Transcript: Thursday, November 27, 2014

NBR ThumANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Susie Gharib, funded in part by —


Happy Thanksgiving and welcome to this special holiday edition of NIGHTLY BUSINESS REPORT.

You know, thanksgiving as we all know is a time of refraction, to look back at what we`ve have, how far we`ve come to be grateful for friends and family.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: For investors, it`s a good time to take stock, maybe do looking ahead and tonight we`re looking very far ahead to see what Wall Street, housing, retail, energy and other industries may look like years from now in this fast-paced every changing world.

GHARIB: And we begin tonight with the future of Wall Street, what many call the financial capital of the world. At its heart is the New York Stock Exchange. But will the exchange, which has seen many changes of its own in recent years, play the same vital role decades from now and what about the big tanks?

As Kayla Tausche tells us, the future of finance may look a lot different in the future.


KAYLA TAUSCHE, NIGHTLY BUSINESS REPORT CORRESPONDENT: Most big banks have already fled the financial district for cushier headquarters elsewhere. The New York Stock Exchange, one of the last holdouts here on Wall Street proper. But by the year 2039, what was once the epicenter of high finance might be just a relic and the world`s new commercial hub oceans away.

(voice-over): Since the late 18th century, Wall Street has been the world`s premier trading hub. By 2039, it will be more of an idea than a place. Banks will lean on their core businesses of liaising between companies and investors, underwriting bonds and stocks, and making loans to consumers and businesses.

Author and futurist David Wolman says that`s how it should be.

DAVID WOLMAN, AUTHOR: I would like to see banks go back to being, you know, community banks, irrespective of where they`re located — you know, buttressing and empowering the local economy through lending and securing deposits. You know, they`re pulling more people into the formal economy instead of necessarily just gambling on a collateralized debt obligation.

TAUSCHE: Consultants agree, saying the “masters of the universe”
mentality will fade, regardless of the political climate. Companies will seek independent advice on mergers, complex trading will become automated, and sell-site head count will shrink dramatically, especially in the financial centers.

Emergence of new economic centers will follow GDP growth, like the one local Chinese officials are building in Shenzhen, laying groundwork for a working population of 650,000 and $25 billion in GDP by 2020, giving New York, London, and Hong Kong a run for their money.

Competition will come from all over. International banks, big data, and peers in the shadows says Dave Hoffman at PWC.

DAVE HOFFMAN, PWC: There will be a move afoot, whether it`s a hedge fund or different kind of entity. There will be other entities in the game. But the question is, who`s going to really create the most frictionless customer experience? Who`s going to have the trust of the consumer, whether it`s a deposit or a loan account? And who are the regulators going to ultimately let in the business?

TAUSCHE: For NIGHTLY BUSINESS REPORT, I`m Kayla Tausche, in New York.


MATHISEN: Well, the landscape of the world`s financial markets is not the only thing that will change. The information that drives trades and decision making is already undergoing a transformation.

Dominic Chu talked with some market experts to find out why financial markets are prime for disruption in the future.


DOMINIC CHU, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): The seeds for Wall Street`s next evolution are already being sewn all the way across the country.

VIVEN RANADIVE, TIBCO SOFTWARE CEO: There might be nonconventional players sitting here that could cause a huge disruption to Wall Street as we know it today.

CHU: And for good reason. If you think computers are mission critical for markets now, just wait.

MARK PALMER, TIBCO SOFTWARE GENERAL MANAGER: The future 25 years from now will be settled by having these infinite depths of historical information to temper choices and decisions.

CHU: The concept is called “Fast Data”, which takes boundless amounts of information and lets users make real time decisions. Imagine knowing all at once manufacturing activity in China, oil output in Saudi Arabia, inflation data in the U.S., plus a million other factors, and then generating a trade based on the combined outcome.

BOB GREIFELD, NASDAQ OMX CEO: Twenty-five years and now, you`re certainly going to see man and machine come together in some way. And it`s going to be very interesting to watch.

CHU: Leaders on Wall Street say they need to embrace concepts like “Fast Data” to stay ahead.

JEFF SPRECHER, INTERCONTINENTAL EXCHANGE GROUP: If you don`t change from within, you`ll find a group of, you know, 20-year-olds, smart 20-year- olds in Silicon Valley will suddenly create something that will be disruptive.

CHU: Disruptive technology will also impact the nature of exchanges.

(on camera): The concept of exchanges is simple: bring buyers and sellers together to get deals done.

SPRECHER: Technology and smart entrepreneurs are finding ways of putting networks together almost overnight.

CHU (voice-over): Some say new technology will change the face of the financial markets.

BILL O`BRIEN, BATS GLOBAL MARKETS: In terms of trading floors, they`re there. They`re really not there to support the trading business.
The overwhelming majority of trading, like it is today, will be done in a hyper automated way.

CHU: Whether trading takes place on a Wall Street trading floor or not, there is no doubt the level of investing sophistication is bound to grow.



GHARIB: One popular type of investment focused on the feature, target date funds. They`re commonly used as a way to fund for retirement. The funds automatically adjust and become more conservative as investors approach retirement age. They make long-term investing easy, but are they too simplistic?

Joining us now to answer that, Manisha Thakor. She is founder and CEO of her own wealth management firm MoneyZen.

Manisha, nice to see you here with us.

MANISHA THAKOR, MONEYZEN FOUNDER & CEO: Good to see you, Susie and Tyler.

GHARIB: Well, let`s first start off by just asking who are — who is good for these funds? How do you know if a target date fund is right or wrong for you?

THAKOR: So, there are two great things about target date funds, Susie. The first is that when you invest in a target date fund, essentially what you`re doing is committing today to specific acts and allocation and you are also simultaneously committing to a plan how that asset allocation will change and when in the future. That`s huge because asset allocation is one of the key drivers of long-term investment success, and this is one of the reasons why target date funds can be great for new investors, individuals of their 401(k)s or individuals who find that they sometimes shoot their shelves in their own foot with their own behavior.

MATHISEN: So, what do I need to know, Manisha, about what`s in my target date fund and what do I need to ask about that glide path of changing asset allocation as I draw closer to my target date?

THAKOR: Tyler, there are three things to focus on. The first is what`s the composition of the underlying funds that are in that target date fund? Are they active funds trying to chase after alpha which the evidence shows has a bad track record or low cost index funds which is what I like to see in a target date fund.

The second thing is the glide path as you mentioned. That`s how quickly the percentage of equity shifts towards fixed income and gets more conservative.

A good rule of thumb, Tyler, is 110 minus your age is a rough approximation of where you`d like to see the equity, if you`re an average investor in your target date fund.

And then, the third one are fees, and this is huge, Tyler. For every incremental 1 percent that someone is charged in fees over an investing lifetime. That eats up 20 percent of their ending portfolio value. So, I like to see target date funds with an all in fee of 50 basis points or less.

GHARIB: And how do you know how much of your savings you put into these types of funds?

THAKOR: I am so glad you asked that question, Susie. So, one of the great things about target date funds is they help you save yourself from yourself in the sense that they are a one-decision fund. So, if you`re a person who finds that you`re very emotional, that tracking the market makes you nervous, these are wonderful investments. And one stat to back that up, over the last 30 years, the S&P generated a return of 11.1 percent, but the average investor in equity funds, according (INAUDIBLE) Research, has only generated a return of 3.7 percent.

So, the vast majority of people aren`t capturing their fair share of the return. If you fall in that camp, target date funds are worth a second look.

GHARIB: OK. You`ve given us a lot to think about.

Thank you so much, Manisha Thakor from MoneyZen.

MATHISEN: One of the greatest challenges will be finding new energy sources over the next quarter century or so. And as our energy consumption grows, the race to develop alternatives is more important than ever.

Morgan Brennan tells us what new technologies could power the future.


MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: When it comes to developing oil alternatives for the future, MIT is on the cutting edge.

VLADIMIR BULOVIC, MIT PROFESSOR: To actually build your seven a device may start here.

BRENNAN (voice-over): Researchers here like Vladimir Bulovic are using science to tackle some of the energy industry`s biggest issues.
Bulovic e helped develop this, transparent solar cells. Unlike traditional solar panels, Bulovic`s design only absorbs infrared or invisible light.
Because you can see through them, you can put transparent solar panels on just about anything.

BULOVIC: Let`s say roads, around the roads or on top of the building or in these cars, why isn`t surface of a car coated with a transparent solar cell.

BRENNAN: Bulovic says that in 25 years, these types of solar cells could even be built into the windows of skyscrapers, dramatically bringing down energy consumption. And by building transparent cells into the smart phones of the future, charging your device could become a thing of the past.

BULOVIC: It`s kind of annoying to have to recharge it every few days.
So, can you avoid that? Yes, you can but harvesting just a little bit of the infrared sunlight.

BRENNAN (on camera): Storing all that energy is also a problem, one that another MIT professor is working to solve.

(voice-over): Donald Sadoway is pioneering a new type of liquid metal battery.

DONALD SADOWAY, MIT PROFESSOR: This is one watt hour. It`s the workhorse cell.

BRENNAN: Made of earth abundant elements, it`s cheaper to build and lasts longer than lithium batteries.

SADOWAY: I`d like to say, if you want to make something dirt cheap, make it out of dirt. We got some data showing battery could be fully discharged on a daily basis for ten years and still have over 99 percent of its initial capacity.

BRENNAN: Sadoway is scaling his batteries up to store electricity from wind and solar that could be set back into the grid during peak energy demand. He says in 25 years, his batteries could be put into the basements of building taking demand off the grid and saving billions of dollars through carbon free energy.

SADOWAY: There is all sorts of opportunities for changing the nature of the grid so that we don`t have to then build more of these monstrous power plants that are frightfully expensive.



GHARIB: What will the U.S. military look like in the future as the Pentagon`s budget shrinks? Will our military force have more robots than people on the front lines?

Jane Wells takes a look at what the defense industry could become decades from now.


JANE WELLS, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): In 25 years, U.S. military forces will have fewer men.

UNIDENTIFIED MALE: We can throw it.

WELLS: More machines.

It`s one of the many trends which Frank Kendall must fund now. He is the man at the Pentagon with the checkbook.

FRANK KENDALL, DEFENSE UNDER SECRETARY FOR ACQUISITIONS: I`m worried about our pipeline of new products.

WELLS: Kendall says due to budget cuts, much of what we will see in
25 years is upgraded versions of what we have now. There will be some new programs for cyber defense, and he hopes to find money to protect our satellites.

KENDALL: There is, from the intelligence I`ve seen, an attempt at least by some countries to build systems that would allow them to dominate space, to take out our assets, which are very vulnerable.

WELLS: Potential solutions include breaking up large, expensive satellites with multiple functions into smaller more expendable ones, or having backup systems ready to launch.

REPORTER: Well, that`s expensive.

KENDALL: It`s all expensive.

WELLS: The biggest check, however, will be written for the F-35 by Lockheed Martin (NYSE:LMT), the most expensive program in Pentagon history.
If the super stealthy jet delivers as promised —

LT. COL. MATT RENBARGER, USAF F-35 PILOT: In 25 years, this airplane is going to be all over the world.

WELLS: It will be a plane made so easy to fly that future pilots will need different skills.

RENBARGER: So, instead of being more stick and rotor type skills, we`re going to have a lot more computerized type skills that are going to be required to fly airplanes.

WELLS: Another trend: simulators being used for everything, and for a larger share of training to save money.
Then, there are the drones. No program has come further in 25 years, and none is now under greater scrutiny.

RYAN HARTMAN, BOEING`S INSITU PROGRAM MANAGER: There will be more unmanned aircraft in the U.S. military than manned aircraft in the military.

WELLS: In a quarter century, one person will be able to control several unmanned aircraft at once, all on one operating system. While on the ground, armed robots may provide cover for soldiers and marines, while driverless convoys will resupply troops. The technology is already being tested.

MAJ. GEN. WILLIAM HIX, ARMY CAPABILITIES INTEGRATION CENTER: I will say that I think the technology they have is better than the Google

WELLS: But some things may not change. Robots and drones may never be given the freedom to kill on their own.

HARTMAN: I think that there are some things, some decisions that humans make that make the doctrine of war work. And so, I think that is a distant probability.

WELLS: Whether war itself will be a low probability in 25 years of ever, unfortunately, seems unlikely.



MATHISEN: Still ahead, did you beat the holiday traffic or get stuck in it? All those traffic jams are only going to get worse. But will technology one day make them a thing of the past? The future of driving, next.


MATHISEN: Did you hit the road for the holiday? If your answer is yes, odds are you sat in traffic. AAA expects 46 million Americans to travel at least 50 miles from home by car this Thanksgiving weekend.
That`s the most in seven years.

And that trend is expected to continue and get worse in the years to come. Not just on the holidays but every day.

Phil LeBeau takes a look at what`s being done to put an end to the traffic headaches.


Tired of traffic? Well, it`s only getting worse. Over the next 25 years, it`s estimated another 10 million vehicles will hit American roads and will
spend even more time behind the wheel.

JOHN GARTNER, NAVIGANT RESEARCH: The problem is likely to get worse before it gets better, but there are a lot of things in development that give us hope for the future.

LEBEAU: One solution? Self-driven cars. Tech firms like Google
(NASDAQ:GOOG) and automakers like Mercedes-Benz will use real-time traffic data to have cars take us to our destination faster, with fewer headaches.

JOHAN JUNGWITH, MERCEDES-BENZ: One of our main intentions actually, on the one hand increased safety, reduce the number of accidents. But also getting time back, actually giving convenience back to our customers.

LEBEAU: Bob Lutz, former vice chairman of General Motors (NYSE:GM), goes even further. By 2039, he sees autonomous drive modules chauffeuring us, often on high-speed freeways where inductive electric lines in the pavement recharge the modules as they zip along, without us steering or controlling the speed.

BOB LUTZ, FORMER GM VICE CHAIR: The primary driver of this vision that I describe of the electrified standardized modules is the need for efficiency in human transportation. Is this great news for the car fan?
No, it isn`t. But I don`t see the problem being solved any other way.

LEBEAU: Almost everyone admits it will take time for self-driving cars to take off, because state and federal regulators will be hesitant to allow people to turn over their driving duties to computers and sensors in cars.

(on camera): But make no mistake, electric and self-driven cars are coming. And with them, hopefully, a whole new way to avoid traffic headaches.



MATHISEN: A change in the way we drive could change the way we live.
Where we live and how we live. The transportation is just one of many fact tomorrows being considered by urban planners as they try to develop the city`s of the future.

Diana Olick explains.


We`re already doing it with cars and with bicycles, we are finally learning how to share.

HARRIETT TREGONING, HOUSING AND URBAN DEVELOPMENT: Cars are parked about 95 percent of the time and driven 5 percent of the time. So, millennials are thinking, why would I own a car that I don`t use, except for 5 percent of the time? Why don`t I just pay for what I use?

OLICK: Sharing is the natural outgrowth of a more social generation, a generation born with the Internet. Technology fuels sharing, says the Obama administration`s chief urban planner, and offers more choices in the way we live and work.

TREGONING: Millennials in particular like choices. So, I think we`re going to see changes in the workplace to give them more of that work life balance that might mean they get to spend more time the work force in general, more time teleworking, being able to work from home or some third location.

OLICK: Which in turn, will create new urban cores, places that might have been considered stroll or excerpts, are now figuring out that their future is about denser, mix use, convenient neighborhoods with work, home and play all sharing one smaller space.

(on camera): Urban planners of the future will not only have to deal with social change but also with climate change, as cities like Boston face stronger storms and higher sea levels.

(voice-over): On Boston`s Burroughs Wharf, million dollar condos hang over the harbor, the rising harbor.

(on camera): When you look out at this water, do you really see 10,
15 years from now that it`s going to be that much higher?

DOUG FOY, SERRAFIX CEO: It will be higher.

OLICK (voice-over): An expert in climate change, Doug Foy advices city governments and planners on energy efficiency and environmental protection.

FOY: Urban planners will have to deal with that by planning their cities around resiliency, around adaptation, around dealing with the threats and consequences of more intense storms.

OLICK: Which means everything from putting storm gates out in the ocean to moving building systems to higher floors, parks will also become defensive like Boston`s emerald necklace which serves as both green space and a floodplain surrounding much of the city. And then there is heat.

TREGONING: Already in most cities, there is a clear differential between the heat in the city and the heat outside of the city. There is something called an urban heat island effect.

OLICK: To offset that, cities will have to do double duty, generate energy and keep the city cool.

TREGONING: Imagine the green roofs on buildings, what if they grew food for restaurants on the ground floor? What if we had green walls that could help produce food and cool buildings?

OLICK: As planners imagine, corporate America is watching because the potential for profit is huge.

(on camera): Specifically, what kinds of companies would profit from the rebuilding of our cities?

FOY: Well, all the companies that are in energy systems, energy efficiency, IT systems, this is where people want to be. We`ll have to be smarter about it and we can be smarter.

OLICK: Because there is an enormous economic opportunity to do this well.

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


GHARIB: Coming up on the program, heading to the mall this weekend?
Retailers are hard at work trying to change the way they do business and how you will one day shop.


MATHISEN: Thanksgiving isn`t just about family and food. For many, it is also about getting a good deal. So, it seems like a perfect time to examine the future of shopping because as Courtney Reagan tells us, the trip to the mall in the future is going to look nothing like it does today.


The future of retail is now in the making, in Manhattan studios, Silicon Valley startups and retail labs that look like any old store but are

AL SAMBAR, KURT SALMON RETAIL STRATEGIST: Physical retail is the temple for your brand. It will feel a lot like your digital retail

ISAAC KRAKOVSKY, KURT SALMON RETAIL STRATEGIST: So, if I`m shopper and I`ve got this dress, I`m interested in this dress, I can come over to the screen here and the screen will pick it up and know what I`ve got in front of it. You can pick your size and if you`ve logged in, you can add it to your fitting room. So, what you`re actually doing is creating a shopping cart, that kind of like you do online.

REAGAN: The intersection of online information, physical product and personalization from data analytics will redefine the retail experience.
By opting in, retailers will know who we are, what we like, and how we buy
as soon as we step inside.

UNIDENTIFIED MALE: As I move my feet, it creates artwork on the

REAGAN: And personalization will be paramount, like customizing a
pair of Converse for every shopper in the store.

KRAKOVSKY: The store knows who you are when you come in. They can promote to you individually, based on your buying preferences, based on your history, and based on what they think you`ll react to each individual

REAGAN (on camera): While it may be a challenge for retailers now, 25 years from now, the separation between digital and physical will no longer exist.

(voice-over): Smart store fronts that sense what sports teams you like and display the team jersey to prompt a purchase. Digital halos around every product that tell a story, where it comes from, how it was made and peer reviews of its performance, powered by your personal
preferences and particulars. Smart shelves will also protect you.

BRIAN DAVID JOHNSON, INTEL FUTURIST: That intelligent shelf understands that your daughter has a nut allergy, which is really incredibly dangerous. Now, imagine that every single product in the store that has nuts in it, peanuts in it, or was made in a factory that had it,
they all go dark.

REAGAN: And through all these experiences, the consumer will be in

KEVIN MCKENZIE, WESTFIELD LABS GLOBAL CHIEF DIGITAL OFFICER: I don`t think it`s a world where you`re going to walk in and a robot is going to hand you the shirt that you browsed online. There is going to be people that do want that human to human interaction.

I think the difference is they`ll actually be able to order it on
demand whenever they want it, their way.



GHARIB: Well, if shopping will become more personalized, wait until you see what media will look like. Julia Boorstin reports on the big changes coming to the way we watch TV, movies and play games.


From television to movies, games to social networking, even advertising, media will become personalized and immersive. Virtual reality technology like this Oculus headset is the first step to beam people into a virtual world.

DAN ROSE, FACEBOOK VP PARTNERSHIPS & OPERATIONS: In the future, if I have these glasses on, I can actually be there at the game watching it with my friends and family and the other people in that stadium.

BOORSTIN: At the movies, screens will disappear into the walls and scenes will surround you. This first of its kind 4DX regal theater in Los Angeles hints at the future.

(on camera): In this 4DX theater, the chairs jerk and shake along with the action, there is water and rain effects that range from a gentle breeze to the feel of a tornado and there are eight different smells, and this is just the beginning.

(voice-over): In the future, a theater like this could track your heart rate, brain and to change the film based on what its algorithms determines the audience wants to see. Bio sensor technology is already using data about what you`re thinking and feeling to enable mind control, the future of games.

(on camera): The sensors in this head set pick up on my brain waves allowing me to control what happens on the screen by thinking about it.
That`s amazing.

Head sets like this can detect if I`m relaxed, excited, engaged, or frustrated to change the look on my avatar`s face, or even to change the outcome of the game.

(voice-over): Even advertising will become immersive and interactive.
Imagine walking past a restaurant, seeing reviews, glancing at shoes in a store window for costs and comparisons.

Ad tech company Blipper already enables smartphones or Google
(NASDAQ:GOOG) glass to bring objects to life.

(on camera): Wherever you are, you`ll be targeted with personalized ads. You won`t need a smartphone or Google (NASDAQ:GOOG) glass. Futurists predict ads could pop up in front of your face or whispered into your ear.

AD: Starbucks (NASDAQ:SBUX) coffee today.

BOORSTIN (voice-over): For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin.


MATHISEN: And in case you were curious, your Thanksgiving dinner tonight costs a little more this year. The American Farm Bureau Federation says the total cost of a classic feast for 10 people will average just over
$49 total. But that`s only, Susie, 37 cents more than last year. What a bargain.

GHARIB: I think it`s worth it, especially that pumpkin pie.

MATHISEN: That`s a bargain.

GHARIB: That`s NIGHTLY BUSINESS REPORT on this Thanksgiving Day. I`m Susie Gharib. Have a great day and thanks for watching.

MATHISEN: And I`m Tyler Mathisen. Happy Thanksgiving, everybody.
And we will see you tomorrow evening.


Nightly Business Report transcripts and video are available on-line post broadcast at The program is transcribed by CQRC Transcriptions, LLC. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Nightly Business Report, or CNBC, Inc. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c) 2014 CNBC, Inc.

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