again.
BMW`s M3, which were selling for around $15,000 five years ago, now trading
for more than $60,000, $70,000.  The engines are great and the collectors
for these cars are all in their 20s.

Of course, the downside to `80s cars is that mechanically, they weren`t
great.  And these cars are very tough to get in and out of.  The electrical
systems, the AC systems, often didn`t work.  But today`s collectors prefer
the memories and moments over mechanical greatness.  So, it`s worth the



HERERA:  So, you want to stay fit?  Maybe get into one of those cars.

Well, now you can and stay home and work out when you want as often as you
want.  It`s all part of the fast-growing on-demand fitness industry and
it`s shaking up the gym business as we know it.

Diana Olick has the latest installment of “Sweat Equity.”


back to buns, if you can press a button, you can do it anywhere — workouts
on demand, online.  There are thousands already, some for free, some for a

All part of a business that is turning the traditional fitness models
upside down.

CARL DAIKELER, CEO BEACHBODY:  DVDs have worked just fine for over ten
years.  But now, there`s opportunity to have a two-way dialogue and the
ability to support the customer and their results.  Provided a meaningful
opportunity to expand what we give to customers.

OLICK:  At the Santa Monica headquarters of Beachbody, the company that
brought cult workouts like P90x and Insanity into millions of basements and
garages around the world, on demand is now in demand.  Launched just over a
year ago, the service has close to 1 million subscribers who pay about $13
a month each.

CEO Carl Daikeler says the service gets 100,000 views a month and 68
percent of users say they want both DVDs and on demand.

DAIKELER:  Instead of cannibalizing the business, it`s actually enhancing

UNIDENTIFIED FEMALE:  She`s shaking because she`s working out!

OLICK:  But the money flowing into on demand is fueling competition.  Brick
and mortar gym chain Crunch, which has 150 locations in the U.S. now,
launched on demand classes two years ago.  The service is free to most gym
members or $9.99 a month on its own.

KEITH WORTS, CEO CRUNCH:  Crunch is a powerful brand.  We felt like adding
an online digital experience helped extend our brand outside the four walls
of our gym.

OLICK:  Its following is smaller at 20,000 views a month, but the company
is growing its library and its reach.

WORTS:  We`re not really looking at it as, oh, this is an online digital
experience and investment in that world.  It`s really an extension of the

DAIKELER:  Is there going to be competition?  Will all the big guys
consider that providing fitness programming to the end user is a value?  Of
course, there will be.  What we do that is actually effective is we test
this stuff in a particular sequence so that people get results.

OLICK:  Beachbody`s investment didn`t take much.  It already had the

Beachbody had big brands already but the competition here in America`s
basements is only getting hotter.  And that means the players need to be
more daring, more creative, and most of all, they need to fully embrace the
new technology.

SETH SHAPIRO, USC ADJUNCT PROFESSOR:  If you take the Beachbody model,
there`s probably a good analogy to what`s happened with Netflix
(NASDAQ:NFLX), right?

Netflix (NASDAQ:NFLX) began the same way that Beachbody has become a $200
million business, in the consumption of fixed media, DVD sales.

But increasingly overtime, you`re going to see more and more content shift
from fixed media like DVDs to online content.

OLICK:  But Daikeler doesn`t like the label some of his competitors have
touted, that they are now media companies.

DAIKELER:  That shocks me a little bit.  We are absolutely a goal-oriented
body transformation company.

OLICK:  Daikeler says he`ll keep making DVDs as long as customers keep
buying them.  And right now, they`re still buying those disks at twice the
rate of on demand.  For now, at least, the old model is still working out.

For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Santa Monica, California.


HERERA:  And to read more about the fast-growing on-demand fitness
industry, head to our website,

That does it for us on NIGHTLY BUSINESS REPORT.  I`m Sue Herera.  Thanks
for joining us.

MATHISEN:  And thanks for me, I`m Tyler Mathisen.  Have a great evening,
everyone, and we hope to see you back here tomorrow night.


Nightly Business Report transcripts and video are available on-line post
broadcast at 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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