Transcript: Nightly Business Report — March 23, 2015

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

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Mark your calendar. The second in command at the Federal Reserve says yes, expect a rate hike this year. But what comes next could be rocky.

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: No breakthrough. Tense talks between Germany and Greece, with little sign of progress as reports surface that Greece will soon run out of money.

MATHISEN: And startling statistics. How did the American retirement crisis, and it is that, get so bad? And can anything be done?

All that and more tonight on NIGHTLY BUSINESS REPORT for Monday, March 23rd.

HERERA: Good evening, everyone, and welcome.

Investors have been hanging on the Federal Reserve’s every word, and today was no different. The Central Bank’s second in command reiterated that the fed is on track to raise short-term rates at some point this year. But Vice Chair Stanley Fischer made it clear that the path ahead will be anything but smooth.

And St. Louis Fed President James Bullard also warned of potential volatility. But this time, in the equity markets, as the Federal Reserve gets ready to raise its benchmark interest rate.

(BEGIN VIDEO CLIP)

JAMES BULLARD, ST. LOUIS FED PRESIDENT: The temper tantrum in the summer of 2013 was all about markets being surprised that the Fed was going to pull back on QE sooner than it thought. There was a mismatch between what markets thought and what the Fed thought. And we do have some potential for that today.

(END VIDEO CLIP)

HERERA: Steve Liesman has more on Vice Chair Fischer’s speech today at the Economic Club in New York, and the road ahead for rates.

(BEGIN VIDEOTAPE)

STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Federal Reserve Vice Chairman Stanley Fischer saying in a speech in New York today that the Fed will indeed likely hike interest rates this year, but he gave no clue as to what month, he said, if it’s June or September or some date in between or some date after, that essentially the increase will be from a funds rate to a still low funds rate.

Here’s how he put it:

STANLEY FISCHER, FEDERAL RESERVE VICE CHAIR: When we raise the interest rate, as we probably will do one day, from zero percent to 25 percent, 25 to 50 basis points, we will be moving from an ultra-expansionary monetary policy, to an extremely expansionary monetary policy.

LIESMAN: As to what conditions the Fed will look for when deciding to raise interest rates, Fischer basically repeated the statement, saying they’re looking for further improvement in the labor market and confidence that inflation is heading back to the 2 percent target.

Fischer was also asked about exchange rates and the strengths of the dollar. And he said as far as he could tell, the Fed has looked and it does not appear to be currency manipulation.

FISCHER: What is not acceptable is manipulating the exchange rates, purely exchange rates, trying to use that as the sole means of generating growth. That has not happened as far as we can tell in our partner countries.

LIESMAN: Under Global (ph) 7 agreement signed by the United States, countries agreed to follow policies and not do so on the back of lower exchange rates, as far as Fischer, current policies in Europe do not violate that agreement.

Fischer sees lower growth this quarter but also sees the U.S. economy heading to the natural rate or the maximum rate of unemployment, which the Fed lowered recently to 5.1 percent. As that unemployment rate drops, the odds of a Fed rate increase will be on the rise.

For NIGHTLY BUSINESS REPORT, I’m Steve Liesman.

(END VIDEOTAPE)

MATHISEN: More on the economy, in the big week ahead for data. It started today with a very modest rise in existing home sales. It will end later this week with a fresh read on economic growth.

And as Hampton Pearson reports, the Federal Reserve will pay close attention to all the reports.

(BEGIN VIDEOTAPE)

HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): This week, policymakers will get the latest economic snapshot on housing, inflation, the strength of manufacturing and business investment, and another round of revisions in overall economic growth. Today, the National Association of Realtors said existing home sales rose just over 1 percent in February. The forecast for new home sales out tomorrow predicts a 4 percent decline.

And the purchase of durable goods, big ticket items, including aircraft orders and new cars is a key barometer on business investment. But leading economists say it is the inflation data and the consumer price index that will be most closely watched by the Fed.

DIANE SWONK, MESIROW FINANCIAL CHIEF ECONOMIST: Everything from falling prices at the grocery store now are offsetting a slight uptick in prices at the pump, although they’ve since come down. But what the Fed really cares about is after we get out of our groceries and what we spend at the gas station, what’s underlying inflation doing, and that’s going to still be too tepid for the Federal Reserve to move.

PEARSON: The other wild card, continuing volatility in the currency markets. Another headache for policymakers when it comes to the outlook for economic growth and inflation.

SWONK: We’ve had a major move up in the dollar. And although it’s volatile from day to day, the dollar is a very strong dollar at this stage of the game. That’s bad in our strength relative to the rest of the world. It is also undermining us and undermining the Fed to some extent.

PEARSON (on camera): When this week’s economic data is all in, Fed watchers and economists say they expect patience, if not caution from monetary policymakers.

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

(END VIDEOTAPE)

HERERA: Stocks took a breather today after a big week of gains. The Dow Jones Industrial Average fell 11 points to 18,116. The NASDAQ saw a 15-point pullback, but remained above the key 5,000 level. And the S&P 500 dropped a little bit more than 3. And in the treasury market, the yield on the benchmark 10-year remains below 2 percent.

MATHISEN: Now to the European economy, and European Central Bank President Mario Draghi. He said today, the ECB will buy public and private debt for at least 18 months, until it is convinced inflation has normalized. The comments also come amid reports Greece would run out of money sometime next month. When asked if the ECB was, quote, “blackmailing” Greece and pressuring the country, Draghi dismissed the assertion.

(BEGIN VIDEO CLIP)

MARIO DRAGHI, ECB PRESIDENT: Let me disagree with you about — almost about everything you said. First of all, are we blackmailing Greece? Well, it’s a bit of a reach when you look at the exposure that we have with Greece. ECB has 104 billion of exposure to Greece. This is equal to 65 percent of Greek GDP and it’s the highest exposure in the Eurozone. So, it’s a — what sort of blackmail is this. It’s up to you to judge.

(END VIDEO CLIP)

MATHISEN: Mr. Draghi spoke today at the European parliament.

HERERA: And while Draghi took questions on Greece, that country’s prime minister met today with German Chancellor Angele Merkel, to discuss its debt deal and to try and hammer out the issues that still divide the two nations.

Annette Weisbach reports from Berlin.

(BEGIN VIDEOTAPE)

ANNETTE WEISBACH, NIGHTLY BUSINESS REPORT CORRESPONDENT: After the relations between Greece and Germany probably have hit the lowest point since the Second World War, it was about time that both parties came together.

Mr. Tsipras came here for the first time to Berlin, as Angela Merkel invited him. And both actually discussed two main areas. And the biggest area was, of course, those bilateral relations which are not going too well.

Both parties insist that they want to improve the bilateral relations between the nations, and also, that it doesn’t really have that they talk a lot about each other and not really talk together, so that actually the area which actually sounded best from that press conference, when it comes to really hard facts is still missing a sense of reality from Mr. Tsipras, because he’s still not saying anything concrete about structural reform.

So far, the bottom line from that meeting is a lot of nice words, a lot of common sense, and probably also a little bit of warmer atmosphere between both parties, but still, no sense of reality from Mr. Tsipras that his country Greece is actually at risk to be bankrupt as soon as mid-April.

For NIGHTLY BUSINESS REPORT, Annette Weisbach, Berlin.

(END VIDEOTAPE)

MATHISEN: To oil now, where Saudi Arabia is standing firm on its decision to maintain production levels, saying it would consider cutting output only if non-OPEC producers also do so.

The settlement — by the settlement, West Texas crude today at 88 cents higher, $47.45 was the finish there. Brent climbed about 1 percent.

And as investors wonder where prices are headed, some of the biggest names in the energy sector discussing that very topic at the annual Scotia Howard Weil Energy Conference in New Orleans.

Jackie DeAngelis was there.

(BEGIN VIDEOTAPE)

JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT: The main theme at the conference today, institutional investors talking about all the cash that they’ve raised to invest in the energy sector that is now sitting on the sidelines. The issue is, figuring out the timing in the energy industry to get this money allocated and working in the marketplace.

The expectations have been for a short-term price drop, say in the next two months or so, and then to see prices rebound in the back half of the year. In fact, that’s what most companies are saying.

RICK MUNCRIEF, WPZ ENERGY CEO & PRESIDENT: Second half of the year I think looks a little more robust on the pricing front. But sure, near term, I think we’re going to see some pressure.

DEANGELIS: But many investors wondering if the timeline that the energy CEOs are setting out for a price rebound should actually be pushed, because Schlumberger (NYSE:SLB) came out at the conference this morning talking about production declines, not really occurring in a significant way in the United States until 2016, indicating we could see flat production to the end of the year.

Meantime, we know that energy companies are cutting their capex spending. This is for future project. We also know they’re taking rigs offline. But as one investor said to me, it appears they’re taking their Buicks offline and holding on to those Mercedes who are still producing.

For NIGHTLY BUSINESS REPORT in New Orleans, I’m Jackie DeAngelis.

(END VIDEOTAPE)

HERERA: Well, the uncertainty in the oil market is rippling into other sectors. Today, railroad operator Kansas City Southern (NYSE:SO) (NYSE:KSU) cut its full year revenue outlook and issued weak guidance for the current quarter, citing slow growth in the energy industry. And that sent shares lower by 8 percent, and pressured other stocks in the sector as well.

Morgan Brennan has more.

(BEGIN VIDEOTAPE)

MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Shares of Kansas City Southern (NYSE:SO) (NYSE:KSU) went off the tracks, after the company cut earnings guidance for 2015.

The culprit? Energy — as lower oil and natural gas prices weigh on results in a number of ways. Analysts say the announcement confirms what investors have worried about for months, that the downturn in energy would pressure railroad earnings. The reason other rail stocks fell today as well.

CHRISTIAN WETHERBEE, CITIGROUP VP OF TRANSPORTS: There probably are some uncertainties where the growth is going to come from this year, from a volume perspective, particularly with some of the weakness in the energy space. I think there’s a view that maybe industrial capex might get cut a bit outside of the energy space, and that could have an impact on volume. I think that’s part of the reason why you’re seeing a little bit of a disruption here in the early goings of 2015.

BRENNAN (on camera): Kansas City Southern (NYSE:SO) (NYSE:KSU) now expects crude oil shipments to grow more slowly this year, and revenue from frac, sand and metal pipes, materials used in onshore drilling, to weigh on first quarter results, due to a, quote, “significant decline in new drilling operations in the U.S.

(voice-over): Lower fuel surcharges which have helped lower expenses are also cutting into revenue growth and cheaper natural gas is curtailing demand for coal, a threat for the entire industry, since it remains such a big business.

Still, analysts expect growing U.S. economy to offset the weakness.

WETHERBEE: The transportation industry will do well because these are really GDP focused companies. That being said, overweight energy exposure is something that we would be a little concerned about. You see it to a some extent with a few of the names in the railroad space. And you also see it to some extent with a few of the names within the marine transportation space. So, those would be areas we would be a little bit cautious on.

BRENNAN: Just don’t expect the same rate of growth the group posted in 2014.

For NIGHTLY BUSINESS REPORT, I’m Morgan Brennan.

(END VIDEOTAPE)

MATHISEN: Still ahead, America’s retirement crisis. Just how bad is it? The startling numbers, and what, if anything, can be done to make sure you have the money you need for your golden years.

(MUSIC)

MATHISEN: A multi-billion dollar joint venture in the medical world tops our “Market Focus” tonight.

The hospital chain Tenet Healthcare (NYSE:THC) will join forces with United Surgical Partners International to create the nation’s largest operator of outpatient surgery centers. The deal valued a little more than $2.5 billion. It gives Tenet the option to buy United Surgical over five years. Tenet up 5 percent today to $52.07.

Humana (NYSE:HUM) plans to sell its Concentra urgent care unit for about $1 billion. Humana (NYSE:HUM) says it will use some of the proceeds of the sale to fund its $2 billion share buyback, and fund other growth projects. Shares of Humana (NYSE:HUM) off a fraction today. They finished $182.10.

HERERA: Shares of biotech company ImmunoGen (NASDAQ:IMGN) are taking off today after the company announced a deal to license its anti-cancer therapies to Japan’s Takeda Pharmaceuticals. The deal could be worth nearly half a billion dollars. The stock was up almost 17 percent today, to $8.69.

Shares of Gilead Sciences (NASDAQ:GILD) were lower after the company issued an alert saying that several patients taking its hepatitis C drugs, including the $1,000 a day Sovaldi, used in combination with the heart treatment developed abnormally slow heartbeats. One of the patients died. Gilead was one of the biggest drags on the NASDAQ, off 2 percent to $100.26.

And Pepsi has added former Dallas Fed President Richard Fisher to its board. Pepsi’s CEO says Fisher brings, quote, “deep knowledge of financial matters and a breadth of global experience and expertise in international trade and regulatory matters.” Fisher stepped down from his position at the Fed last Thursday. Pepsi shares up a fraction to $95.85.

MATHISEN: You’re thinking about moving in retirement? There’s a new study out from Bankrate ranking the best and worst states to spend your retirement years. The report looked at things like the cost of living, crime rates, weather, health care quality, and taxes.

OK, here we go. Wyoming took the top spot. Followed by Colorado, Utah, Idaho, and my home state, Virginia. The worst states for retirees, says Bankrate, are Arkansas, New York, Alaska, West Virginia, and Louisiana.

HERERA: But does it really matter where you live if you can’t afford to retire? Nearly half of Americans have no retirement savings and the median amount in a 401(k) plan today, $18,433.

So, how do you get people to save more?

Carolyn McClanahan is the director of financial planning at her own firm, life planner partners.

Welcome. It’s nice to have you here, Carolyn.

CAROLYN MCCLANAHAN, LIFE PLANNER PARTNERS DIRECTOR: Thank you, Sue. I’m happy to be here.

HERERA: You know, why do people not save enough for retirement? I mean, I know some people simply can’t because their income level may be low. But for those who do make a decent amount of money, or an average salary, why are we not saving more?

MCCLANAHAN: Well, to me, there are two reasons. The first is, people are used to guaranteed pensions. And when you have something guaranteed, and then all of a sudden, they just gradually took it away and put 401(k)s in place, the public didn’t get the memo on that one. And they didn’t understand 401(k)s, so they didn’t put money away.

The second reason and, yes, this we see often, people live for now. Behaviorally, they want to enjoy the present because they don’t know about their future. And so, you know, they just think everything’s going to be OK, and they don’t put money away.

MATHISEN: I would add a third thing in there, Carolyn, and that would be the sluggish income growth in this country. It’s very hard for people as their cost of living goes up in many parts of the country to put money aside to save. That’s why the balances are so low, right?

MCCLANAHAN: Oh, you’re exactly right. The 401(k) system to me is a failure. And it doesn’t take into account that people just don’t have enough income that they can put aside, that they can sustain the lifestyle they have now in the future, for 30 years. I mean, we weren’t meant to retire for 30 years.

HERERA: You know, a lot of people say don’t even consider retiring until you have saved $1 million in either assets or in cash. But what would that $1 million get you on an annualized basis?

MCCLANAHAN: Well, you know, they’ve done studies in the past on how long your money will last. There’s a rule of thumb called the 4 percent rule, and that’s been a little squishy. So, that, if you based it on the 4 percent rule, you get $40,000 a year to live on. And for a lot of people, that’s not enough.

MATHISEN: You called 401(k)s a failure? That is a strong statement, Carolyn. Compared with what? Compared with what? And what would the alternative have been? I mean, America’s built on the idea that we’re supposed to be able to take care of ourselves.

MCCLANAHAN: Oh, America was built on corporate pensions. And we had good corporate pensions for many years. You know, Social Security was supposed to pick up the hole for the very poor, and it was meant to be a stopgap for the very poor, not meant to be your total retirement income.

So, people were forced into 401(k)s without any training of how to invest that money. And how to create income streams for themselves in retirement. And that’s why it’s a failure.

HERERA: Should we be allowed to save more, though, those of us who can save? Should they up the limit of what you can put away, so that people can kind of catch up?

MCCLANAHAN: Well, the problem you get into is the people who are able to save, a lot of them are already doing that. You can increase the limits on how much people put in 401(k)s, but in reality, that helps the wealthy that can already save more.

So, they’re going to get a bigger tax break. I don’t know if that’s a good thing. Think about it. If we took away the tax break from retirement systems, we could probably use some of that money to beef up Social Security, so many people didn’t have to live in poverty.

HERERA: All right. Carolyn, thank you vey much. We appreciate it.

MCCLANAHAN: It’s my pleasure.

HERERA: Carolyn McClanahan with Life Planner Partners.

MATHISEN: Well, as the country adapts to the wave of newly insured patients under the affordable care act, there have been growing concerns about the shortage of doctors. But changes in health care law also driving a rise in the popularity of what’s known as concierge’s medicine here in the U.S. But what exactly is it?

Sharon Epperson reports.

(BEGIN VIDEOTAPE)

SHARON EPPERSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Dave Kerpen stays on the go, running a company that helps small businesses manage their social media presence.

DAVE KERPEN: Literally, every minute is booked, from morning until night. I use my calendar to track every single that I do. And I really take advantage of every minute.

EPPERSON: The busy CEO doesn’t like to complicate his schedule or waste time, especially when it comes to his health.

KERPEN: You go to the doctor every six months, you wait in an office, you get seen by one of a dozen or two dozen doctors who happen to work at that office and have you for the day. You wait in the waiting room. Then you wait in the doctor’s office. Then you wait for billing. It takes a long, long time.

EPPERSON: Kerpen is one of a growing number of consumers who want to be able to see a doctor on demand. So, he hired Dr. Ken Redcross. He’s a concierge’s doctor, a primary care physician who offers a greater degree of personalized attention than a traditional doctor for a fee.

DR. KENNETH REDCROSS, CONCIERGE PHYSICIAN: You’ve got a busy executive, can’t get out, thinks that he has to work 25 hours a day. What am I going to do if I’m sick and down? Well, here comes me.

EPPERSON (on camera): There are more than 4,000 concierge doctors in the United States today, according to the American Academy of Private Physicians. And that number is only expected to grow in this era of health care reform, as more Americans seek alternatives to the way doctors deliver care.

(voice-over): Concierge doctors charge a retainer that can range from $1,500 to several thousand dollars a year. That gives the patient 24/7 access by mobile phone, e-mail or text. And the ability to make appointments the same day. Some doctors write out prescriptions and may have them delivered to your home and some may even make house calls, or office calls.

REDCROSS: It really runs the gamut. Sometimes the patients call for a pesky cold, cough, flu-like symptoms that haven’t gone away. Some patients were called because they’re like, doc, I’m a little short of breath and I don’t really know what’s going on. Am I anxious? Am I having an issue with my heart? Am I having an issue with my lungs?

Patients also call because they have diabetes and they haven’t had a follow-up. I’ll set up a way for them to get blood draws at their office if they’re busy to come out to the lab.

EPPERSON: Kerpen, a patient of Dr. Redcross, pays a $2,500 annual retainer.

KERPEN: I call him every six months, or I text him. He’s over the next day, or two days later, comes to my office, comes to my house, waits for me, waits until I’m done with a meeting, and I can see him just like that.

EPPERSON: He says the concierge services are worth the cost, for his own health, and the health of his company.

KERPEN: Just the time saved alone ends up being worth it, because I can use that time to make money with our business.

EPPERSON: For NIGHTLY BUSINESS REPORT, I’m Sharon Epperson.

(END VIDEOTAPE)

HERERA: Coming up, imagine starting your car, not with a key, but with your eyes. The new technology that could prevent your vehicle from getting into the wrong hands.

(MUSIC)

MATHISEN: Here’s a look at what to watch tomorrow.

As Hampton Pearson mentioned earlier in the broadcast, the consumer price index for February comes out tomorrow, inflation always a key data point for the Federal Reserve.

February new home sales expected to fall as bad weather kept prospective buyers away. And Congress begins voting on its fiscal 2016 budget resolution. That is what to watch tomorrow.

HERERA: Well, that didn’t take long. We told you last week about Starbucks’ controversial initiative called “Race Together”, aimed at generating dialogue about race relations. The coffee company now says it will end a key component of that program. Baristas will no longer write “race together” on cups that they give to customers in order to spark conversation. Starbucks (NASDAQ:SBUX) says the move was planned and was not a reaction to the widespread criticism of the program. The company says it will continue with the other aspects of the project.

MATHISEN: The death toll from defective General Motors (NYSE:GM) ignition switches has risen now by 7 to 74. Ken Feinberg, who is administering the company’s compensation program, says a total of 200 claims, including those severely injured and hospitalized, are also eligible for compensation. The fund receives more than 4,300 claims by the January 31st deadline.

HERERA: As our cars and trucks become smarter and filled with more technology, there’s a new device to ensure the right person is driving the right vehicle. It involves having your iris of your eyes scanned before starting up the car.

Phil LeBeau has more.

(BEGIN VIDEOTAPE)

PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Every 45 seconds, a vehicle is stolen in the U.S. That crime is actually becoming less frequent. Now, iris scanning technology is looking to keep even more cars from being stolen.

TOM MALONE, VOXX ELECTRONICS PRESIDENT: Unfortunately, for the driver who wants to bend the rules, there’s no way around it. You’re going to get in, you’re going to authenticate it. And if you’re not the right guy, you’re not starting that vehicle.

LEBEAU: Eyelock Incorporated, which is based in New York, has developed small infrared cameras and technology that scan the irises of your eyes. Because they’ll match the iris scans you put into the car, you’ll be able to start it up and drive away. The odds of a car thief or someone else having irises that match yours, 1 in several trillion.

So, only you or someone else already scanned into the car’s memory will be the driver.

TONY ANTOLINO, EYELOCK CHIEF MARKETING OFFICER: It will be used to authenticate the ignition, so the wrong person can’t start your car and steal it. It’s going to be used to tie into telematics, so that insurance premiums can be rated on a driver by driver basis, not just when a car is in motion.

LEBEAU: Eye-monitoring is next wave of making our vehicles smarter, keeping drivers’ eyes on the road, or in the case of trucking and delivery firms, making sure the right driver is behind the wheel.

Insurance companies are interested in the possibilities. So, are other industries. Eyelock is talking with jet makers about putting its technology in cockpits. And with airports about using iris scans at security checkpoints.

ANTOLINO: You look at an iris camera, it recognizes you, and you can move very, very quickly through the airport, because you are a trusted traveler.

LEBEAU (on camera): Iris scan technology is not new. In fact, it’s been around for several years. But eyelock system is ushering in a new era of auto security. Look for these types of systems to be in new vehicles within the next three to four years.

Phil LeBeau, NIGHTLY BUSINESS REPORT, Chicago.

(END VIDEOTAPE)

MATHISEN: The eyes have it. There you go.

HERERA: That will do it for NIGHTLY BUSINESS REPORT for tonight. I’m Sue Herera. Thanks for watching.

MATHISEN: And I’m Tyler Mathisen. Eyes are blue. Have a great evening, everybody. 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) 2015 CNBC, Inc.

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