Transcript: Nightly Business Report – June 10, 2016

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

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR:  Sharp slide.  Government bond
yields tumble around the globe.  And that could be a game changer for your retirement savings.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR:  Bullet train.  A privately
run passenger rail system using no public dollars is manufacturing its cars
in a state you might not guess.

HERERA:  A cut above.  Meet the cereal entrepreneur who`s made millions by
making people look good.

Those stories and more tonight on NIGHTLY BUSINESS REPORT for Friday, June
10th.

MATHISEN:  Good evening, everyone, and welcome.

This was a week stocks got the Dickens — Charles dickens that is.  It was
by all reckonings a tale of two markets.

From Monday through Wednesday, great expectations.  Oil moved higher, so
did stocks.  With the S&P 500 flirting with all-time highs.

Then came Thursday and Friday, bleak house.  Government bond yields around
the globe fell to record lows in Germany, Japan, and the U.K.  The reason?
Growing fears about global economic growth, central bank policy, and that
coming vote on whether Britain will stay in the European Union.  Money
flowed out of U.S. stocks and into treasuries.  U.S. bond yields medical to
multi-month lows.

Meantime, the Dow Jones Industrial average was off 119 points today to
17,865.  NASDAQ dropped 64.  The S&P 500 down 19.  And for the week, as a
whole the NASDAQ took the biggest hit.  It fell 1 percent.

Bob Pisani has more on the change in the market tone this week.

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT:  The stock market got
smacked around by the bond market and on Friday by the currency markets and
uncertainty over Europe`s future.  It started in the middle of the week and
yields on 10-year German bonds approached zero and dropped sharply in the
United States.  That put pressure on bank stocks on both sides of the
Atlantic, with many U.S. bank stocks down 2 percent to 4 percent for the
week.

But it was a lot worse for European names and it`s been that way all year.
Big bank stocks like Deutsche Bank and Societe Generale are down more than
20 percent this year.

Late today, an independent poll in the U.K. showed a jump in support among
those who wanted the U.K. to leave the European Union.  That`s put pressure
on the British pound and strengthened the dollar.  Now, a strong dollar is
not good for commodities or commodity stocks, so oil dropped and energy and
industrial stocks like Chevron (NYSE:CVX) and Ingersoll Rand dropped.

But don`t worry too much.  For all this drama, we`re essentially flat for
the week.  And the volume today was only about average.  In other words,
prices dropped because buyers weren`t interested.  There was no rush of
sellers coming into the market.

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

(END VIDEOTAPE)

HERERA:  So, what will those falling bond yields mean for you and your
retirement portfolio?

Charlie Bobrinskoy is the vice chairman and head of the investment group at
Ariel Investments and he joins us now.

Charlie, welcome back.  It`s nice to see you again.

CHARLES BOBRINSKOY, ARIEL INVESTMENTS VICE CHAIRMAN:  Thanks for having me.

HERERA:  The factors that have contributed to the lower rates, specifically
the ones that we saw today, are going to be with us for a little bit of
time, most people say.  So, what do you do if you`re nearer retirement and
you still have some government bonds in your portfolio?

BOBRINSKOY:  Well, dropping interest rates means that bond prices go up.
And they`ve gone up way more than they should.

Bond yields are at 200-year lows, the lowest interest rates we`ve had since
Alexander Hamilton was secretary of treasury.  They make no economic sense.
They make no economic sense to have negative interest rates in Europe.

And so, what you should not do is buy bonds.  You can`t put all your money
in the stock market, I realize that.  If you need to have a portion of your
money in safer assets, don`t be afraid to own cash, don`t be afraid to own
short-term bonds.  But don`t buy long-term bonds at these inflated levels.

MATHISEN:  So, let`s say I`ve got money that is rolling out of a CD or
rolling out of a 10-year bond that I happened to buy 10 years ago, what do
I do with that money if I want income?

BOBRINSKOY:  It`s a tough question, Tyler.  The answer is, there are other
income substitutes.  Things like high-yielding stocks.  Johnson & Johnson
(NYSE:JNJ), for example, pays almost 3 percent dividend yield.  That yield
has gone up over time.

But you`ve got to be careful because other people are searching for yield
as well.  So, now is not a great time to be a yield investor.
Unfortunately, you`re going to have to sit this one out for a while and
wait for a better time.

HERERA:  You know, everybody talks about being in cash.  And some argue
that that`s not a good alternative because you`re not making anything on
your money.  On the other hand, you still have your money.

Do you feel as though cash is really a viable alternative for people as
they get closer to retirement?  I know you mentioned it a little bit
earlier.

BOBRINSKOY:  I do.  I think you shouldn`t be afraid to own cash here.  But
maybe do what I`ve done which is to own two or three-year bonds.  You won`t
get hurt owning two and three-year corporate bonds.  You won`t make a lot.
You`ll make something.

But if interest rates go up, a two-year bond doesn`t go down much in value.
A 10-year bond goes down a lot in value if interest rates go up.

HERERA:  All right.  Charlie, we`ll leave it there.  Thank you.  Have a
great weekend.

BOBRINSKOY:  Thanks for having me.

HERERA:  Charlie Bobrinskoy with Ariel Investments.

MATHISEN:  Well, Americans may be losing confidence in the future.  The
University of Michigan sentiment index slipped last month in part because
consumers do not think the economy is as strong as it was last year.
However, the index did come in slightly above expectations because of a
slight improvement in wage growth.

HERERA:  The Department of Transportation approved six airlines to begin
flights to Cuba.  The airlines got the go ahead to fly from five U.S.
cities to nine Cuban cities other than Havana.  Havana routes won`t be
announced until later this summer.  The carriers approved are American,
Southwest, JetBlue, Frontier, Silver, and Sun Country.

MATHISEN:  From planes to rail cars, they`re central to keeping the
economy, people in goods moving.  Those cars, of course, must be made
overseas with cheaper labor, right?  Wrong.  Some passenger rail cars are
still built here in the U.S. in a state you might not guess.

Let`s go all aboard with Jane Wells in Sacramento.

(BEGIN VIDEOTAPE)

JANE WELLS, NIGHTLY BUSINESS REPORT CORRESPONDENT:  California is
expensive.  It`s highly regulated.  It`s unfriendly to manufacturing.  Yet
this is where German industrial giant Siemens is building rail cars.

UNIDENTIFIED MALE:  The front end of this is an aluminum front end.

WELLS:  Wow.  So it`s a big coke can?

UNIDENTIFIED MALE:  It`s a big coke can.

WELLS:  This state-of-the-art locomotive is being built inside a 600,000
square foot plant in Sacramento, the California capital, a place where
Siemens has been doing business for 30 years.

MICHAEL CAHILL, SIEMENS USA ROLLING STOCK PRESIDENT:  The positive spirit
that comes from California, the enthusiasm here unmatched anywhere else in
the country.

WELLS:  Florida`s governor recently encouraged California businesses to
relocate to the sunshine state.  But ironically, Siemens is building these
new trains for a high-speed rail line opening next year in Florida.

UNIDENTIFIED MALE:  This is one of the passenger coaches.

WELLS:  Mike Reinenger runs Brightline, which is owned by Fortress
Investment Group, which is raising money from investors to build a $2.5
billion privately funded high-speed rail along existing tracks from Miami
up the coast and eventually to Orlando.

UNIDENTIFIED MALE:  Transportation that will unite the state of Florida —

WELLS:  Commuter rail is suddenly hot.  Everyone`s jumping on board.
Bright line strategy, its fancy train stations, competitive prices, rail
coaches with wide aisles, outlets, Wi-Fi, platforms that reach out to you,
fast trips, and hospitality.  Betting it can lure some of the people making
the half billion car trips in the region.

MIKE REINENGER, BRIGHTLINE PRESIDENT:  So, if we capture a single digit
percentage of that market, around 5 million people, we will have a
successful and important new business.

WELLS:  Other projects have forced Siemens to expand its Sacramento plant.
It hopes to bid for one of the biggest projects of all, the California
high-speed rail, which leads to one big difference between the Golden and
Sunshine states — the Florida project is $2.5 billion, privately funded.
California`s train will be taxpayer-supported and cost at least $68
billion.

For NIGHTLY BUSINESS REPORT, Jane Wells, Sacramento.

(END VIDEOTAPE)

MATHISEN:  To read more about the $2.5 billion rail project, head to our
website, NBR.com.

HERERA:  Still ahead, weathering the volatility.  Our market monitor is
recommending stocks to get you through the ups and downs.

(MUSIC)

HERERA:  Sad news tonight out of Silicon Valley.  Venture capitalist Thomas
Perkins has passed away at age 84.  His firm Kleiner Perkins Caufield and
Byers funded some of the big names in tech, including Google (NASDAQ:GOOG)
and Amazon (NASDAQ:AMZN).  Early on, he also played a major role in the
growth of the computer and biotech industries.

MATHISEN:  Gawker Media has filed for bankruptcy protection and the bidding
for its assets has begun.  The decision comes after a judge ruled that a
$140 million jury judgment against the company would stand.  That invasion
of privacy case was between Gawker and the former professional wrestler
Hulk Hogan.  According to reports, digital media company Zift Davis will
start the bidding around $90 million for Gawker.

HERERA:  To politics now, Donald Trump took some swings at Hillary Clinton
on the campaign trail and on the economy.  And Hillary Clinton swung right
back.

John Harwood watching it all in Washington.

Good to see you, John, as always.

Trump made some of those comments when he spoke to religious conservatives.
What was his message?

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT:  Well, it was two-
fold.  On the one hand, he went after Hillary Clinton, said she wouldn`t
protect the country from Islamic terrorism.  He repeated his description of
her as crooked Hillary, said she would raise taxes and hurt the poor in
this country, be bad for jobs.

But he also was playing defense against a lot of this criticism of his
remarks about the judge, and he went out of his way to say, I`m not for
discrimination against anyone, nobody race, ethnic group should be
discriminated against, trying to clean up that problem.

MATHISEN:  Elizabeth Warren endorsed Ms. Clinton last night and they had a
private meeting today in Washington.  Is she really a possibility to become
Ms. Clinton`s running mate?

HARWOOD:  I think you`d have to say she`s a possibility.  I`m certainly
skeptical that`s where she`ll go in the end.  Some of this turns on your
conception of what`s possible in the election.

There are some Democrats who think they have a natural majority with the
demographic groups that they appeal to — minorities, liberal whites, young
people.  And that if they can simply mobilize them, and Elizabeth Warren
would help that, they can win a narrow victory.

Others think it`s possible to win a bigger victory, pull over moderate
Republicans, moderate interests.  If you`re going to do that, you wouldn`t
pick as polarizing a choice as Elizabeth Warren, you`d go for a safer pick.

HERERA:  We will see.  John Harwood in Washington.  John, have a great
weekend.  Thank you.

HARWOOD:  You bet.

MATHISEN:  Intel (NASDAQ:INTC) and Apple (NASDAQ:AAPL) have an iPhone
connection and that`s where we begin tonight`s “Market Focus.”

Intel (NASDAQ:INTC) will make chips for some versions of Apple`s iPhones.
Bloomberg says iPhones using AT&T`s network will have chips from Intel
(NASDAQ:INTC).  While Verizon (NYSE:VZ) iPhones and ones sold in China will
continue to use Qualcomm (NASDAQ:QCOM) processors.  Intel (NASDAQ:INTC) up
a dime to $32.04.  Apple (NASDAQ:AAPL) down nearly a percent at $98.83.
Qualcomm (NASDAQ:QCOM) off 2 percent at $53.83.

Federal Trade Commission may green light the merger between Walgreens and
its rival pharmacy Rite Aid (NYSE:RAD).  “New York Post” says any approval
by FTC would come with conditions.  Walgreens up better than 4 percent at
$82.47.  Rite Aid (NYSE:RAD) gaining about 3.5 percent to $7.83.

Monsanto (NYSE:MON) reportedly rejecting a second takeover offer from the
pharmaceutical giant Bayer.  Bayer`s $62 billion offer for the agricultural
company was the same amount it offered back in May.  “The Wall Street
Journal” says Bayer has requested business information from Monsanto
(NYSE:MON) and Monsanto (NYSE:MON) says, uh-uh, not until there`s a higher
bid.  Shares of Monsanto (NYSE:MON) off a fraction, they finished today at
$109.20.

HERERA:  AT&T (NYSE:T) has reportedly outbid rival Verizon (NYSE:VZ) in the
second round of offers for the tech giant Yahoo (NASDAQ:YHOO).  Reuters
says Yahoo (NASDAQ:YHOO) is expected to make public its short list of
potential suitors in upcoming days.  Yahoo (NASDAQ:YHOO) down more than 1
percent to $36.83.  Verizon (NYSE:VZ) gained 1 percent to $52.67.  AT&T
(NYSE:T) up just a fraction to $40.33.

Wendy`s says it`s found a second case of malware at its payment terminals.
The fast food chain now says the number of restaurants affected by the
malware is, quote, “significantly higher” than the 300 previously reported.
The software caused fraudulent transactions on some customers` credit and
debit cards.  Shares of Wendy`s down 6 cents to $10.25.

Tesla, rather, is denying its Model S vehicle has any safety issues with
its suspensions.  The automaker also denied claims it discouraged customers
from reporting the problem.  As we told you last night, the National
Highway Traffic Safety Administration said it would review reports of the
suspension issue.  Shares of Tesla fell more than 4 percent to $218.79.

MATHISEN:  Our market monitor has stock names he says will benefit from
rising interest rates, rising energy prices, and stock market volatility.

Michael Mussio, portfolio manager at wealth management firm FBB Capital
Partners.

Last time, Michael, you were on in February, you recommended Alphabet,
that`s Google`s parent.  It`s up a fraction.  Apple (NASDAQ:AAPL) up a
little bit too.  Microsoft (NASDAQ:MSFT) down a fraction.  Basically break-
even there.

You still like all three of those?

MICHAEL MUSSIO, FBB CAPITAL PARTNERS PORTFOLIO MANAGER:  We do, we own all
three stocks.  The theme back then was tech stocks that were of a good
value that provided some income and growth and otherwise more expensive
tech sector.  We still own all three of those.

MATHISEN:  You call the picks you`re going to give to us tonight micro
plays on macro trends.  What do you mean briefly there, please?

MUSSIO:  Yes.  So, individual stocks that could benefit or help investors
kind of hedge part of their portfolio with some of the bigger-picture items
that are going on in the economy.  Energy prices, interest rate movements,
and just general market volatility.

HERERA:  All right.  Let`s get to the new stock picks then, Michael.  CME
Group (NASDAQ:CME) is your first one.  And you say it`s a hedge on market
volatility?

MUSSIO:  Yes, CME Group (NASDAQ:CME) runs various exchanges, including the
Chicago Mercantile Exchange.  The stock benefits when there`s a little bit
more volatility.  The company gets more trading, more activity.  And while
investors wait, we`re expecting them to pay about a 5 percent yield this
year with the special dividend that we expect to receive at the end of the
year.

MATHISEN:  Another one in the financial business, TD Ameritrade
(NASDAQ:AMTD) Holdings.

MUSSIO:  Yes, this is the interest rate play.  The brokerage firms, the
discount brokerage firms in particular, are poised to do quite well as
short-term rates continue to go up eventually.  And also benefit from low-
cost advice, relatively speaking, as advisers through TD Ameritrade
(NASDAQ:AMTD) and their competitors take away business from the brokerage
house firms.

HERERA:  Next, a hedge on rising energy prices with Schlumberger
(NYSE:SLB).

MUSSIO:  The oil services industry of energy.  From a competitive
standpoint they`re benefiting from a recent breakup of a merger on
antitrust concerns.  Their two biggest competitors, Halliburton (NYSE:HAL)
and Baker Hughes (NYSE:BHI).

And they have a strong balance sheet.  They`re generating solid cash flow.
They`re in a bit of a blip with everything else in the energy space, but if
energy is more on an uptrend down a downtrend, which we think it is,
Schlumberger (NYSE:SLB) should outperform.

MATHISEN:  You like these individual stocks.  Do you like the market at
today`s prices?

MUSSIO:  The market as a whole is pretty fairly valued, right?  I mean, we
think that with no or — actually no earnings growth and earnings
contraction, trading at 16, 17, 18 times, depending on which multiple
you`re looking at is pretty expensive.  So, until we see some overall
growth in the market, we`d rather pick individual companies and sectors
that we think are poised for growth.  It`s better than what the market is
offering now.

MATHISEN:  All right.  Michael, thanks very much.  Michael Mussio with FBB
Capital Partners.

And coming up, from a barbershop to a multi-million dollar hair care
business, one entrepreneur`s hair-raising success story.  It`s tonight`s
“How I Made My Millions.”

(MUSIC)

MATHISEN:  Here`s a look at what to watch next week.

On Monday, Apple`s worldwide developers conference begins.  This year`s
theme appears to be software.

On Tuesday, retail sales from May will come out with questions swirling
about the economy investors want to see how consumer spending is holding
up.

Wednesday, the Fed chair holds a news conference following a two-day
meeting of policymakers on interest rates.

And that is what to watch next week.

HERERA:  The Great White Way is having a record year.  In the most recent
season, 13 million theatergoers shelled out more than $1 billion to see a
Broadway show.  And ahead of the Tony Awards this weekend, there is one
show in particular that`s garnering much of the attention.

Susan Li has more from New York.

(BEGIN VIDEOTAPE)

SUSAN LI, NIGHTLY BUSINESS REPORT CORRESPONDENT:  It`s the hardest ticket
to get on Broadway.  A play based on one of America`s Founding Fathers,
Alexander Hamilton, and it`s raking in the Hamilton.

The show is sold out until January next year.  People still come from all
over, camping out, hoping to get their hands on rare tickets.

UNIDENTIFIED FEMALE:  I`ve lost the lottery almost 200 times.  I`ve pretty
much given on that ever happening.

UNIDENTIFIED MALE:  Day number two, overall, it`s going to be about 51
hours when it`s all said and done.  We`re about 40, 40 hours in right now.

LI:  “Hamilton” has shattered Broadway`s top ticket price, hiking the cost
of the best seats to $849.

And on the secondary market, a ticket to the final performance of the
show`s creator and star Lin-Manuel Miranda in mid-July will cost you
$6,000.

KEN DAVENPORT, DAVENPORT THEATRICAL:  It`s a lightning rod to let people
know what`s happening on Broadway, and the uniqueness of it, and the
diversity of it.  And what we see also when we have a big hit like that,
that all the ships rise with that tide.

LI:  The “Hamilton” phenomenon has helped Broadway rake in $1.3 billion in
revenue with over 13 million theatergoers in the season.  So, Broadway is a
big business.

“Wicked” just surpassed the $1 billion mark after a 12-year run.  “The Lion
King” and “Phantom of the Opera” both claim to have grossed $6 billion
globally.

For those looking for the next billion-dollar show, an appearance on this
weekend`s Tony Awards could give some of these productions a second wind at
the box office.

DAVENPORT:  Not only win an award that night but the awareness that
appearing on the show can bring to the show, to people all over the world.
It really is the fastest way we can spread a message about a show that`s
running right now on Broadway to all four corners of the globe.

LI:  “Hamilton`s” case, that message has been loud and clear.  And for its
neighbors across Times Square, everybody`s enjoying the benefits.

For NIGHTLY BUSINESS REPORT, I`m Susan Li, New York.

(END VIDEOTAPE)

MATHISEN:  A high school dropout turned Hollywood hair master and what set
Jim Markham apart was his Midas (NYSE:MDS) touch for shampoos, conditioners
and more.  His story in tonight`s “How I Made My Millions”.

(BEGIN VIDEOTAPE)

MATHISEN:  Hair products, they are Jim Markham`s passion.

JIM MARKHAM, COLORPROOF, FOUNDER AND CEO:  Nice texture.

MATHISEN:  And profession.

JIM MARKHAM:  I love it.  It`s great.

MATHISEN:  Jim created his latest hair care line, ColorProof, with his wife
Cheryl.

CHERYL MARKHAM, COLORPROOF FOUNDER:  Just because we`ve done it before
doesn`t mean that you can do it again.

JIM MARKHAM:  We`re survivors.  We`re persistent.  We`ll not lose.

MATHISEN:  As a kid, that assertive attitude came in handy, especially when
Jim found himself a father and a husband for the first time at a very young
age.

JIM MARKHAM:  Ended up getting married at 15.  Had a child at 15.

MATHISEN:  So, Markham enrolled in barber school and in 1967 opened a small
shop in Albuquerque, New Mexico, that also sold hair products like those
created by his friend, the celebrity stylist Jay Sebring.

JIM MARKHAM:  He got Paul Newman, Steve McQueen, and Frank Sinatra.

MATHISEN:  But August 1969 brought devastating news.

JIM MARKHAM:  I heard on the radio Jay Sebring and Sharon Tate killed.

TV ANCHOR:  Los Angeles and the country were shocked to learn of a grisly
trail of murders which included the death of the actress Sharon Tate.

MATHISEN:  Tate and Sebring were murdered by followers of Charles Manson.
The brutal killings that haunted the nation suddenly accelerated Markham`s
career.

JIM MARKHAM:  When he was killed, I was the only one that could take over.

MATHISEN:  He helped run Sebring`s company for several years.  But
eventually ditched men`s products and concentrated on women`s hair care
with his second wife Cheryl.

JIM MARKHAM:  What do you think of that?

MATHISEN:  They worked together, as they still do.

CHERYL MARKHAM:  I don`t love it.

MATHISEN:  ABBA Pure and Natural, the Markhams` first feminine hair care
line, hit the market in 1989, thanks in part to a loan from Cheryl`s
father.

JIM MARKHAM:  Her father loaned us $150,000.  We took $100,000 down to
zero.  Then the company started coming up.  It`s like any time there, we
could have failed.

MATHISEN:  Eight years later, they`d made dad`s money back and accepted an
offer to buy the business.

CHERYL MARKHAM:  We thought, wow, you know.  Sold the company for $20
million, we can retire.  Then we realized, there`s way more to life than
that.

MATHISEN:  So, at the turn of the 21st century, they headed back to the lab
to invent yet another hair product hit.  This one called Pureology with new
technology that helped protect color-treated locks.

CHERYL MARKHAM:  The fact that it started to keep color in longer was a
surprise.

JIM MARKHAM:  We did $57 million our sixth year.  L`Oreal offered us a lot
of money and we sold.

MATHISEN:  It was enough to buy this southern California home with
incredible views overlooking the Pacific, and a few other big-ticket toys.
But still not enough to make these serial entrepreneurs want to retire.

JIM MARKHAM:  It`s got to go in the shampoo, it`s so good.

MATHISEN:  Markham`s fifth product line ColorProof began rolling off
assembly lines in 2012.  Four years later, its retail sales hover around
$44 million a year.

JIM MARKHAM:  Every product I ran always was much better than the one
before.  I`ve been doing that all my life.  I won`t give up.

(END VIDEOTAPE)

MATHISEN:  Just keeps doing it over and over.  One of Jim Markham`s early
secrets to success was offer free haircuts to celebrities, a risky move
that paid off.  Once they got hooked, he charge them 55 bucks a cut back in
the mid `70s.  That will be about $250 in today`s market.

HERERA:  Well, he`s made a lot of millions.  And speaking of millions he`ll
have to pay up to have lunch with billionaire investor Warren Buffett.  His
annual lunch auction has drawn offers exceeding $2.5 million.  The bidding
on eBay (NASDAQ:EBAY), which ends late tonight, has already topped last
year`s winning bid.  The proceeds go to a San Francisco-based charity that
helps with the homeless.

And that will do it for NIGHTLY BUSINESS REPORT.  I`m Sue Herera.  Thanks
for joining us.

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

MATHISEN:  And I`m Tyler Mathisen.  And we here at NBR thank you for your
support.  Have a great weekend, everyone.  We`ll see you Monday.

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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