Transcript: Nightly Business Report – June 7, 2016

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

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR:  The race is set.  Clinton
clinches.  Trump tries to quell his critics, as investor attention turns to politics and its impact on the                                                                               economy and your money.

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR:  Breaking new ground.  The
promise of a new test to detect cancer that is both less painful and less
expensive.

MATHISEN:  Bucking the trend.  Is corporate America rethinking a long-held
tradition of the workplace?  The annual pay raise.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Tuesday, June
7th.

HERERA:  Good evening and welcome.

The Dow touches 18,000 and the S&P 500 flirts with record levels.  But we
begin tonight with the race for the White House and the race that Wall
Street was expecting looks to be set.

Hillary Clinton has clinched the Democratic presidential nomination,
becoming the first woman to lead the presidential ticket of a major party.
Much of the focus today was on the presumptive Republican nominee, Donald
Trump.  The two highest-ranking Republican members of Congress, Paul Ryan
and Mitch McConnell, have come out against Trump`s attacks on a Hispanic
federal judge who was presiding over the Trump University case, calling him
biased because he`s of Mexican descent.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN (R-WI), SPEAKER OF THE HOUSE:  I disavow those comments, I
regret those comments that he made.  I don`t think — claiming a person
can`t do the job because of their race is sort of like the textbook
definition of a racist comment.  I think that should be absolutely
disavowed, it`s absolutely unacceptable.

(END VIDEO CLIP)

HERERA:  Senator McConnell also expressed frustration saying, quote, “It is
time to quit attacking various people that you competed with or various
minority groups in the country and get on message”, end quote.

Late today in a statement, Trump said his comments about the judge had been
misconstrued.

John Harwood is with us now in studio.

John, it`s always good to have you here.

How damaging is this particular incident to Mr. Trump, if at all?

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT:  I think it`s very
damaging to Mr. Trump and you see that in the strength of that statement
that Paul Ryan made today.  Even after Donald Trump issued his statement
late in the day saying he`d been misconstrued, Jeb Bush put out a statement
saying Donald Trump should not defend that statement because some people
interpreted his statement as doing that, even though he said he wasn`t
going to comment anymore.  He should retract it.

You had Mark Kirk, Republican senator from a blue state of Illinois,
running for re-election, one of the people who seats Republicans need to
keep a hold of, disavowed his endorsement saying he`d concluded that Donald
Trump is not fit to be commander in chief.

That is not a good day for the Republican Party in general or Donald Trump
as Republican nominee.

MATHISEN:  Kelly Ayotte, Susan Collins, Lindsey Graham, all coming out
strongly against what Mr. Trump has been saying, and saying repeatedly with
respect to Judge Curiel.

How did we get to the point in this campaign where on this day where
Hillary Clinton is clinching to become the first female to lead a major
party ticket, that she`s not the top political story of the day?

HARWOOD:  Tyler, it is an indication of how different Donald Trump is from
what we`ve seen in politics before that he galvanizes our attention even on
this day.  Last night, of course, the “A.P.” having counted up
superdelegate votes put Hillary Clinton over the top.  She didn`t want to
claim it, she wants to have that happen tonight after California, New
Jersey, and four other states vote.

And she will have the requisite number of delegates.  She`s going to claim
that nomination tonight.  Soon thereafter, President Obama will endorse.
But even so, Donald Trump sort of blocks out the sun.

Now, from a Democratic perspective, it`s not a bad way to block out the sun
because it helps Hillary Clinton make her argument that Donald Trump should
not be president.

HERERA:  Wow.  John, thank you so much.  It`s great to have you with us in
studio.

HARWOOD:  Love being here.

HERERA:  John Harwood.

MATHISEN:  On Wall Street today, a rally in the price of crude oil to above
$50 a barrel sent energy shares higher.  And that in turn pushed the S&P
500 to a ten-month high.

The Dow Jones Industrial Average, which had briefly crossed 18,000 earlier
in the day, rose 17 points to 17,938.  NASDAQ lost about 7 points.  The S&P
500 added two.

HERERA:  Verizon (NYSE:VZ) reportedly plans to submit a second-round bid of
about $3 billion for Yahoo`s Internet business.  According to the “Wall
Street Journal”, the telecom company is seen as a leading contender to buy
the assets.  A third round of bidding is also expected in the months-long
confidential auction process.  Shares of Yahoo (NASDAQ:YHOO) fell while
Verizon (NYSE:VZ) shares rose.

MATHISEN:  General Motors (NYSE:GM) CEO says the automaker will continue to
focus on the profitability of each vehicle even if it comes at the cost of
market share.  At a meeting of shareholders today, chief executive Mary
Barra said this year`s profit will improve from last year`s record and that
she believes the stock price will follow.

(BEGIN VIDEO CLIP)

MARY BARRA, GENERAL MOTORS CEO:  We will also work to continue to deliver
superior results.  We`re growing margins, having, you know, record EBIT
margins improving across the board.  We`re going to stay and continue to do
what we say we`re going to do, and we believe over time, that will be
reflected in the share price.

(END VIDEO CLIP)

MATHISEN:  Shares, though, of General Motors (NYSE:GM) are down 13 percent
over the past year amid those record profits and they sit just below the
IPO price of a few years ago.

HERERA:  Rough day for Ralph Lauren.  The iconic upscale apparel company is
forecasting a plunge in its sales this year.  The stock fell 2 percent
today.  But it`s down more than 30 percent over the past year.

But the retailer says it has a plan to revive sales growth at the luxury
fashion brand.  And as Courtney Reagan reports, it maybe taking page from
the Old Navy playbook.

(BEGIN VIDEOTAPE)

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT:  It`s a new era for
Ralph Lauren.  Today, CEO Stefan Larsson led the company`s first-ever
investor day in New York City, announcing major changes to reinvigorate the
50-year-old global brand.

Larsson left Old Navy to take over eight months ago as the namesake founder
moved to executive chairman and creative director.  Ralph Lauren sales,
profit and stock price have slumped in recent quarters as cost swells.
Some external factors like weak shopper foot traffic and the strong dollar
have dented performance.  But other issues have been self-inflicted.
Larsson`s plan with focus on reining in expenses, brands and stores
amounting to a $400 million restructuring of the company this year.

STEFAN LARSSON, RALPH LAUREN CEO:  All the initiatives we are driving are
simple, straightforward ways of strengthening the brand, drive profitable
sales growth.  What we mean with profitable sales growth is to drive
sustainable sales, expand the margin, to ultimately drive to a strong
shareholder return.

REAGAN:  Ralph Lauren will focus on three main brands — Ralph Lauren,
Polo, and Lauren.  The company will close 10 percent of its mainly high-end
stores, strip out three layers of management, which means cutting 1,000
jobs or 8 percent of full-time staff.

Ralph Lauren is reducing the amount of inventory it shifts to department
stores and other wholesale retailers, which is 45 percent of revenue and
hopes falling back on discounts and selling more merchandise at full price.

Leaning on his strengths from Old Navy and H&M, Larsson will shorten
merchandise production times from 15 months to nine months and start an
eight-week product test pipeline to be more reactive to customer
preferences.  Larsson aims to strengthen its e-commerce business recently
recruiting an executive from eBay (NASDAQ:EBAY).  And with the right team
in place, many analysts believe under Larsson`s leadership, Ralph Lauren
will strengthen its legacy.

LIZ DUNN, TALMAGE ADVISORS FOUNDER & CEO:  I think it`s important they are
trying to regain some of their brand positioning.  And get rid of maybe
some of the lower tier positioning and some of the discounting.  But they
also have a very big opportunity internationally.  They`re underpenetrated
internationally.

So, I think those are the real big opportunities for them.  This was good
news overall to hear that this brand is kind of taking the necessary steps
now to make sure that they`ll be around for many, many years to come as
that strong iconic American brand.

REAGAN:  All these changes in addition to expectation forth continued weak
shopper foot traffic, though, does result in a sales guidance cut.  While
changes will inflict some near-term pain, analysts seem to agree it`s
necessary for long-term

For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan.

(END VIDEOTAPE)

MATHISEN:  Still ahead, it is simple.  It`s not invasive.  And it could one
day be the super piece of the next frontier in the battle against cancer.

(MUSIC)

HERERA:  New treatments for cancer weren`t the only topics of conversation
at the world`s largest cancer research conference this, which we reported
on yesterday.  Researchers were also focused on new, less-invasive ways of
testing for that disease.

Meg Tirrell reports.

(BEGIN VIDEOTAPE)

MEG TIRRELL, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Enter the liquid
biopsy or a blood test for cancer.  A featured study at the conference
showed one such test yielded similar results to more invasive tissue
biopsies.

HELMY ELTOUKHY, GUARDANT HEALTH CO-FOUNDER & CEO:  The concept of the
liquid biopsy is to get all that same information through a simple blood
draw.  You would totally change the paradigm of how we monitor, detect and
treat cancer.

TIRRELL:  Helmy Eltoukhy is CEO of Guardant Health, the maker of that test.
It works by detecting bits of DNA shed by cancer cells that circulate in
the blood.

ELTOUKHY:  Cancer cells, as they grow rapidly, they start dying rapidly.
They shed their unique DNA into the blood stream.  So, you take a tube of
blood from the patient, there will be small traces of DNA in that tube of
blood that are coming from the cancer cells.

TIRRELL:  Guardant is one of many companies working to develop new blood
tests for cancer.  A market Cowan estimates could eventually reach $10
billion.  But doctors caution it`s early days.

DR. MICHAEL THOMPSON, AURORA CANCER CENTER CANCER RESEARCH MEDICAL
DIRECTOR:  There`s a lot of hope and some hype in precision medicine.

TIRRELL:  The hope is that one day, blood tests could be used to diagnose
cancer, replacing traditional tissue biopsies, which are more invasive and
can be more expensive.

But Dr. Michael Thompson of the Aurora Cancer Center in Milwaukee says,
right now, tissue biopsies are still the gold standard.  But blood tests
for cancer have their place in helping monitor patients after diagnosis and
guiding treatment decisions.  And foundation medicine, another competitor
in the space, says 10 percent to 20 percent of cancer patients are
ineligible for tradition biopsies.

DR. MICHAEL PELLINI, FOUNDATION MEDICINE PRESIDENT & CEO:  Instead of just
letting these patients go and saying there`s no ability to understand your
tumor, we now have the ability in certain cases to use a blood-based test
to assess it.  So, it`s just another piece in the puzzle.  It`s another
tool in the tool box to help us understand a patient`s cancer.

TIRRELL:  Work in the area is accelerating.  Genetic sequencing giant
Illumina (NASDAQ:ILMN) announced that it formed a new company to develop a
blood test that could potentially diagnose cancer earlier, potentially
replacing the traditional biopsies.  But experts say it`s still years away.
Illumina (NASDAQ:ILMN) name the company Grail.

For NIGHTLY BUSINESS REPORT, I`m Meg Tirrell, in Chicago.

(END VIDEOTAPE)

MATHISEN:  Valeant slashes its full-year outlook again.  And that is where
we begin tonight`s “Market Focus.”

The pharmaceuticals company delayed first-quarter results came in today
worse than expected and that led Valeant to cut its forecast for the second
time since December.  The appointed CEO Joseph Papa attributed the mist to
the, quote, “impact of significant disruption from recent investigations
into the company”.  The company officially filed its so-called 10Q form,
meaning the company will avoid default on its debt.

Valeant shares today down more than 14 1/2 percent to $24.64.  Now, get
this, last August, the stock was more than ten times higher at a 52-week
high of nearly $264.

Pulte Group says the hedge fund Elliot Management has bought a large stake
in the home builder.  CNBC citing sources says Elliot`s position is greater
than 4 percent but less than 5 percent that would require an SEC filing.
Shares of Pulte finished the day up 4 percent $19.37.

Meantime, the online real estate company Zillow agreed to pay the Move
(NASDAQ:MOVE), Incorporated, which is owned by News Corps, $130 million to
settle claims it allegedly stole trade secrets from that company after it
hired two of that company`s former employees.  Move (NASDAQ:MOVE) had been
looking for about $2 billion in damages.  Shares of Zillow up more than 5
percent at $32.40.

HERERA:  Newspaper publisher Gannett (NYSE:GCI) isn`t ready to give up on
its proposed takeover of Tribune Publishing just yet.  A day after a
regulatory filing revealed lackluster support for Tribune`s board among its
shareholders, Gannett (NYSE:GCI) said its $815 million unsolicited offer
for the company still stands.  Gannett (NYSE:GCI) shares up a fraction to
$15.38.  Shares of Tribune up 1 percent to $13.16.

Medical device maker Zimmer Biomet will buy LDR holding for about $1
billion.  That merger is expected to increase Zimmer`s presence in the
spinal device market.  Zimmer shares were down nearly 2 percent to 119.43.
While LDR shot up 63 percent to $36.99.

And the Food and Drug Administration is seeking more data from a study
conducted by Sarepta Therapeutics on its treatment for Duchesne muscular
dystrophy.  Sarepta plans to submit the requested information in the coming
weeks and will await the FDA`s approval decision.  Shares of Sarepta surged
more than 22 percent to $19.67.

Hertz Global saw its shares pop today after a regulatory filing showed
activist investor Carl Icahn increased his position in the car rental
company.  Icahn`s recent investment brings his total number of shares above
60 million.  Shares up 6 percent to $11.40.

MATHISEN:  Well, it is not a good time for hedge funds, basically.  Many
dealing with poor returns and, often, they`re the target of tough talk on
the campaign trail.  Now, the industry is faced with a third dilemma: lack
of talent.

Kate Kelly explains what`s being done to attract the next generation of
star traders.

(BEGIN VIDEOTAPE)

KATE KELLY, NIGHTLY BUSINESS REPORT CORRESPONDENT:  In the `80s and `90s,
working in finance was a dream job.  Today, hedge funds, one of the most
lucrative parts of the industry, can`t find enough qualified workers.  The
talent, according to one of the best-known figures in the business, just
isn`t there.

STEVE COHEN, POINT72 CHARIMAN & CEO:  Frankly, I`m blown away by the — you
know, the lack of talent.  It`s not easy to find great people.

KELLY:  A bunch of things have led to this point.  A change in business
models at the bank who used to train up future hedge fund workers but don`t
do that type of trading anymore thanks to regulations, a stodgy culture
that makes hedge funds tough to penetrate, and the siren call of Silicon
Valley, the industry of choice for research and data mavens who want to
disrupt the world and make money doing it.

It`s something Jaime Goodfriend, a key player in Cohen`s own recruiting
efforts, sees all the time.

JAMIE GOODFRIEND, POINT72 ACADEMY DIRECTOR:  I think there`s a substantial
increase in competition for the best talent.  So, today, you know, for
young people, you could go to Silicon Valley, you can go to private equity
firms.  It`s not just you go to the investment bank and then you go to the
hedge fund.

KELLY:  To raise its hiring name, the Chicago-based hedge fund firm Citadel
is taking a page out of the Silicon Valley playbook.  L.J. Brock, a tech
industry veteran who is now the chief people officer there, describes it.

L.J. BROCK, CITADEL CHIEF PEOPLE OFFICER:  We really focus on understanding
what`s important to candidate, what are their skills, their passions, their
experiences?  And then we look to build a job around that.

KELLY:  And Cohen has a novel approach too.  He brings in fresh talent at
an earlier stage, with a new trading school called the Academy that
Goodfriend run.  Late last month, a bunch of college sophomores gathered at
his Stanford, Connecticut, office to hear more.

For Jennifer Zhang, a University of Michigan student, the day was
intriguing.

JENNIFER ZHANG, UNIVERSITY OF MICHIGAN STUDENT:  I think Point72 is really
making effort to teach younger people that hedge funds are a place that we
can excel at because they`ll teach us many skills that we can learn and can
reprogram.

KELLY:  Now, says Zhang, she is looking to Point72 as a future prospect and
isn`t concerned about its legal back story which included the indictment of
a forerunner firm for insider trading charges it settled.

For NIGHTLY BUSINESS REPORT, I`m Kate Kelly in New York.

(END VIDEOTAPE)

HERERA:  From hedge funds to law firms.  Associates at a New York law firm
will get their first pay raise in nearly a decade.  Cravath, Swaine and
Moore says first-year associates will make $20,000 more effective July 1st.
Since the Great Recession, law firms have scaled back significantly.
Traditionally, though, when one leading law firm raises pay others tend to
follow.

MATHISEN:  General Electric (NYSE:GE) is leading the way and rethinking the
way it compensates employees.  The company is considering — get this —
replacing its longstanding, much-imitated five-point employee rating system
and annual pay raises and replacing them with other forms of compensation.

But will others in corporate America follow?

Mark Englizian is compensation expert at the research firm Institute for
Corporate Productivity.

What is GE looking at and what would replace the annual raise?  What kinds
of alternative forms of compensation?

MARK ENGLIZIAN, INSTITUTE FOR CORPORATE PRODUCTIVITY:  Well, actually, it`s
disconnecting the annual performance review from the annual pay review and
the merit increases is becoming increasingly common.  Employees have been
disenchanted with the employee performance appraisal process for a number
of years across corporate America.

And as companies like GE take a fresh look at this, I think we`re going to
see a lot of innovation in this space.

HERERA:  It also goes to corporate culture, does it not?  I mean, GE has
been trying to change its corporate culture.  But also with workforce
that`s skewing a little bit younger, they want different things.  The money
is not as important as perhaps flex time and other things like that.

ENGLIZIAN:  Yes, that`s a very good assessment.  There`s a much larger and
comprehensive total basket of rewards that employees today and top talent
certainly are really looking for.  Everything from paid time off to
extended leaves to concierge-type benefits at the corporate campus.  So,
it`s not just about corporate — or just about salaries anymore and pay
increases once a year.

HERERA:  I want to go back to how you began and get you to explain or
elaborate a little bit more.  If you separate the employee — how would it
work when you separate the employee evaluation from the employee
compensation?  Are you separating pay from performance?  And I thought the
evaluation was supposed to be directly tied to what you`d make so that the
best performers got the best raises.

ENGLIZIAN:  Yes, good question.

My read is that companies are certainly not moving away from a pay for
performance strategy.  I think this is more about the process of how it
gets done and the experience that employees have had in the past
historically of just having one conversation with a manager as something of
a check the box part of the process for getting a salary increase.

I think pay for performance is clearly alive and well.  This is more about
changing the process and the experience about how it happens.  Corporate
America has for many years not been innovative in this space.  And I
believe the GE is beginning to set a standard that others will follow.

MATHISEN:  All right.  Mark, thank you very much.  Interesting developments
there.  Mark Englizian with the Institute for Corporate Productivity.

HERERA:  Coming up, the big question that`s hanging over some startups that
are trying to change business as we know startups that are trying to change
business as we know it.

(MUSIC)

MATHISEN:  The chair of the House Financial Services Committee is outlining
a proposal that would dismantle parts of the 2010 Wall Street reform bill
known as Dodd-Frank.

(BEGIN VIDEO CLIP)

REP. JEB HENSARLING (R), TEXAS:  We need economic growth for all and bank
bailouts for none.  So, we are unveiling a new plan because Dodd-Frank has
not worked.  They said that it would lift the economy, it hasn`t lifted the
economy.

We`re still limping along at 2 percent economic growth.  We had a
nonexistent jobs report.  Wages are stagnant.  Savings have failed.  They
said that it would fix too big to fail, instead it enshrined too big to
fail.

(END VIDEO CLIP)

MATHISEN:  Congressman Jeb Hensarling says the Financial Choice Act would
repeal the Volcker Rule which bans banks from making speculative bets for
their own account.  It would prevent a body of regulators from designated
nonbanks as being systemically important.  And it would give banks the
option of holding high levels of capital, make it optional.

Though, it has little chance of passing Congress this year, it could
influence the presidential debate.

HERERA:  Looking for the next company that will disrupt the status quo?
Well, CNBC is out with the list of the world`s most innovative private
companies that are changing the economy and overall business landscape.
Some, of the names you probably know.  But others you may not.

So, here are the top five.  Number five, 23 and Me.  A genetic testing
company.  Coming in at number four, Palantir Technologies, a secretive
company that mines data and works cybersecurity.  Third, EZ-Tap, a mobile
payment startup for emerging markets.  Number two, home rental company
Airbnb.  Topping the list, the ride-sharing app — ride-hailing app, I
should say, Uber.

MATHISEN:  That was probably an easy call, Uber to be number one.

HERERA:  Yes, I think so.

MATHISEN:  There`s money to be made in companies that want to turn industry
on their heads.  I don`t need to tell you that.  But startups and venture
capitalists, they are facing their share of challenges lately.

Julia Boorstin explains.

(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Square was the last
Silicon Valley IPO and that was in November.  The stock trading below its
opening day close.  The IPO drought since then, the lowest number of IPOs
since the recession, is posing challenges to startups, driving a slowdown
in venture capital funding plus big questions about sky-high valuations.

Kleiner Perkins, which is backed disrupters such as Uber and Bloom Energy,
says these challenges to taking companies public puts even bigger pressure
on finding truly disruptive companies.

ERIC FENG, KLEINER PERKINS PARTNER:  What that does for us is really make
us double down and get even stronger conviction on our long-term strategy.
Again, we`re not investing for a 12-month horizon or a 24-month horizon.
We`re thinking about how entrepreneurs and technologies and companies can
be disruptive to the world for the next 10, 20, 100 years.

BOORSTIN:  Though the IPO drought has raised concerns about venture funding
drying up, it`s making established disrupters such as Airbnb, Uber and
Spotify even more appealing, allowing a number of startups to grow their
funding over the past year.

Jerry Chen of V.C. Grey Lock, which has backed a number of successful
startups, including Airbnb and Dropbox, says there`s more potential now
than ever.

JERRY CHEN, GREY LOCK PARTNERS:  Now your car, your watch, your phone, your
house, now has technology in it.  So, when technology`s everywhere, every
industry should be a software business.  Every industry is a technology
business, which is why everything from health care to government to cars
are all vulnerable to disruption now.

BOORSTIN:  Two well-known disrupters, Square and Pure Storage, did go
public.  While investors a wait for the IPO market to open up, they`re
hoping staying private longer will translate into an even bigger payoff.

For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in San Francisco.

(END VIDEOTAPE)

HERERA:  And that does it for NIGHTLY BUSINESS REPORT tonight, I`m Sue
Herera.  Thanks for watching.

And we want to remind, this is the time of year your public television
station seeks your support.

MATHISEN:  I`m Tyler Mathisen.  Thank you for your support.

Have a great evening, everybody.  We`ll hope to see you right back here
tomorrow night.

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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