Transcript: Friday, December 6, 2013

nightly-business-report-september-25-201321-300x225ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and
Susie Gharib, brought to you in part by —

(COMMERCIAL AD)

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Jobs jolt. Good news
for Main Street is good news on Wall Street. Stocks jump on a strong
employment report, putting the ball squarely in the Fed`s hands.

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Making the comeback.
What small lenders are doing to grab new mortgage business, becoming big
winners as they thrive.

MATHISEN: And market monitor. Our guest tonight tells investors to
go global for the best returns next year.

All that and more tonight on NIGHTLY BUSINESS REPORT for Friday,
December 6th.

GHARIB: Good evening, everyone.

It looks like good news for the economy is finally good news for Wall
Street. Stocks rose sharply because of a super strong jobs report.
American businesses added 203,000 jobs in November, much more than
expected, and the nation`s unemployment rate fell to 7 percent even, that`s
a five-year low.

The rally was broad based with all 10 sectors of the S&P 500 index on
the plus side. Today`s gains come after five straight losing sessions on
fears that a stronger economy would be the catalyst for the Federal Reserve
to being cutting back on the stimulus plan. But now, it looks like
investors and traders believe that a growing economy is good news.

So, here is a look at today`s closing numbers. The Dow shot up almost
200 points, back above the 16,000 level. The NASDAQ jumped about 30 and
S&P rose 20 points, returning to the 1,800 mark again.

MATHISEN: So where are all those jobs, and what do the gains mean for
the economy?

Hampton Pearson takes a look.

(BEGIN VIDEOTAPE)

HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Just in time
for the holidays, Tanger Outlets opened this $100 million complex with 80
high-end retailers in Prince George`s County, Maryland, just Washington,
D.C. In light of today`s surprisingly strong jobs report, opening a new
outlet mall doesn`t look like such a big business risk after all.

KENT DIGBY, NATIONAL HARBOR: One of the things we`re most proud of is
the employment record from a project that in its heyday was putting in
3,000 workers, construction workers every day on the project. So, again,
6,000 full and part-time jobs and not to mention Tanger now almost 7,000
full and part-time jobs.

PEARSON: The outlet mall opening just two weeks ago created a
thousand jobs. Among the most excited new hires, Deja Lee, a store manager
at the Harley Davidson Store.

DEJA LEE, HARLEY DAVIDSON: It was amazing for my manager Vanessa to
call me and tell I got hired, especially in an area like this, in National
Harbor. So, it was great and I was very ecstatic and I was just so happy
to get the job.

PEARSON: Nationwide, the retail sector added 22, 000 jobs, part of
the across the board employment spike that dropped the unemployment rate to
7 percent. Separate reports today also show consumers are starting to
spend again, and consumer confidence about job prospects and income has
taken its biggest jump in five months heading into the holiday season.

So, good news about the Main Street economy is also good news on Wall
Street. With some analysts reading today`s rally as tantamount to the
markets giving the Fed permission to taper. But they don`t expect Ben
Bernanke and company to be in a rush.

CHRISTIAN WELLER, AMERICAN PROGRESS CTR.: I think the Fed will take
one more a month of data to have three months of decent data to start
indicating that they`re going to clearly taper.

PEARSON (on camera): The Fed`s tapering hand could be strengthened if
Congress comes up with a budget deal, lifting still another cloud over the
economy. What happens when Congress returns next week could be crucial.

For NIGHTLY BUSINESS REPORT, I`m Hampton Pearson in Washington.

(END VIDEOTAPE)

GHARIB: David Kelly says the Fed is one step closer to deciding to
taper. He`s chief global strategist at JPMorgan (NYSE:JPM) Funds.

Hi, David.

So, how close is close besides that jobs report that Hampton was just
reporting on. We`ve got that strong GDP number yesterday, this week —
strong auto sales, strong home sales, good news on manufacturing, good news
on, you know, Cyber Monday.

How do you think the Fed looks at all this data and could they taper
this month?

DAVID KELLY, J.P. MORGAN FUNDS CHIEF GLOBAL STRATEGIST: Yes, I think
they could. I would call it a 50/50 shot as to whether they taper this
month. Logically, they absolutely should. I mean, if the Fed is going to
be consistent. You go back to last June when Ben Bernanke first talked
about ending QE, he said they would start later this year and they would
end when the unemployment rate hit 7 percent roughly.

Well, we`re actually at 7 percent already. And, in fact, if you go
down the list of things the Federal Reserve has been worried about,
including unemployment being too high, problems with the federal
government, problems with housing, the numbers really seem to calm those
fears.

So, logically, the Federal Reserve ought to begin to reduce bond
purchases at its meeting next week. The only question is, you know, we
thought that in September and they were, you know, too nervous to do it
then, they would still be too nervous to do it in December.

MATTHEWS: What do you think is holding them back, David?

KELLY: I — I just think that they are, the personnel in the Federal
Reserve right now is about as dovish (ph) we have ever seen in 100 years in
the Federal Reserve. I`m not sure what should hold them back any further.
You know, I`ve called them wrong in the past, so I don`t want to say it`s a
sure thing. But, logically, they absolutely should begin.

You know, this is the most extreme monetary policy we`ve had in 100
years of Federal Reserve. It doesn`t make sense with the unemployment rate
coming down. The economy is too strong for the Federal Reserve to keep
emergency measures in place.

GHARIB: David, so, when the Fed does taper, bring this home to our
audience, when does it mean for people`s investments there. You know,
portfolios and what does it mean if you`re a borrower for mortgage rates or
other personal loans?

KELLY: OK. For the economy, 2014 will not be a great year for the
bond market, just like 2013. We expected long-term interest rates will go
up between 50 basis points and 1 percent. So, not that much, but they will
go up and that hurts bond returns.

For the stock market, I think the stock — you know, I`d always pick
an improving economy over monetary medicine. I think it`s actually better
for the stock market. So, I think the stock market can continue to go up.
Of course, it`s gone up a lot.

And then for individuals, you know, I wouldn`t worry too much. I know
interest rates are going to go up but at very low levels. Mortgages are
still an excellent deal. So, if you can afford to buy a house, and you can
get a loan, I still think this is a good time to buy.

MATHISEN: You know, the typical paradigm, David, has always been as
rights go higher, as interest rates rise, that`s poison for stocks. Why do
you think the two can co-exist with both rates and stock prices rising?

KELLY: Well, Tyler, it depends where the rates are when you start.
We looked at data over the last 50 years and what we found it`s the longest
10-year treasury rate below 5 percent when they go up. That`s really a
sign the economy is improving and that actually helps the stock market go
up.

If on the other hand, rates were, say, 8 percent and go to 9 percent,
it means you`ve got a raging inflation problem and that really is a
negative for the stock market. So, if you start at a low level, rising
rates aren`t that much of a threat to the stock market.

GHARIB: All right. David, thank you so much. Always a pleasure to
have you on the program. Have a great weekend.

KELLY: You too.

GHARIB: David Kelly, chief global strategist at JPMorgan (NYSE:JPM)
Funds.

MATHISEN: Well, two big banks face accusations of unfair mortgage
practices and the allegations are that they produced a wave of foreclosures
in my minority neighborhoods.

The city of Los Angeles says Wells Fargo (NYSE:WFC) and Citigroup
(NYSE:C) engaged in what it calls a continuous pattern of predatory lending
practices and red ling. That says the city, settled minority mortgage
holders with loans they couldn`t afford. Both banks call the charges
baseless.

GHARIB: Now, while many big banks are cautious about approving
mortgages right now, smaller banks and independent lenders are swooping in.

And as Diana Olick explains, borrowers are paying attention.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Brian Del Terzo is about to buy a larger home for his growing family just
outside Minneapolis. This is not his first foray into the mortgage
process.

BRIAN DEL TERZO, MORTGAGE BORROWER: I had experiences in the past
with larger lenders, you know, dealing with home purchases and I just
didn`t feel like a special person. I felt like a number.

OLICK: So, this time, he went with Waterstone Mortgage, a smaller
lender based in the Midwest.

DEL TERZO: It`s been a lot smoother process, with a local smaller
company that seems to care more.

OLICK: Brian is among a growing number of borrowers turning to non-
bank lenders and to community banks. Their share of the mortgage market is
now at 60 percent, compared to just 39 percent in 2009, according to inside
mortgage finance.

BRIAN SIMON, NEW PENN FINANCIAL COO: I think it`s a combination of
independent mortgage bankers and community banks being aggressive and
entrepreneurial, taking advantage of niches. It`s also some of the larger
banks electing not to play in some of the spaces.

OLICK: Banks large and small have been very busy over the last few
years as record low mortgage rates fueled a refinance boom, but rates are
rising again now and refinance volume has dropped dramatically, down over
60 percent from a year ago. That has independent lenders gathered at an
industry conference in Miami this week talking deals.

SIMON: Now, you know, that the industry is a little bit in flux,
rates are up. Some companies are doing well, some companies aren`t doing
so well, there is an opportunity for companies like mine and others like
that, other independent mortgage bankers, to go out and seek market share
and be aggressive in recruiting new talent, perhaps acquisition.

OLICK (on camera): As for the big banks, they may come back into the
market more if home sales improve next year. But as for now, David is
beating Goliath yet again.

For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Washington.

(END VIDEOTAPE)

GHARIB: To read more about the small lenders come back, head to our
Web site, NBR.com.

MATHISEN: And still ahead, a number of retailers are not only looking
for shoppers this holiday season, but also a CEO, and that could be the
biggest concern for shareholders.

(MUSIC)

MATHISEN: Another demerit for the Healthcare.gov Web site. The
federal online marketplace now concedes that during October and November,
about one out of over four transactions sent incorrect information from
customers to their new insurance carriers. Officials now say those numbers
are preliminary, not precise and that the error rate is now down in one to
ten

GHARIB: Don`t freak out, but just 18 shopping days until Christmas.
This is the height of the holiday shopping season, and some well-known
retailers know exactly what their putting on their Christmas list.

Courtney Reagan explains.

(BEGIN VIDEOTAPE)

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Some retailers are hoping for more than just a strong holiday season. They
are asking Santa for a new CEO for Christmas.

It`s been six months since Lululemon CEO Christine Day said she was
retiring once a successor was found. The yoga wear retailer is still
looking.

This summer, JCPenney began its search to find a permanent CEO to take
over for Mike Ullman who steps back into the C-Suite to help stop the
bleeding from the failed turnaround.

While the board members have changed, the retailer says the CEO search
is ongoing.

Abercrombie & Fitch (NYSE:ANF) may not be looking to replace CEO Mike
Jeffries, though, many, including shareholder Engaged Capital think it
should. Even though it may be expensive for the company to cut ties with
Jeffries.

(on camera): There isn`t that one magic quality that makes the
perfect retail CEO. It`s about matching need to skill. The trick is
finding the right combination of those skills, plus, a strong track record,
whether it`s a turnaround expert with financial acumen, or former
merchandising manager with a strong understanding of a core consumer.

JOHN CHALLENGER, CHALLENGER, GRAY & CHRISTMAS: Some retailers may see
themselves on a fast growth path, maybe looking to expand internationally,
and may want to find a CEO who can prove that he or she has made that
happen for other retailers in the past.

REAGAN (voice-over): Who is on the possibility list? Andrew
Jennings, outgoing CEO of struggling German department store Karstadt, is
someone who`s both desirable and available.

Ron Frasch, Saks (NYSE:SKS) former president and chief merchant, is
also available. But some question whether he`s CEO material.

And then there`s the wish list, highly desirable but unavailable,
Brendan Hoffman, CEO of Bon-Ton Stores; Ken Hicks, Footlocker (NYSE:FL)
CEO; Glenn Murphy, Gap (NYSE:GPS) CEO; and Jeff Gennette, Macy`s chief
merchandising officer.

Michael Gould, Bloomingdale CEO for 22 years, he`s stepping down in
February and he says to move into education or philanthropy. It`s hard to
consider him working for anyone else, but if he`d be willing, he`d be a big
get. There is always a chance for a Christmas miracle.

For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan.

(END VIDEOTAPE)

MATHISEN: Well, Sears (NASDAQ:SHLD) is spinning off its Lands` End
units, speaking of retail. And that is where we begin tonight`s “Market
Focus”.

The retail giant filed with the SEC to distribute stock to
shareholders for the value of Lands` End, but the board of directors still
needs to sign off on the transaction. This is the company`s latest effort
to get back on track as it faces mounting losses and declining sales.
Shares of Sears (NASDAQ:SHLD) Holdings down nearly 4 percent to $48.09
today.

Another retailer, JCPenney facing an SEC inquiry into its finances.
Regulators are investigating the retailer`s controversial $800 million
stock offering this fall. The agency has also requested information on
Penney`s liquidity, its cash and equity in debt. Shares plunged almost 9
percent today, falling back to $8.08.

GHARIB: Well, JCPenney wasn`t alone. Shares of Barnes & Noble
(NYSE:NE) (NYSE:BKS) also tumbled today on word that it`s under
investigation by the Securities and Exchange Commission. Regulators are
looking into the book chain`s accounting practices and earnings
restatement. The stock dropped 12 percent to $14.43.

And Intel (NASDAQ:INTC) was the best performing Dow stock today after
a Citi analysts upped his rating to buy from neutral. The endorsement came
because the analyst noted increased corporate demand for personal
computers, even though the overall PC market has been declining. Intel
(NASDAQ:INTC) rose more than 2 percent to $24.82.

MATHISEN: And tonight`s market monitor is betting on synchronized
global growth. He says investors will get better returns from overseas
markets like Europe and Japan in 2014. He`s Mark Luschini. He`s chief
investment strategist at Janney Montgomery Scott.

Mark, welcome. Good to have you with us.

MARK LUSCHINI, JANNEY MONTGOMERY SCOTT: Thanks, Tyler.

MATHISEN: Let`s talk about the outlook for the U.S. markets in light
what many people expect is going to be the gradual lessoning of Federal
Reserve stimulus in the economy.

LUSCHINI: Well, we`re expecting 2014 to be an improving year in U.S.
domestic growth. What we`re seeing here in the latter quarter of 2013, I
think is setting up for pretty decent inertia leading into next year. And
with I think a lose of fiscal friction caused by the sequestered cuts and
the payroll tax holiday, that is going to be weaned out of the economy in
2014, coupled with an uptick in consumer business and spending.

Collectively, we think we can start to tease escape velocity or
something around 3 percent GDP growth before we leave 2014.

GHARIB: Well, as Tyler was introducing you, he said you`re also
seeing really good investment opportunities in Europe and Japan. Most
people think of those areas as still a little bit shaky. Tell us just
quickly why you think that`s the way to go.

LUSCHINI: Sure, Susie.

The story in Europe was one of not necessarily that things had to get
better. They just had to stop getting worse. And we saw that earlier this
year and now, of course, you posted two consecutive quarters of economic
growth and really some of the cheapest evaluations among developed
countries.

And so, what we find, there is terrific opportunities for picking up
good quality companies, trading in expensively, especially when compared to
U.S. equities, which we think will lead to even better upside potential
than staying domicile here exclusively here in the United States.

MATHISEN: Uh-hmm. Let`s get to some of your picks here, beginning
with Helmerich & Payne (NYSE:HP). Nice dividend and obviously an exciting
business.

LUSCHINI: Well, we think so, Tyler. I mean, the fact is we`re
bullish on the energy renaissance that`s being taken place here in the
United States. It has great portfolio assets, a lot of rigs in the Bakken
Shale and in the Gulf of Mexico, brand new, state of the art portfolio of
assets as well, nonetheless. So what they`re using the best and most
current technology available. And as you said, a handsome dividend yield
trading at about 12 times earnings in a mid-sized company, about $8 billion
of market capitalization.

GHARIB: Your next stock make goes along with your international
theme, Tal International. That`s TAL ticker symbol. This stock almost
doubled this past year.

Is there still upside? What`s the attraction?

LUSCHINI: Susie, we think so. Purchased New York-based headquartered
company with, again, a really attractive dividend yield, around 5 percent,
just a little bit over. Once again trading 12 times forward earnings. We
think the business of leasing the shipping container companies is going to
be good on the back of increased domestic and global trade, and needless to
say, thematically, this is going to be a company we believe that`s going to
fit neatly into that opportunity.

MATHISEN: Let`s go to pick number three and I have a couple
questions, Japan DXJ, the WisdomTree Hedged Equity Fund. I assume that`s
an ETF. Why an ETF in Japan as opposed to picking a stock there? And what
does hedged mean in this particular case?

LUSCHINI: Tyler, importantly is the word “hedged”. And the fact of
the matter is, what is done here by WisdomTree with regard to this ETF is
that they basically negated the currency exchange. So, investors can get a
pure play on the lift and Japanese equity prices as opposed to perhaps
being washed out of the gains that we foresee for the Japanese equity
market due to the fact the yen may continue — which we believe it will —
to weaken against the U.S. dollar in a goal forward basis.

MATHISEN: All right. Very interesting. Thank you very much, Mark,
for those choices.

Do you have any disclosures with respect to the securities you just
mentioned?

LUSCHINI: Our clients own all three and I own DXJ.

MATHISEN: All right. Mark Luschini, chief investment strategist with
Janney Montgomery Scott, thanks.

GHARIB: And coming up, meet the woman who wants girls to ditch the
dolls and start building and in the process, she`s building a business of
her own. Our bright idea story is next.

(MUSIC)

GHARIB: Americans are using their credit cards a lot more these days.
The amount of debt on credit cards and other so-called revolving credit
accounts reached its highest level in more than three years in the month of
October. That`s a good sign of consumer spending leading into the holiday
season.

MATHISEN: All righty. Traditionally, construction toys for girls are
a tough sale, but Debbie Sterling is trying to change that. Her bright
idea, a toy called GoldieBlox. It features a book and a building kit aimed
at getting girls interested in tinkering and problem-solving. Last month,
the company released a video that drew 8 million hits in a week, produced a
ton of buzz and a whole lot of sales.

(BEGIN VIDEOTAPE)

MATHISEN (voice-over): Debbie Sterling didn`t play with erector sets
when she was growing up in Rhode Island. In fact, it was quite a surprise
when her high school math teacher suggested she study engineering in
college.

DEBBIE STERLING, GOLDIE BLOX FOUNDER & CEO: I didn`t know what an
engineer was. I thought it was a train driver.

MATHISEN: She learned quickly at Stanford, though, that engineering
is a field dominated by men. Sterling says only 11 percent of the U.S.
engineering force is female, a sore spot that got her talking with a
college buddy, another woman who mentioned playing with her brother`s
Lincoln logs and Legos as a kid.

STERLING: It just hit me, why were those her brother`s toys and why
didn`t it get those as a little girl?

MATHISEN: So, Sterling begun talking to neuroscientists and reading
about cognitive development.

STERLING: Girls have really strong verbal skills and love story and
characters, and what was missing from all the construction toys in the
market, there was — why are we building this rollercoaster and who is
riding on it and where are we going? And who is it helping?

MATHISEN: The verbal hook is a book starring Goldie drawn by Sterling
herself. And why not? Her grandmother, Sterling Sturtevant, was one of
the first woman cartoonist back in the `50s, drawing the curmudgeonly Mr.
Magoo.

But toy makers weren`t buying Debbie`s idea. She says they were stuck
in time. Mr. Magoo`s time.

STERLING: The message kind of over and over again was looking at me
with pity, saying oh, this girl doesn`t know that construction toys for
girls don`t sell. Suddenly, I`m walking around like I`m in the twilight
zone, I feel like I`m in the 1950s.

MATHISEN: To prove them wrong, Sterling and friends team-tested
prototypes all over the San Francisco Bay Area.

STERLING: You learn that there is so much more complex than what the
pink isle makes them out to be.

MATHISEN: The pink isle, princess dolls, makeup kits, play kitchens
and to Debbie Sterling, a target for disruption.

Her message was a hit on Kickstarter, the crowdfunding Web site, back
on 2012, where she roped to raise $150,000 to make 5,000 units.

STERLING: And we hit the goal in four days.

MATHISEN: In a month she raised about $185,000. The first production
run, 40,000 units.

Toys “R” Us ordered and soon in Barbie shadow, there was a new kid on
the block.

STERLING: It`s pretty surreal and it gives me goose bumps to see
Goldie next to Barbie and now, girls have a choice.

MATHISEN: Goldie has had a makeover by professional artist this year,
but her spirit hasn`t changed.

STERLING: We have Rosie the Riviter, we have Pippi Longstocking, we
have Matildam, we have Punkie Brewster and Louise (ph). Those were sort of
the five female characters that influenced Goldie.

MATHISEN: Last month, GoldieBlox they released this video. It was a
one-week wonder until legal issues with the music as you were faced, but
the bottom line is it helps sell a more GoldieBlox toys.

STERLING: We shot up to number one and number two bestselling toys on
Amazon (NASDAQ:AMZN) this week.

UNIDENTIFIED MALE: Deborah Sterling.

MATHISEN: The same week in Chicago, Sterling was named the Rising
Star Inventor of the Year by the toy and game industry, an honor. But her
focus is on the toughest build of all, change.

STERLING: Engineering doesn`t have to be this incredibly intimidating
math science thing. We can start showing girls that engineering actually
changes people`s lives and it can help make the world a better place.

(END VIDEOTAPE)

MATHISEN: Sterling says GoldieBlox is making money, though she`s not
ready to say just how much just yet. And GoldieBlox is also one of four
finalists in a contest to win a free Super Bowl commercial, somewhere close
to $4 million. That announcement is due in late January. We`ll fill you
in when we get it.

How about that?

GHARIB: They`ll play with those dolls and then go become an engineer.

MATHISEN: Right.

GHARIB: And do great things for the country.

MATHISEN: Absolutely.

GHARIB: We can use more women like that.

That`s NIGHTLY BUSINESS REPORT for tonight. I`m Susie Gharib.

We want to remind you, this is the time of year your public television
seeks your support to make programs like this one possible.

MATHISEN: And I`m Tyler Mathisen. On behalf of your public TV
station, thank you so much for your support. Have a great weekend,
everybody. We`ll see you back here on Monday.

END

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