Transcript: Nightly Business Report — March 9, 2015

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

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Bull market birthday. Stocks edged higher as investors mark the sixth anniversary of the bull market. But will the run in stocks live to see a seventh?

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Tarnished arches. McDonald’s (NYSE:MCD) reports another month of weak sales. What the new CEO plans to do to improve business.

MATHISEN: Credit relief. Why mistakes on your credit report which determine whether you get a mortgage, a student loan, maybe even a job just got easier to fix.

All that and more tonight on NIGHTLY BUSINESS REPORT for Monday, March 9th.

HERERA: Good morning, everyone, and welcome.

What better way to mark the sixth anniversary of the bull market, one of the longest in history, than with a rally. Stocks bounced back today, helped by a couple billion-dollar deals, much different from what we witnessed on this day in 2009, when the U.S. was in a deep recession, housing had collapsed, and Lehman Brothers had gone under.

Fast forward six years, the S&P 500 has more than tripled since bottoming, led by consumer discretionary stocks, financials and industrials. Since that time, 29 stocks within the S&P 500 have gained more than 1,000 percent. Today, the Dow Jones Industrial Average closed up nearly 139 points, to finish just under 18,000, the NASDAQ added 15, and the S&P 500 tacked on 8.

Bob Pisani takes a look now at the anatomy of the six-year bull market run.

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT: The bull market is six years old this month. Is it time to celebrate or is it time to get a little worried?

Maybe it’s a little bit of both. First, it’s been an incredible run. Since bottoming intra-day on March 6th, 2009, the S&P 500 was up 211 percent. With the exception of brief drops in 2010 and late 2011, most of this has been straight up.

Second, it’s been a long run of 26 bull markets in the past 85 years. This is the fourth longest according to “The Wall Street Journal.”

There are three reasons for this historic run. First, earnings have hit a record high as corporations have learned to cut costs and run more efficiently. Second, buybacks have surged as corporate America has invested in their stocks at the expense of growing their business. And finally, there’s the Fed. No one knows how much higher the stock market is because of the Fed’s stimulus program. But no one, including the Fed, doubts that this is an important factor in the rally.

And that’s the problem investors have now. The economy is clearly improving. But traders are worried that even a moderate rise in interest rates or even the hint the Fed will be raising rates anytime soon will end the rally.

ART CASHIN, UBS: I’m worried that, if for example, we go into the March FOMC meeting next week, and they decide to take out the word “patient”. You saw what happened Friday with the first hint that things will move up. We’ll have to see how the market reacts.

PISANI: But there’s a whole school who believe that the Fed who will not let things fall apart again, that if the economy does suffer a meaningful dip, the Fed will be back in lowering rates again.

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

(END VIDEOTAPE)

MATHISEN: Let’s turn now to two market pros for their views on what’s next for U.S. stocks. We welcome back John Manley, chief equity strategist at Wells Fargo (NYSE:WFC) Funds Management, and Andrew Slimmon, senior portfolio manager with Morgan Stanley (NYSE:MS) Wealth Management.

Gentlemen, welcome back to both of you.

Andrew, let me start with you, because you take the position that this may be a kind of pause year in stocks. Why do you say that?

ANDREW SLIMMON, MORGAN STANLEY WEALTH MANAGEMENT SR. PORTFOLIO MGR: Well, I think three reasons.

Number one is the market has compounded at 20 percent a year for the last three years. And last year, what was the hottest product? It was the S&P index fund. I know that whatever is the hottest product usually doesn’t do well the next year.

Number two is earnings estimates are coming down. And that’s a reverse from 2010-2011 when even though the market was dipping, estimates hadn’t really revised down. So, I’m concerned about a decline in earnings.

And then three, what did we learn last year about tapering? When the Fed began tapering, the market didn’t do anything until the tapering was over. I think that’s coming up this year as well.

So, it’s been a very strong market, estimates have come down that worries me, and then, Fed policy.

HERERA: You know, John, those are some very interesting points, but you disagree to a certain extent. You’re still bullish and you don’t think we’ve kind of hit that kind of enthusiastic phase?

JOHN MANLEY, WELLS FARGO FUNDS MANAGEMENT CHIEF EQUITY STRATEGIST: Well, bull markets always sort of end with a bang. As we’ve seen over the last 50 years, there’s always a period of time when the market pulls money in and that hasn’t happened. I can’t say it’s not going to pause for a month or two, I can’t say it’s not going to be down 5 percent, 6 percent, 7 percent.

But basically, the things that made it go up over the years, the last six years are still there.

Andrew is right, the earnings are down, but they’re down because of oil and the dollar. Those things are rather ephemeral. They were up because of productivity. That’s still going on.

MATHISEN: Let me turn back to you, Andrew, and ask whether you think in light of the slowing of earnings, the bull market is intact, even if you believe it may be due for a pause, that refreshes. Is it a pause that refreshes or pause that ends?

SLIMMON: No, I think we’re in a bull market. I think we have multi-years to go. But I don’t think this is a pause of the next three months. I think the year will end up being a disappointing, albeit maybe positive, but very low positive year for U.S. equities, for U.S. equities.

I think it will be better elsewhere, but for U.S. equities, I think it will be a low single-digit return year, and it will be a pause, not the end of the bull market.

HERERA: Why don’t you jump up on that, John? What kind of returns are you looking for this year? And how selective do investors have to be in a market that has run so far?

MANLEY: Well, the main number that — the single-digit number, I don’t disagree with. I think that’s probably the best target, somewhere — I say, high single digits. What’s the difference? I think there’s still that potential that people get really excited.

How many 4 percent to 7 percent corrections we had in the last three or four years? At some point, it’s the boy who cries wolf. At some point, the investors were out there on the sidelines sort of say, I’m missing something and they become skeptical — or there’s skepticism. Can’t argue with overseas being perhaps more attractive, but it’s still U.S. good.

MATHISEN: Andrew, you know, you’re arguing here with Mr. Rogers (NYSE:ROG) and the nice blue sweater he’s got. He’s got the comfort factor going for him.

But I want to turn back to your point about international being a better target of opportunity. If you’d put money into European equities at the start of the year, you’d be feeling pretty smart now. Do you anticipate that Europe is going to be one of those targets of opportunity, or when you say international elsewhere, are you talking beyond there?

SLIMMON: Sure. You know, look, I’m a portfolio manager. I focus on companies, and the flaw of investing last year in Europe was that companies were not really generating good earnings growth. And that has started to change, and the big change was that the euro peak last may, and there tends to be about a six to nine-month lag between when there’s a big change in the currency and when the earnings start to kick in.

So, what we’re hearing this year, unlike last year, is really earnings started to accelerate. That’s been the key problem for Europe. Yes, you have good European central bank policy, but without earnings growth, you know, you can’t kick start the stock market. I think that’s the change this year versus last year.

HERERA: John, one of the things that the market’s watching for very carefully is the next FOMC meeting, whether or not, as Art Cashin said in Bob Pisani’s report, whether they take the word “patient” out and whether they start to move up on interest rates.

But you maintain, even if they raise rates, that’s not necessarily a tightening.

MANLEY: It’s tightening when they try to restrain the economy. When they set interest rates or policies in such a manner that will pull money out of the economy, and therefore, out of the capital markets. I don’t think that’s going to happen. I think they may raise rates. But that’s just a recognition that the economy’s getting stronger and we no longer need these extraordinarily low rates.

They’ll still be pushing money toward the economy. They meet less resistance when things get better. And I think you have to adjust for that.

So, I think there will probably be some change in the language. I think we’re moving towards higher short term rates. That’s not unknown. And while it may cause a pause to a certain degree, it’s still pretty good thing for the U.S. markets. And as Andrew said, Europe is a couple years behind us, mostly for two good years.

MATHISEN: Gentlemen, thank you for a very thoughtful and helpful discussion. John Manley of Wells Fargo (NYSE:WFC), Andrew Slimmon of Morgan Stanley (NYSE:MS).

HERERA: And now to McDonald’s (NYSE:MCD), which saw another month of worse than expected sales in the U.S. and globally. The company, which is pretty much synonymous with fast food, has seen traffic and profits fall.

And now, the new chief executive is under pressure to turn things around. Despite the weak sales reports, shares of McDonald’s (NYSE:MCD) did rise slightly.

Courtney Reagan has more on McDonald’s (NYSE:MCD) tarnished arches.

(BEGIN VIDEOTAPE)

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): The Golden Arches aren’t bringing in golden sales. McDonald’s may be the world’s best known and largest restaurant chain, but it’s been getting attention for all the wrong reasons. The fast food chains worldwide February sales that restaurants open at least a year fell nearly 2 percent. Just under half of McDonald’s (NYSE:MCD) total sales come from the U.S. comparable sales throughout the disappointing 4 percent in that key market, and fared slightly worse in Asia.

Competition from fast food and fast casual rivals like Chipotle and Five Guys increased prices off that higher labor and ingredients costs, and consumers’ appetites for healthier alternatives are all contributing reasons to McDonald’s (NYSE:MCD) sales slump. Plus, the restaurant has been working to regain Asian consumers’ trust after food safety issues surfaced there last year. The disappointing sales trend cost CEO Don Thompson his job. Just a week ago, the restaurant’s chief brand officer, Steve Easterbrook took over as chief executive, and other changes are coming soon.

(on camera): McDonald’s (NYSE:MCD) executives acknowledge, quote, “consumers’ needs and preferences have changed, and say there’s an urgent need to evolve.” Investing in technology, mobile ordering, store remodels and simpler and more regional menus are part of the plan changes. And just last week, the company said it would begin to phase out chickens raised with human antibiotics.

DAVID PALMER, RBC CAPITAL MARKETS: This regional approach, the quality upgrades, also the technology stuff, that should help in the second half of the year. That’s when we, and I think the company, would be looking for them to get stability. At that point also I think you’re going to get some help from refranchising, perhaps some debt leverage to help shareholders get more positive.

REAGAN: Palmer says McDonald’s (NYSE:MCD) will continue to face pressure in the space. But the changes to come have made him more optimistic about the company’s outlook. But despite the silver lining, he still sees a long road to recovery for the Golden Arches.

For NIGHTLY BUSINESS REPORT, I’m Courtney Reagan.

(END VIDEOTAPE)

MATHISEN: General Motors (NYSE:GM) plans to repurchase $5 billion in shares by the end of next year. Now, the move is part of the deal reached with an investor group that averts a proxy fight over the company’s balance sheet. As part of the agreement the investor Harry Wilson will withdraw his candidacy for a seat on GM’s board of directors.

On a conference call this morning, CEO Mary Barra said the automaker’s balance sheet is strong and she is focused now on long-term growth.

(BEGIN AUDIO CLIP)

MARY BARRA, GENERAL MOTORS CEO: We believe we’re in a position to move forward with this framework because we are executing operationally. I think you’ve seen we’ve made a lot of progress on delivering our customer focused strategy, and we’re building on that momentum in 2015 from the progress we made in 2014.

(END AUDIO CLIP)

MATHISEN: Investors did seem to like the move. They sent shares of G.M. up 3 percent.

HERERA: And now to Europe, where the European central bank’s bond buying program began today. According to “The Wall Street Journal”, national central banks brought up their own government debt including German, French, Italian and Belgian bonds. The ECB’s quantitative easing program is intended to prop up the region’s sluggish economy.

MATHISEN: And in Belgium today, Eurozone’s finance ministers urged Greece to accelerate talks with its creditors, since the debt-ridden country was granted a bailout extension late last month. Some say there just hasn’t been enough progress on implementing new policy measures.

Julia Chatterley has more from Brussels.

(BEGIN VIDEOTAPE)

JULIA CHATTERLEY, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): A top message given to the Greek authorities by the other Eurozone finance ministers after talks here in Brussels concluded in under two hours.

JEROREN DIJSSELBLOEM, EUROGROUP PRESIDENT: We have spent now two weeks, apparently discussing who meets whom where, in what configuration, and on what agenda. It’s a complete waste of time. I cannot be explicit enough about it. And that’s why we simply said look, we’ve talked about this long enough now, let’s start on Wednesday.

CHATTERLEY (on camera): They ultimately want to see greater details about the financial situation in Greece right now. And talks behind the scenes haven’t really started. Greece needs to step up as far as greater reforms are concerned. And ones like being (INAUDIBLE) impacting is tax agents in Greece, while on holiday, quite frankly don’t (INAUDIBLE).

The ball is very much now in Greece’s courts. The other question that was raised by a lot of the journalists here was, what’s going to happen as far as Greece’s finances are concerned. We know they’ve got to pay the IMF over 1 billion euros in the next two weeks.

The message here was also very clear: Greece has to secure itself. They’re willing to be flexible, but they want to see economic reforms implemented before they’re willing to help. So, I say it again, ball in Greece’s courts, and likely to see further discussions on this in the coming weeks.

For NIGHTLY BUSINESS REPORT, I’m Julia Chatterley in Brussels.

(END VIDEOTAPE)

HERERA: Still ahead, some call your credit score the most important number of your financial life. And now, for the first time in a decade, it may get easier to fix mistakes on your report.

(MUSIC)

HERERA: The nation’s budget deficit will rise slightly this year. The Congressional Budget Office says the deficit will increase $486 billion, slight increase over the CBO’s last projection. That rise is being attributed higher spending on Medicare, Medicaid and student loans. But if you look ahead, the agency says that deficit will fall in the coming few years amid slower increases in spending on private health insurance.

MATHISEN: President Obama outlined an initiative today that focuses on building a larger technology workforce. The president says he has commitments for more than 300 employers as well as local governments to train and hire software developers, information technology engineers, and cybersecurity pros.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Companies like LinkedIn (NYSE:LNKD) are going to use data to help identify the skills that employers need. Companies like Capital One are going to help recruit, train and employ more new tech workers, not out of charity but because it’s a smart business decision. All of this is going to help us to match the jobs to the worker.

(END VIDEO CLIP)

MATHISEN: There are an estimated 500,000 job openings in tech-related fields right now, while wages in other fields remain stagnant.

HERERA: If you want to rent an apartment, take out a mortgage or even apply for a job, your credit score matters. And now, it will be easier to get errors off of your report. The big three credit bureaus — Equifax (NYSE:EFX), Experian and TransUnion — said they will make it easier to dispute claims and change the way medical debt is reported. It’s all part of a settlement with New York state’s Attorney General Eric Schneiderman.

Eamon Javers is following the story for us tonight from Washington.

And, Eamon, did this come about because they broke some rules, the agencies broke any rules? Or is it for something different?

EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, the agencies say they didn’t break any laws here, but Eric Schneiderman, the New York state attorney general, has been looking into their practices over the past several years. And this is a story, Sue, that could affect ultimately about 200 million people.

Among the changes now announced in this deal is the fact that actual human beings are going to be involved if you have a dispute over your credit report. That didn’t necessarily used to be true. A lot of those disputes were reviewed automatically by robots. And now, they said they’re going to actually to bring people in, train people to review some of those disputes. And if you have an error in your credit report, that might mean it will be a lot easier to get it fixed.

Here’s the New York state attorney general. Take a listen.

(BEGIN VIDEO CLIP)

ERIC SCHNEIDERMAN, NEW YORK ATTORNEY GENERAL: The credit reporting system in America that we’re addressing today suffers from inaccuracy and often from outright injustice. Many consumers have to deal with incorrect credit reports, that have life-changing errors for reasons that are far beyond their control.

(END VIDEO CLIP)

JAVERS: Now, the industry responded through a trade association saying in a statement, “We’re always looking for ways to improve our procedures and this consumer assistance plan will allow us to do just that.”

And, guys, the government says about 8 million disputes were filed with reporting agencies in 2011. So, this new change will help a lot of those folks.

MATHISEN: Let’s talk a little bit about health debt, Eamon. It’s a big constituent for Americans’ indebtedness and sometimes their problems. What are the changes mean for that?

JAVERS: Well, under health debt, what they say is a lot of problems people have with health debt imbalances showing up in their credit report is due to the insurance company’s delays in paying, or an insurance company disputes that the individual consumer has nothing to do with under this plan. There’s now going to be a 180-day delay before health debt shows up on your credit report. That gives all those insurance companies a chance to wrangle through all their disputes before it shows up as a problem for that consumer. That could help a lot of people who are caught between the credit rating agencies and insurance companies, Tyler.

HERERA: All right. Eamon Javers — Eamon, thank you.

JAVERS: You bet.

MATHISEN: Alcoa (NYSE:AA) is buying RTI International Metals (NYSE:RTI) in a deal worth $1.5 billion. And that is where we begin tonight’s “Market Focus”.

The aluminum giant buying the titanium supplier in an effort to grow its aerospace business. Alcoa’s chief explained the value of the deal.

(BEGIN VIDEO CLIP)

KLAUS KLEINFELD, ALCOA CEO: Why is this a good deal? I mean, on the one hand, we are expanding all value in business. Secondly, we’re expanding it in aerospace that is high growth. This year, we believe large commercial aircrafts are going to grow 15 percent. Overall, we see in the next year, 5 to 6 percent annual growth rate.

(END VIDEO CLIP)

MATHISEN: Shares of Alcoa (NYSE:AA) off more than 5 percent to $13.70. RTI, though, up almost 40 percent to $38 a share.

Mall operator Simon Property Group (NYSE:SPG) is launching a hostile bid for rival Macerich (NYSE:MAC), worth about $16 billion. This after saying Macerich (NYSE:MAC) refused to discuss a combination. Shares fell a fraction. Macerich (NYSE:MAC) rose 7 percent, it finished at $92.76.

The activist Starboard Value is upping the pressure on Yahoo (NASDAQ:YHOO) now. The firm wants a major overhaul there. It’s urged the company to cut costs, buy back up to $4 billion worth of shares and spin off its stake in Yahoo (NASDAQ:YHOO) Japan. Shares there off 1 percent to $42.98.

Shares of Whiting Petroleum (NYSE:WLL) popped on reports its seeking a buyer. The search for deal comes as the price of crude plummets, which, of course, has taken a bite out of the oil and gas producer’s results. The shares moved up about 11 percent to $37.71.

Urban Outfitters (NASDAQ:URBN) out with late earnings and its results from the holiday quarter beat estimates. The retailer’s sales were in line with consensus. After the bell, shares were initially higher. Before the close, the stock was up 1.5 percent to $39.51.

Qualcomm (NASDAQ:QCOM) is returning cash to shareholders. The tech giant announcing a $15 billion buyback and a dividend hike of 14 percent. The yield on that payout is about 2.3 percent. Shares spiked right after the close. In regular trading, the stock was about 1.5 percent higher to $72.71.

MATHISEN: Coming up, what’s at stake for Apple (NASDAQ:AAPL) as it unveils its much anticipated Apple (NASDAQ:AAPL) Watch?

(MUSIC)

MATHISEN: Gas prices keep climb. According to the Lundberg Survey, the average price of regular grade gas rose 21 cents in the past two weeks, now sits at $2.54 a gallon on average nationally. Still about $1 below where prices were last year. Baton Rouge, Louisiana, had the lowest price gasoline in the 48 contiguous states, $2.61. The sends L.A., the highest, $3.48 a gallon.

HERERA: It is here, the highly anticipated Apple (NASDAQ:AAPL) Watch. Apple (NASDAQ:AAPL) unveiled it today at an event in San Francisco, making it the first new category to be introduced under CEO Tim Cook.

As you can see, shares of Apple (NASDAQ:AAPL) rose during the event, but then pared their gains, ending the day up 54 cents.

Josh Lipton has more on the watch and why it is so important to Apple (NASDAQ:AAPL).

(BEGIN VIDEOTAPE)

TIM COOK, APPLE CEO: The Apple (NASDAQ:AAPL) Watch is the most advanced timepiece ever created.

JOSH LIPTON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Apple (NASDAQ:AAPL) CEO Tim Cook today unveiled the company’s first new product category in five years, Apple (NASDAQ:AAPL) Watch.

COOK: It’s not just with you, it’s on you. And since what you wear is an expression of who you are, we designed Apple (NASDAQ:AAPL) Watch to appeal to a whole variety of people with different tastes, and different preferences.

LIPTON: The watch is available in three collections, Apple (NASDAQ:AAPL) Watch sport, beginning at $349, Apple (NASDAQ:AAPL) Watch collection, available starting at $549, and Apple (NASDAQ:AAPL) Watch edition, an 18-karat gold model with prices starting at $10,000.

One potential problem for Apple (NASDAQ:AAPL), it’s competing in a crowded field of smart watches, but rivals such as Motorola and LG. However, to date, consumers haven’t been too excited about smart watches, only 720,000 Android wear devices shipped in 2014, according to research firm Canalys.

But Apple (NASDAQ:AAPL) says its new watch isn’t just a very accurate timepiece, the device also lets users send messages, read e-mails and answer calls right from their wrists. The watch is a fitness companion as well, measuring calories and providing a snapshot of daily activity. The watch only works with an iPhone, 5 and higher. Analysts think it could prove a big hit with Apple (NASDAQ:AAPL) loyalists.

GENE MUNSTER, PIPER JAFFRAY ANALYST: There’s over 400 million iPhone owners out there and if you assume maybe 10 percent, 20 percent, 30 percent of them buy one of these watches, you get into some huge numbers potentially.

LIPTON (on camera): Apple (NASDAQ:AAPL) is betting if they compete and succeed in this market, there’s a lot of money on the line, and expectations are high. The stock is up nearly 70 percent in just the past 12 months.

For NIGHTLY BUSINESS REPORT, I’m Josh Lipton in San Francisco.

(END VIDEOTAPE)

MATHISEN: The job site Career Bliss, like a lot of that career bliss, is out with a list of the ten happiest jobs in America. The company used data from 25,000 reviews and rated satisfaction on things like support and management.

And here are the results that may surprise you. We’ll give you the top three.

Third place, a loan officer. They work long hours but they do help people realize their dreams, like starting a small business or getting a house. Number two, an executive chef. Lots of stress, but the survey says also very rewarding. And number one, happiest people in their careers, school principals. They may have to deal with some tough kids, but their job satisfaction rating came in tops.

HERERA: I was surprised by that one, I have to say.

MATHISEN: Yes.

HERERA: That will do it for NIGHTLY BUSINESS REPORT. I’m Sue Herera. We want to remind you, this is the time of year your public television stations seek your support.

MATHISEN: And we thank you for that support. And we will see you back here tomorrow night.

END

Nightly Business Report transcripts and video are available on-line post broadcast at http://nbr.com. The program is transcribed by CQRC Transcriptions, LLC. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Nightly Business Report, or CNBC, Inc. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c) 2015 CNBC, Inc.

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