Transcript: Wednesday, April 2, 2014

NBR ThumANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Susie Gharib.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Spring ahead. The private sector added more than 190,000 jobs last month. Will that translate into a strong employment report on Friday?

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Frustration on the Hill. Senators push General Motors (NYSE:GM) CEO for answers only to come up short. What will it take to get more answers?

MATHISEN: Cost of overtreating. A new study adds to the controversy over the value of mammograms. Is more testing always better and at what price?

All that and more tonight on NIGHTLY BUSINESS REPORT for Wednesday, April 2nd.

GHARIB: Good evening, everyone.

It was another day of records on Wall Street. That`s thanks to encouraging reports about jobs and U.S. manufacturing. Payroll firm ADP says almost 200,000 private sector jobs were added to the economy in March.
That`s much better than the numbers we`ve seen over the past few months, and it comes just two days ahead of the Labor Department`s critical employment report.

Also, factory orders for February showing the biggest gain in seven months. That put investors in the buying mood. The Dow rose 40 points, ending just three points short of an all-time closing high. The NASDAQ was up eight and the S&P added five points. And it did close at a record close for the second day in a row.

So, what does all this positive economic news mean for that Friday jobs report?

Hampton Pearson takes a look.

(BEGIN VIDEOTAPE)

HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
New data on hiring in the private sector shows there could be a springtime recovery from what has been a brutal winter. While the addition of less than 200,000 private sector jobs in March was below forecast, there was a big upward revision in February data. Nearly 40,000 more jobs added than previously reported. That`s according to payroll processor ADP.

Leading the way, construction hiring, up 20,000, the best move in the last three months. Financial firms added 5,000 more employees, the biggest move in five months.

JOHN RYDING, RDQ ECONOMICS: One of the good things about the job gain in March was thought was broad-based. It was broad-based by size of firm, small, medium and large firms all added jobs in aggregate. And also, it was broad-based by industry.

PEARSON: Other parts of the economy are showing signs of life. Auto sales rose 6 percent last month, topping 1 1/2 million vehicles, the biggest monthly gain since last November. And a closely watch manufacturing barometer grew at a faster pace, rebounding from shutdowns caused by severe winter weather. It all points to stronger hiring when we get the government jobs report on Friday.

RYDING: Given the growth in the labor force, which is slowing for demographic reasons including aging of the population, 200,000 jobs a month will bring the unemployment rate down significantly.

PEARSON (on camera): The springtime constructions season begins in earnest if Friday`s government job reports meets or beats the 200,000 threshold, it would be the biggest monthly gain in jobs since last November.

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

(END VIDEOTAPE)

MATHISEN: Two influential members of the fed with slightly different timetables on when the Central Bank may decide to raise a key interest rate. Dennis Lockhart, president of the Atlanta Federal Reserve Bank, predicting today if the economy grows at a rate of around 3 percent over the next year, the federal funds rate could see its first hike in years during the second half of 2015.

Meantime, in an interview today, James Bullard, the president of the St. Louis Fed, said that hike could come as early as the first quarter of next year.

GHARIB: A major ruling from the Supreme Court today that goes right to the role of money in American politics. In a 5-4 ruling, the court struck down a key part of the federal campaign finance law saying that it`s OK for individual wealthy donors to give as much as $6 million to political candidates and parties.

John Harwood joins us now from Washington with more on today`s ruling.

So, John, this sounds a lot like this decision is a replay of Citizens
(NYSE:CIA) United. What do you think?

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT: It`s a little bit different in the Citizens (NYSE:CIA) United allowed people to spend unlimited sums outside of political parties and campaigns. This affects the aggregate limit that people can give to donations, and it could actually end up strengthening political parties.

MATHISEN: John, does this affect businesses and their PACs or their interest groups that are donating?

HARWOOD: It`s not about businesses per se. It`s about individuals.
And what it says is, right now under existing law, we believe that individuals could donate no more than $123,000 per election cycle in chunks of $2,600 per candidate.

This ruling says no limit you can girlfriend as many candidates you want at $2,600 a pop and you can give unlimited sums to parties themselves.

GHARIB: Yes. And speaking of those political parties, I mean, what does it do to strengthening the role of political parties?

HARWOOD: Well, one thing, Susie, that political parties have been concerned about is at Citizens (NYSE:CIA) United, the growth of those super PACs moved a lot of money away from campaigns to independent sources, which could help a candidate but also going to hurt if they were out of step with the candidate`s message. If this makes it easier for some of that money to go into parties, it may strengthen them and strengthen candidates and allow them to have a more coordinated mainstream message to voters.

MATHISEN: All right. John Harwood, thank you very much — John in Washington tonight.

Well, day two of Mary Barra`s testimony to lawmakers on Capitol Hill.
Tuesday, it was the House, today a Senate panel grilling the General Motors
(NYSE:GM) chief executive on how the automaker bungled a recall of 2.5 million faulty cars that have been linked to at least 13 crash-related deaths. But it wasn`t easy today.

Eamon Javers was there, has the story for us.

(BEGIN VIDEOTAPE)

SEN. RICHARD BLUMENTHAL (D), CONNECTICUT: Why not just come clean and say, we`re going to do justice here?

SEN. CLAIRE MCCASKILL (D), MISSOURI: That is incredibly frustrating to me. Oh, you can`t even talk to that. You don`t know anything about anything.

EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): It was another tough day on capitol hill for G.M. CEO Mary Barra who continued to frustrate lawmakers looking for new information about G.M.`s ignition switch failures.

But Barra explained she couldn`t provide answers until G.M. finishes its own investigation of the problem which has spawned wide-ranging litigation.

MCCASKILL: What I want to know is, what investigation began after that deposition?

MARY BARRA, GENERAL MOTORS CEO: That is part of the investigation.

MCCASKILL: So you don`t know whether or not anything happened after that investigation.

BARRA: I don`t have the complete facts to share with you today.

JAVERS: The defects in the ignition systems on Chevy Cobalts and other models caused cars to turn off while drivers were on the road. And that`s led to at least 13 deaths and a recall of 2.6 million cars. Again today, Barra apologized for G.M.`s handling of the issue.

BARRA: Today`s G.M. will do the right thing. This begins with my sincere apologies to everyone who`s been affected by this recall, especially to the families and friends of those who lost lives or were injured. I`m deeply sorry, and the men and women of General Motors
(NYSE:GM) are deeply sorry.

JAVERS: Senators also wanted to know if the vehicles still on the road are safe.

SEN. BILL NELSON (D), FLORIDA: If I were to have a recalled Chevrolet Cobalt, would you recommend that I drive home in it tonight?

BARRA: If you take all the keys off the ring except the ignition key or just use the ignition key, our engineering team has done extensive analysis to say that it`s safe to drive.

NELSON: I suspect that Cobalt drivers would not take comfort in that advice, knowing what has come up.

JAVERS (on camera): And senators were also flummoxed because it appears that no one at G.M. has been fired as a result of the problem.
Some senators wondering whether those problems were swept under the rug because G.M. was teetering on the verge of bankruptcy at the time that they happened. It might not be all over now for General Motors (NYSE:GM).
Senators on the committee saying they want to hold follow-up hearings where they bring in lower level employees who were closer to decision making at the time.

For NIGHTLY BUSINESS REPORT, I`m Eamon Javers in Washington.

(END VIDEOTAPE)

GHARIB: Well, in the midst the uproar about G.M.`s ignition switch recall, the automaker hired what they hope will be a voice of calm and reason. G.M. has tapped attorney Ken Feinberg, he`s the government`s pay czar during the financial crisis, and he`s been hired to oversee payments of families of victims killed or injured in accidents linked to those faulty switches.

Mary Thompson looks at the man who`s become the go-to guy in times of crisis.

(BEGIN VIDEOTAPE)

KEN FEINBERG, ATTORNEY: I have no comments on anything that I`ve read in the newspapers.

MARY THOMPSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Being in the center of a media storm is familiar territory for Kenneth Feinberg.

JOHN COFFEE, COLUMBIA LAW SCHOOL PROFESSOR: If you`re a company caught in the deepening of a quick sand of a major scandal, Ken Feinberg is like a life preserver that you can hold on to and keep you from sinking deeper.

THOMPSON: The latest to call on the 68-year-old services, General Motors (NYSE:GM). Feinberg`s role, be a mediator between the automaker and families of victims whose deaths and accidents were linked to a faulty ignition switch.

BARRA: I am sure this committee knows Mr. Feinberg is highly qualified and very experienced in handling matters such as this.

THOMPSON: General Motors (NYSE:GM) CEO Mary Barra making the announcement when testifying before Congress about the flawed switches.
They`re blamed for 13 deaths and 31 accidents.

(on camera): It`s not an unfamiliar role for Feinberg. He made a name for himself 30 years ago, quickly settling a long-running dispute between makers of the defoliant Agent Orange and a quarter of a million Vietnam veterans.

(voice-over): Since then, he`s served as the government`s pay czar, determining executive compensation for bailed out companies and as overseer for a wide range of victims funds, including those for the victims of the Aurora, Colorado, and Virginia Tech shooters, the Boston marathon bombings, and the families of 9/11.

During his three years in this role, Feinberg`s empathetic and practical approach to a seemingly unsolved problem won him praise.

COFFEE: He`ll have meetings, try to reach out. He does it in a way that`s fundamentally therapeutic. He`s not someone who uses a mathematical formula. He doesn`t attempt complete precision.

THOMPSON: Feinberg isn`t above reproach as overseer for victims fund for BP`s Deepwater Horizon oil spill, the claimants criticized Feinberg for holding BP`s interest about theirs. G.M. won`t say if it`s setting up a victim`s fund, but in a statement, Feinberg said he`d draw on past experience — experience that`s focused on answering the thorny question of what a life is worth.

For NIGHTLY BUSINESS REPORT, I`m Mary Thompson.

(END VIDEOTAPE)

MATHISEN: Still ahead, nearly 26 million U.S. children and adults have diabetes. And today, a promising new drug to fight and to control it.
It sent shares of one company up 70 percent.

(MUSIC)

MATHISEN: Millions of us already use Amazon (NASDAQ:AMZN).com to buy things we use in the kitchen, the bathroom, the bedroom. Now, the online retailer is taking direct aim at your living room, unveiling a new device that will stream movies, shows, music and more right to your TV set.

Jon Fortt has more on Fire TV.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Introducing Amazon (NASDAQ:AMZN) Fire TV.

JON FORTT, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Tech geeks have expected this for awhile, and it`s finally here. Fire TV, a stream and video box from Amazon (NASDAQ:AMZN) that connects to the Internet and makes any TV a smart TV.

(on camera): The price, well, $99 for this, the Fire TV device, $39 extra if you want the gaming console. That`s not a bargain basement price.
It`s right around the mainstream. If you want this type of hardware, the onus would be on Amazon (NASDAQ:AMZN) to really sell the value. Why you should want this rather than the devices of its competitors.

(voice-over): And it has a lot of rivals, Apple (NASDAQ:AAPL) TV, Google (NASDAQ:GOOG) Cromecast, Roku, some of these streaming offerings, by the way, cost half as much. Amazon`s Fire TV costs more because it can do more the company says. That`s the gamble.

JORDAN ROHAN, STIFEL NICOLAUS, SENIOR ANALYST: I don`t think this will work. I think it`s too high a price. I think it doesn`t do what the gamers would want. The serious gamers are going to go towards Xbox or something like that. I don`t think it makes enough sense to solve enough consumer problems so this is off the shelf obvious Christmas gift later this year.

FORTT: This particular move to bring streaming video to the living room comes at an interesting time. Apple (NASDAQ:AAPL) CEO Tim Cook said a few weeks ago, Apple (NASDAQ:AAPL) TV became a $1 billion business last year for the first time. And tech watchers now expect the company to make an even bigger TV play later this year.

Amazon (NASDAQ:AMZN) itself just hiked the price of its prime subscription service that includes streaming video to $99 from $79, even as it`s spending millions of dollars to get exclusive streaming rights to shows like “Downton Abbey” and “24”. Crunch time comes in October and November when Apple`s latest TV offering will make its debut and Google
(NASDAQ:GOOG) will have its own refreshed Android software and media store.
We`ll see then whether Amazon`s Fire TV has what it takes to win the holidays.

For NIGHTLY BUSINESS REPORT, I`m Jon Fortt in New York.

(END VIDEOTAPE)

GHARIB: Google (NASDAQ:GOOG) is set to split its stock in an unusual way. And that`s where we begin tonight`s “Market Focus”. The search giant will award shareholders with two additional shares for the company for every one they own.

But there`s a twist. Investors who own Class A shares will receive two shares of the newly created class C shares. These new C shares have no voting rights, meaning the company`s founders will maintain control.
Google (NASDAQ:GOOG) shares rose a fraction to $1,135.

Microsoft (NASDAQ:MSFT) made some big announcements at its so-called Build Conference today. The company unveiled a voice assistant called Cortana. It`s a rival to Apple`s Siri. Also, it will give away its Apples operating system to members of phones and tablets. Shares fell slightly to $41.35.

MATHISEN: T-Mobile won`t be selling BlackBerrys anymore. Blackberry ended its licensing deal with T-Mobile saying the companies no longer have complementary strategies. This after recent scuffle between the two companies when T-mobile e-mailed BlackBerry customers with a promotion to switch to a competing device. Shares of BlackBerry were up 1 percent today nevertheless to $8.21. Shares of T-Mobile up a fraction to $33.49.

GlaxoSmithKline halts a late stage cancer drug trial. The drugmakers lung cancer vaccine did not increase survival rates. It continued the trial despite the initial failure and tried to find a subgroup of patients that might benefit from the treatment but that effort wasn`t successful.
Shares of GlaxoSmithKline down a fraction to $53 a share.

GHARIB: But it was a spectacular day for shareholders of another drugmaker, Mannkind. Shares surged an astounding 74 percent after a FDA panel recommended the approval of its experimental diabetes drug which you inhale, which means no more needles to get insulin.

Sheila Dharmarajan has more on the hopes for this new drug and what it will take before it hits the market.

(BEGIN VIDEOTAPE)

SHEILA DHARMARAJAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-
over): Nearly 26 million children and adults in the United States have diabetes, most of whom inject insulin on a daily basis to regulate the disease.

Eli Lilly (NYSE:LLY) and Novo Nordisk (NYSE:NVO) currently dominate the market for injectable insulin, ringing up a combined sales of more than
$5 billion annually. But soon enough, there may be an alternative to needles. Afrezza, an inhalable diabetes treatment developed by California- based Mannkind, got backing from a FDA panel for type I and type II diabetes today.

The inhaler, which can fit in your palm, is meant to be a more convenient, less painful alternative to injections.

MATTHEW PFEFFER, MANNKIND CFO: We heard over and over again how difficult the times diabetics have controlling their disease. And why we need new tools and better tools.

DHARMARAJAN (on camera): Despite today`s win, Afrezza still has a way to go before becoming available to patients. The treatment still needs FDA approval and a partner to commercially launch the drug. Perhaps most importantly, it still needs to win over patients and doctors.

JOSHUA SCHIMMER, PIPER JAFFRAY SENIOR RESEARCH ANALYST: In the treatment of diabetes and obesity, what we see is a market that is built on years of foundation. And because of that, it can be very difficult to move. There`s a lot of inertia in these practices and we`ve seen some drugs that have a lot of promise and potential take a long time to get adopted.

DHARMARAJAN (voice-over): Afrezza isn`t the first to develop an inhalable version of insulin. Pfizer (NYSE:PFE) launched its own version called Exubera in 2006. The product was eventually pulled off the market and cost Pfizer (NYSE:PFE) cost nearly $3 billion.

Critics say the inhaler was bulky. There were concerns about dosing requirements and that the company didn`t do a good job marketing to patients and doctors.

Mannkind hopes to do better.

SCHIMMER: Doctors would like to accelerate or optimize their insulin uses, and having a different tool in their tool box to help them do that we think will be a great advantage.

DHARMARAJAN: And potentially a new solution to the nearly 2 million Americans diagnosed with diabetes every year.

For NIGHTLY BUSINESS REPORT, I`m Sheila Dharmarajan.

(END VIDEOTAPE)

MATHISEN: Shares of the company up 11 percent after the Centers for Medicare and Medicaid Services updated reimbursements rates for its popular breast cancer test. While the announced cut was substantial, it was much smaller than the market expected sending shares to a multiyear high.

GHARIB: Well, another study, another controversy about mammograms.
Researcher`s at Boston`s Brigham and Women`s Hospital say the benefits of having a mammogram are substantial, especially for those at high risk for breast cancer. But the potential risk for many middle-aged women to get a false positive reading for cancer is high, and the study says that often results in unnecessary and costly surgery, chemotherapy or radiation treatment.

MATHISEN: So, what is the value of mammograms and are we over-testing when it comes to screening for cancer?

With us now, Dr. Nancy Snyderman, chief medical editor of NBC News, and Dr. Gilbert Welch, director of the Center for Medicine at the Dartmouth Institute.

Welcome to both of you.

Nancy —

DR. NANCY SNYDERMAN, NBC NEWS CHIEF MEDICAL EDITOR: Hey, Tyler.

MATHISEN: Great to see you.

In common language, what did the study say and what should women do?

SNYDERMAN: The study looked at the last 50 years of medical research looking at mammography. And the researchers concluded that we overstate the benefits and understate the potential harm of screening. As you know, five years ago a U.S. task force suggested that routine mammography in women ages 40 to 50, women with no risk factors was, in fact, poorly spent money, unwarranted and leads to all kinds of problems because of over- screening and that we should start screening at 50.

This big chunk of data really sort of underscored that again and drove home the point that every woman should look at her individual risk factors and then sit down and have a very smart conversation with her physician.

GHARIB: Gilbert, what do you think of what Nancy`s just said? I mean, is there any harm for having the test anyway just to be sure?

DR. H. GILBERT WELCH, THE DARTMOUTH INSTITUTE: Oh, absolutely. There are harms associated with mammography. I think this is just one study that`s part of a growing recognition that we`ve overstated the benefits of screening mammography and understated its harms.

I think it`s very important to start, though, by saying that this is about screening mammography, not diagnostic mammography. None of us debate about the value of having a mammogram if a woman becomes aware of a new breast lump.

That`s a very important test, we all agree about that. The problem is with screening mammography. And whenever we try to get ahead of problems, we end up causing some problems.

The two problems with screening mammograms are first false alarms, which are devastatingly common. About half of women in the United States will experience a false alarm somewhere during a course of annual mammography for 10 years. And then this other problem, which is less familiar, but the problem of over-diagnosis, that is finding a cancer that will ultimately never matter to the patient, except we as doctors don`t know which once they are. So we end up treating everyone.

So that means some women are being treated unnecessarily for breast cancer. So, it`s a very vexing problem.

MATHISEN: Nancy, react to what Dr. Welch just said. Do you agree, disagree, agree in part? Disagree in part?

SNYDERMAN: We`re in total harmony. You know, the interesting thing is, not all breast cancers are alike. If you take 100, 100-year-old women and check them at the time of their death, almost all of them are going to have some kind of breast cancer. Because age is still the number one determining factor.

Some breast cancers may come and go away. Others are more aggressive.
So, while we talk about higher resolution mammography and lower dose mammography, maybe the best mouse trap we have right now. But we`re talking about detecting cancers and not really going to the source of the problem and preventing them.

You know, we really haven`t had the hard conversation in this country about how to spend our money, how to screen wisely. And I know it`s like people don`t like the message and they sometimes blame the messenger.

But how we access our health care system and how we spend our money wisely, screen prudently, this is all part of really good medicine. Doing the same scatter shot stuff to everybody is just not very smart.

GHARIB: Nancy and Gilbert, I want to ask both of you real quickly, most of us think that it`s a good thing. It`s a healthy thing to do to be tested for everything. But it seems like both of you are saying that there`s some dangers to be over-testing.

SNYDERMAN: Well, it`s dumb to be over-testing for everything because you`re going to find something. We`re all walking around with some little shadow on a lung scan or brain scan. Don`t go looking for trouble.

But if you find yourself with something, then you go and have diagnostic tests. Going to have a screening test from head to toe, I just think it`s really stupid.

MATHISEN: Gilbert, you get the last word.

WELCH: Well, I just want to be clear that it`s very hard for us to make well people any better. But it isn`t that hard for us to make them a little worse.

SNYDERMAN: I agree.

WELCH: You have to be a little careful about entering the health care system when you`re well. When you`re sick, please come see us. We can do a lot for you.

MATHISEN: All right, folks, thank you very much.

Vigorous agreement. We thank you for helping us with this one tonight.

Nancy Snyderman, chief medical editor with NBC News, Gilbert Welch, professor of medicine at the Dartmouth Institute.

GHARIB: And here`s another controversial topic — coming up: the words high frequency trading, they`re popping up everywhere these days.
But what is it, how does it work, and does ultra-fast trading impact you, the long-term investor? That`s next.

(MUSIC)

MATHISEN: Virtu Financial, a high-speed trading firm reportedly delay its initial public offering, this comes amid a storm of controversy surrounding the industry. As we told you yesterday, Michael Lewis` new book “Flash Boys” has reignited a debate about the practice and recently FBI said it will investigate whether these firms engage in insider trading.

GHARIB: So what exactly is high frequency trading? And how would some firms benefit from the advantage of knowing about trades milliseconds before the rest of the market does?

Dominic Chu explains it all.

(BEGIN VIDEOTAPE)

DOMINIC CHU, NIGHTLY BUSINESS REPORT CORRESPONDENT: Opponents of high frequency trading say that the market is set up to give an unfair advantage to some but not all participants.

In essence, here`s what they`re saying — imagine a race with three contestants. The first is the scooter, the second your standard or compact or mid-sized car, the other a state-of-the-art Ferrari.

All three are racing to be the first to cross the finish line and get their hands on the share of stock. It`s pretty much no contest, right, the Ferrari`s going to win.

So, here`s how it happens in the stock market. An investor wants to buy a share of stock say worth $10. The light turns green and the race begins. The Ferrari is so much faster that it gets there first and gets that share of stock for $10.

The slower cars will end up paying a higher price for their stock.
But here`s the twist. The Ferrari that won the stock can turn around and sell that stock to the slower Vespa and compact for a profit. The Ferrari owner didn`t really want to only stock in the first place. He just wanted to get there first and jack up the price for you.

Now, it may just be fractions of a penny but those add up over time, and the debate still rages about what this ultimately means for the individual investor.

For NIGHTLY BUSINESS REPORT, I`m Dominic Chu.

(END VIDEOTAPE)

MATHISEN: A debate that is getting hotter and hotter.

And finally tonight, one of the nation`s best known and best-loved restaurants, Tavern on the Green, is reopening after four years. If you`ve never been to the eatery located inside New York City`s Central Park, you may know pretty movies like “Ghostbusters” or “Mr. Popper`s Penguins.”

The tavern was closed in 2010. After a multimillion dollar renovation, it will reopen for dinner in three weeks and will start serving its popular brunch on Mother`s Day.

Make your reservations now.

GHARIB: I hope my kids and husband are listening to this.

MATHISEN: Yes.

GHARIB: Make that reservation. I love that restaurant.

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

MATHISEN: And I`m Tyler Mathisen. Have a great evening, everybody.
Thanks for watching. We`ll see you tomorrow.
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) 2014 CNBC, Inc.

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