Transcript: Nightly Business Report — April 2, 2015

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

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It is a good deal. A deal that meets our core objectives. This framework would cut off every pathway that Iran could take to develop a nuclear weapon.

(END VIDEO CLIP)

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: World leaders reach an historic understanding with Iran over its nuclear program, and the oil market and investors take notice.

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Piece to the puzzle.
Wage growth has been missing from the jobs picture but is that about to change with tomorrow`s employment report?

MATHISEN: And keep on trucking. What the big rig industry has working in its favor that other sectors don`t.

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

HERERA: Good evening, everyone. And welcome.

Investors across the globe have been waiting for a breakthrough.
Today, they got it and it was historic. Six world powers and Iran announced a preliminary agreement to limit that country`s controversial nuclear program.

The deal ends weeks of tense talks and comes a couple of days after the self-imposed deadline. The agreement includes a sharp decrease in the number of Iran centrifuges, access to uranium mines by inspector and the possible suspension of U.S. and E.U. nuclear related sanctions.

President Obama said the deal was a long time coming.

(BEGIN VIDEO CLIP)

OBAMA: I have always insisted that I will do what is necessary to prevent Iran from acquiring a nuclear weapon and I will. But I also know that a diplomatic solution is the best way to get this done and offers a more comprehensive and lasting solution. It is our best option by far.

(END VIDEO CLIP)

HERERA: Oil prices fell on concerns that today`s deal could lead to an easing of sanctions on Iran`s oil exports, potentially flooding the market. West Texas Crude lost about 2 percent to settle at $49.14 and Brent dropped to $54.95.

John Harwood has been following the day`s news from the White House for us.

And, John, it did take quite a long time to get to this point and some people say, now the really hard part begins.

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT: It`s going to be very difficult, Sue.

But I got to tell you, this is a very satisfied White House tonight.
The president believes he has been vindicated in his approach of engaging with Iran, pursuing a diplomatic deal. He was vigorous and affirmative in defending it out the White House Rose Garden, challenging Congress not to try to block something that allies like Germany, France, and Britain had all consented to, as well as the Russians and the Chinese. So, he`s feeling very upbeat.

The question is going to be how intense is that resistance from Republicans in Congress? John Boehner, the House speaker, just went to Israel to visit with Bibi Netanyahu, the prime minister, who of course he had invited to speak to the U.S. Congress. And Netanyahu has been very outspoken against this deal.

MATHISEN: You know, John, as you mentioned early today and the president in his remarks — nothing is agreed to until everything is agreed to. There are lots of drafting challenges and T`s to cross and I`s to dot.

HARWOOD: That`s right. And, you know, I talked to a bunch of foreign policy experts this afternoon. Republicans and Democrats alike were impressed by the amount of detail. They thought it was more substantive and significant than they had expected from this framework.
But they emphasized there are various specifics that they want to see — the nature of inspections. What happens to low enriched uranium?

All that has to be worked out by June the 30th and there are some who believe that that deadline needs to be firmer than the March 31st one was, that the negotiators went over and spilled over in Switzerland.

HERERA: John, you mentioned Prime Minister Netanyahu. What does the understanding, if you will, do to relations between the U.S. and Israel?

HARWOOD: They`ve been very strained. Bibi Netanyahu came to Washington and in front of the president in a manner of speaking really undercut the deal. The president was due to speak to him this afternoon.
We haven`t heard Netanyahu`s readout of that call, but we did hear from an Israeli government official who said that the smiles in Switzerland belie the terrible reality of this deal.

So, certainly, initially, Israel hasn`t changed its stance. The question will be, can the president get Bibi Netanyahu even behind the scenes to not be quite as intense and voluble in his reaction, in hopes of steering off Congress from blocking it.

HERERA: We will see. John, thank you. John Harwood at the White House tonight.

HARWOOD: You bet.

MATHISEN: Well, stocks closed higher, snapping a two-day losing streak on the last trading day of this holiday shortened week. Upbeat economic reports added to the positive tone. Factory orders up 0.2 percent in February.

The expectations there were for a very slight decline. And jobless claims dropped sharply. And more on that in just a moment.

Now, at the close today, the industrials up 65 points to 17,763.
NASDAQ gained almost seven, as did the S&P 500. It closed at 2,066.

HERERA: And now to that jobless claims report. The Labor Department said the number of Americans seeking first time unemployment benefits fell
20,000 to 268,000 last week. That`s close to a 15-year low. It`s also another sign of continued improvement in the labor market, and it comes one day before the government releases the March employment report, where a lot of attention will be on wages and any signs of growth.

Steve Liesman has more.

(BEGIN VIDEOTAPE)

STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: The job market has been on a tear, 3.3 million jobs created just the past year, the most since 2000.

But during much of that time, wages for average workers have been lackluster, staying at about 2 percent yearly growth. But could that be about to change?

Now that McDonald`s has joined major retailers like T.J.Maxx and Target (NYSE:TGT) in offering raises to its rank and file workers, the question is whether we`re finally in an age of wage hikes, and what that could mean for growth, inflation and the Fed.

ROBERT SCHULZ, STANDARD & POOR`S RATINGS SERVICES: There`s debates about how the minimum wage flows through. I mean, obviously, there`s a number of companies including a big one, Walmart, which has raised wages.
So, you know, on the macro level, this is kind of pressure upwardly on wages which are economists have been calling.

LIESMAN: We`ll get a look at wages Friday in the government`s March jobs report, where Wall Street economists look for growth of 248,000 jobs, the 13th month above the 200,000 mark.

But forecasters are still looking for muted wage gains of just 0.2 percent for the month. And there are other concerns about this report. It comes amid a slew of weak economic data, including consumer spending and manufacturing, creating some anxiety that this jobs report could disappoint.

MICHELLE MEYER, BANK OF AMERICA SR. U.S. ECONOMIST: We had a big shock to the economy at the beginning of the year, which was a combination of the decline in oil prices and a much stronger dollar. And that creates a lot of uncertain any terms of forecasting.

LIESMAN (on camera): But another healthy jobs report with wage gains to boot could raise questions from the other side, about budding inflationary pressures and a Fed that`s behind the curb. In truth, wages are still a long way from sparking any inflation, but then again, the Fed is at zero. So, rates are a long way from being able to put the brakes on inflation.

For NIGHTLY BUSINESS REPORT, I`m Steve Liesman.

(END VIDEOTAPE)

MATHISEN: We`ve been reporting for weeks now that the economy has gotten off to a sluggish start this year.

And today, the Federal Reserve Bank of Atlanta cut its growth projection for the first quarter all the way down to zero. That is a drop from 1.9 percent predicted just back in February. J.P. Morgan today also cut its economic growth forecast by nearly 1 percentage point to 6/10 of 1 percent. The firm does see a pick-up in the second quarter. Official data on first quarter growth will be released later this month.

HERERA: The transportation industry is often considered a leading indicator of the economy and though that sector got off to a pretty rough start this year, there are pockets of optimism.

Morgan Brennan has more.

(BEGIN VIDEOTAPE)

MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
It`s been a rocky road for transport stocks. The Dow Jones transportation average has fallen 5 percent this year, on worry that first quarter earnings will disappoint. But analysts say that selloff has created some deals, particularly in trucking.

JASON SEIDL, COWEN AND COMPANY MANAGING DIRECTOR: Right now, we`re recommending truck load stocks to investors, versus than the truck load stocks. Truck load stocks benefit from falling oil as do the truck load guys can capture about 85 percent, almost maybe 87 percent of their fuel costs. So, as fuel decline, it helps them out on the cost side.

BRENNAN: Diesel is more than a double cheaper than it was a year ago, meaning lower expenses, but also making longer hauls by truck is more cost-competitive with railroads.

And there are other reasons to like this group as well. Capacity remains tight, not expected to drive up rates trucking companies charge shippers to move goods. Also, since many companies operations are largely domestic, the stronger dollar is likely to have little impact on earnings.
In fact, it could benefit given the consumer-centric goods being moved.

Plus, trucking should also get a boost from the West Coast port backlogs, since it`s the fastest way to get cargo out. Analysts say there are a number of names to consider.

SEIDL: I think we`re in a multiyear cycle for truck load sectors.
We like the truck load names including Covenant Transportation, Knight Transportation (NYSE:KNX), and Swift Transportation.

MORGAN: But there are risks, the biggest perhaps being a slowdown in the U.S. recovery. If economic growth wanes, that can weigh on trucking volumes. Also, the industry continues to face a fierce labor shortage.
The short fall as many as 40,000 drivers. That number could climb with demand, a scenario that could hinder service times, push up labor costs and ultimately weigh on profits.

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan.

(END VIDEOTAPE)

MATHISEN: An update now to a story we`ve been reporting on all week.
The Indiana Senate and the House have approved changes to that religious freedom law. The bill will now go to the governor, Governor Pence, to sign.

And in Arkansas, Governor Hutchinson signed his state`s amended religious freedom bill, one day after refusing to sign an earlier version of it.

Still ahead, the stock you likely never heard of that our market monitor guest says will rise 40 percent over the next year. She`ll reveal it and explain why straight ahead.

(MUSIC)

MATHISEN: European regulators may be getting ready to move forward with the most high profile antitrust case since Microsoft (NASDAQ:MSFT).
As first reported by “The Wall Street Journal,” the European Commission is now laying groundwork to bring charges against Google (NASDAQ:GOOG). The regulator has reportedly been asking companies who filed complaints to make part of their submissions public. The investigation which has been active now for years examines whether Google (NASDAQ:GOOG) abused its power as dominant search engine.

HERERA: The average rate on a 30-year fixed mortgage barely budged last week, remaining close to historically low levels. Freddie Mac says the national average was 3.7 percent last week. Rates remain about where they were at the start of this year, as the spring home buying season gets into full swing.

MATHISEN: Well, the housing market may be heating up this spring, but the mortgage market is still relatively tight. Big banks still gun shy for losses from years back, are just not being as generous with loans to home buyers. And that is opening the door wide to non-bank lenders.
They`re walking right into the mark.

Diana Olick has our story.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: Let me see.

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Shaya and Yehudis Kohn got a lead on the perfect house for their growing family, but in today`s tight market, they had to move fast.

SHAYA KOHN, HOMEOWNER: I knew that if this house were on the market, there`s no way I would ever get it. So, I bought it before going on the market.

OLICK: They bought the Maryland home with a loan from Charlotte- based Movement Mortgage, a non-bank lender that promises to close loans in just a week.

YEHUDIS: The fact it went quickly, so, we didn`t have to stress about it, worry about it, really helped.

OLICK: Customer service and more aggressive rates are giving non- bank lenders the edge. Their share of the market, more than doubling in the past four years. Names like Quicken, Penny Mac, Loan Depot, and Movement Mortgage are picking up what big banks are leaving.

CASEY CRAWFORD, CEO, MOVEMENT MORTGAGE: Our building actually sits in the shadow of the Bank of America (NYSE:BAC) headquarters building. And we`ve been able to gain number one purchase share in that city instead of five years by offering great service to the homeowner.

OLICK: Crawford (NYSE:CRD.A) admits to poaching talent from some of the big banks and he says it was pretty easy.

CRAWFORD: They have not allocated the resources to make their service competitive and yet have given a lot of opportunity to smaller guys like ourselves. And I think a lot of people and talent inside the big banks got set up with that.

OLICK (on camera): With private capital still not returning to the mortgage market, non-bank lenders largely have to sell to Fannie Mae and Freddie Mac. So, they have to abide by the capital and underwriting standards of those mortgage giants. That should keep risks low but at the same time, not limit creativity.

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

(END VIDEOTAPE)

HERERA: All the controversy surrounding Lumber Liquidators weighed on sales. That`s where we begin tonight`s “Market Focus”.

The hardwood flooring maker reported a big drop off in March sales, following media reports that accused the company of selling flooring with higher levels of a known carcinogen. The company denies the allegations and still managed to post better than expected results. Shares were up a fraction to $33.20.

CarMax (NYSE:KMX) posting a big jump in fourth-quarter profit as used car sales, I should to say, were strong. Specifically luxury vehicle sales helped bolster the car retailer`s results. Shares popped 9 percent to $74.73.

AutoNation (NYSE:AN) also benefiting from a rise in new vehicle and luxury car sales. The CEO says one car in particular helped performance.

(BEGIN VIDEO CLIP)

MIKE JACKSON, AUTONATION CEO: If you look for the industry, all the increase is in trucks and this is still with the number one selling vehicle the last 35 years, the Ford F-150 in changeover. We still did not have full availability, but we have enough now that I can tell you the customer acceptance of the F-150 is off the charts.

(END VIDEO CLIP)

HERERA: And shares were up 1 percent to $64.47.

MATHISEN: IBM has reportedly hired banks to help it defend itself against activists. According to Reuters, Big Blue`s top shareholders are pressing activist hedge funds to take an interest in the stock and maybe move it up. Shares were up today by a fraction, $160.45 was the close.

Simon Property announced a $2 billion share buyback program. This after Macerich (NYSE:MAC), its rival mall operator, rejected its $17 billion takeover bid. Shares were up a fraction to $199.36.

HERERA: And now to our market monitor guest, who`s expecting one of her stock picks to rise as much as 40 percent over the next years. She`s Mariann Montagne, and senior investment analyst with Gradient Investments, an asset management firm with $750 million under management.

Mariann, welcome. Nice to have you here.

MARIANN MONTAGNE, GRADIENT INVESTMENTS SR. INVESTMENT ANALYST: Thank you, Sue. I`m glad to be here.

HERERA: Overall, how do you feel about the market? I know there are pockets that are slightly overvalued by some estimates, or richly valued.
But you`re still seeing a lot of opportunities. So, kind of give me the big picture, if you will.

MONTAGNE: Yes. I think just looking across the market, we`re probably expecting flattish to up 5 percent for the S&P 500 for the full year. And a lot of volatility like we saw in the first quarter where it was up as much as 3 percent and finished the quarter flat. But the pockets where we see opportunity tend to be in the technology area. And so, I have three names that I`m really fond of in that area.

The 40 percent grower you alluded to be would be Cray (NASDAQ:CRAY).
This is the super computer manufacturer. They`re multi-million dollar pieces of equipment. Sales can be lumpy. They do not enough parts to go forward with certain projects, so they had to put investors off on earnings, you know, toward the second earning.

HERERA: And they have been down quite a bit over the company issued that cautious outlook. So, I would assume that you feel that that really adds to the value.

MONTAGNE: I do. In the last six weeks, I think he`s gotten a great opportunity to pick up the shares here to get 40 percent growth.

MATHISEN: Let`s move on to your second pick and I note that you really like growth basically and sometimes you like growth with a little income. Your second choice is a very expensive stock. At least in terms of its — what you have to pay to buy a share. That would be Priceline.

MONTAGNE: Right. Priceline, yes. You know, word to management, split the shares. That would be great.

As for the dynamic of it, 90 percent of their earnings come from Europe. And it`s hurting them right now with the dollar being so — or the euro being so weak, the dollar being so strong. But we think that will turn over the course of the year as the ECB`s actions, you know, work in their favor.

In the meantime, we think there`s a lot of activity going on on the U.S. side, with bookings towards Europe. I mean, it`s a great value right now. There`s pent-up demand. And then, you know, six to nine months out, we think we`ll see the European side working. And then the bookings will come fairly early.

HERERA: Your third choice for us is Cisco (NASDAQ:CSCO) Food Services. That`s a consumer play I would assume.

MONTAGNE: Yes, I think of it as a technology play because it`s a high volume/low margin business. And as they implement new processes and services, they can increase that margin ever so slightly. But on big volume, it pays off big on the bottom line.

And this is one that will benefit from an acceleration in inflation on the food and paper side.

So, you know, as we see people going to restaurants, we`ve seen the restaurant stock pays off. I — this company benefits across all types of restaurants across all geographies. And they just are really a technology place.

MATHISEN: You`ve given us three choices that you like. How long do you hold your typical holding and what would be an example in one of your portfolios that you just loved for years?

MONTAGNE: Right. Well, our typical holding is about three years time. So, we give it about a year to, you know, work its magic. Along the way, of course, we`re constantly seeing if there`s any changes to the investment pieces that would, you know, cause us to exit a position.

But one of the ones we`ve held for years and years is visa. And that`s one that we bought back when the Durbin Act was overhanging the name and, you know, it`s done extremely well — if you can pull up that, I don`t know, five year chart, I guess, since the Durbin times.

HERERA: Uh-huh. Mariann, we`ll leave it there. Thank you very much.

Mariann Montagne —

MONTAGNE: Right. Thank you for having us on.

HERERA: — with Gradient Investment.

Ty?

MATHISEN: Well, there`s a new hot player in Hollywood, but you won`t see its name in lights. It`s China. That country has been doing deals and ramping up investments in the most American of industries, movie-making.

And as Julia Boorstin reports, both sides betting that there`s lots of money to be made.

(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
The biggest new star in Hollywood is China. Chinese media companies have been on a Hollywood investing streak, and studios are looking to tap into the valuable Chinese movie-going market. It has the world`s fastest growing box office expected to surpass the North American box office as soon as 2017.

RICHARD GELFOND, IMAX CEO: Well, China has been a fantastic market for us, and some of the last few months, we`ve actually done better in China than we`ve done in the U.S. And if you look — we don`t only do U.S.
movies in China. We do Chinese movies in China. Films that people haven`t heard of such as “Wolf Totem” or “Dragon Blade”.

BOORSTIN: IMAX, which first moved into China 15 years ago has 215 theaters there and plans to double that footprint. Last year, it sold a 20 percent stake in its China business to Chinese investors.

(on camera): And Chinese conglomerate TCL bought the naming rights to this — originally the Grauman`s Chinese Theatre, looking to brand with the iconic Hollywood spot.

(voice-over): Plus, there`s been a slew of Chinese investments in U.S. content production. Just this week, China`s Huayi Brothers Media agreed to co-finance at least 18 movies for a new studio at STX Entertainment. This follows a big announcement from Lionsgate, the studio behind “The Hunger Games”. It`s partnering with Hunan TV Group on a $350 million co-financing and distribution deal.

MICHAEL BURNS, LIONSGATE VICE CHAIRMAN: This is a market we`re going to do a lot of business with. So, the idea we can have a great partner like Hunan in China and invest in our slate, that`s good news for us.

BOORSTIN: And the Hollywood China love affair has even infiltrated the trade publication. “The Hollywood Reporter” this week inks a content partnership with China`s Tencent.

For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin in Hollywood.

(END VIDEOTAPE)

HERERA: Coming up, what the business world is doing to help the millions of people around the globe with autism, on this Autism Awareness Day.

(MUSIC)

MATHISEN: Here`s what to watch tomorrow. The stock and bond markets are closed for good. So, you really can`t watch them. But the Labor Department will still release the March employment report. You can watch that in the morning, and we will have numbers tomorrow evening. That is what to watch and not watch tomorrow.

HERERA: Microsoft (NASDAQ:MSFT) turns 40 and it`s been very good to investors who purchased shares early. Microsoft (NASDAQ:MSFT) went public in 1986. Since then, it`s had nine stock splits and has issued many dividends. So, according to Microsoft (NASDAQ:MSFT), if you purchased 100 shares at the close of its first day of trading, not the IPO price but the closing price of $28 a share, and you factor in all those dividend payments and split adjustments, that investment today would be worth $1.7 million.

MATHISEN: Airbnb is expanding into, of all places, Cuba. The home rental service says it began offering accommodations to licensed U.S.
travelers staying in that country. A company executive said she believes Cuba could become one of Airbnb`s biggest markets in Latin America. The decision by Airbnb comes less than three months after United States announced it will ease travel restrictions to Cuba.

HERERA: Today is the eighth annual World Autism Awareness Day, a day dedicated to bringing attention to those people living with this disorder.
But what exactly is autism and where do we stand on treatment?

Meg Tirrell has more.

(BEGIN VIDEOTAPE)

MEG TIRRELL, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):
Ryan Flinn and Rhonda Kelly changed the light on front porch to blue every April. Their daughter, Teagan, has autism. Now 7, Teagan doesn`t communicate verbally. She`s now learning to use an iPad to express what she wants.

RYAN FLINN, TEAGAN`S FATHER: The reality is these are just normal people. They communicate differently than we do, they express themselves differently than we do, but they`re — they still have thoughts and feelings and emotions just the same.

TIRRELL: Autism encompasses a range of diagnoses, all under the umbrella of what`s referred to as autism spectrum disorder. The CDC defines it as a group of developmental disabilities that can be associated with significant social, communication and behavioral challenges, while the advocacy group Autism Speaks calls it a group of complex disorders of brain development.

DR. PAUL WANG, AUTISM SPEAKS SVP OF MEDICAL RESEARCH: We think that it`s really an interaction between genes making vulnerable to those environmental risks and then the environmental risk factors. So, those things somehow are acting together.

TIRRELL: Autism spectrum disorders affect more than 3 million Americans, according to Autism Speaks and tens of millions worldwide. The prevalence is increasing. In the U.S., about 1 in 150 kids had autism in 2000, according to the CDC.

In 2010, that had risen to 1 in 68 kids. The reasons for the increase aren`t entirely known. It`s thought to be partially due to increased diagnoses, but not completely. Treatment options right now focused mainly on behavioral therapy. Though there are medications, they`re mainly for symptoms.

WANG: The cornerstone for treatment right now is behavioral and educational intervention, and the earlier they start, the better these kids will do, the better their long-term outcome is.

TIRRELL: Companies from Johnson and Johnson to Roche, Novartis, and Pfizer (NYSE:PFE) have had programs focusing on autism. There`s also an increasing focus in the community, on appreciating what`s known as neuro- diversity, valuing neurological differences without seeking to treat or cure them.

FLINN: I don`t want to change my daughter`s personality. She`s funny, she`s playful. She`s, you know, almost sarcastic. And I don`t want to change who she is, but my concern as a parent is that, you know, Rhonda and I won`t be around forever and we want her to be able to live independently.

TIRRELL: Today is all about bringing awareness to autism, which is as much as five times more common among boys than girls, the reason, according to Autism Speaks, we wear blue today.

For NIGHTLY BUSINESS REPORT, I`m Meg Tirrell.

(END VIDEOTAPE)

HERERA: And we also wear our little puzzle piece for Autism Speaks.

MATHISEN: That`s right. And Bob and Suzanne, former head of NBC, one of the great sort of founders of Autism Speaks.

HERERA: They`re pioneers. They really are.

That does it for NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera. Thanks for watching.

MATHISEN: I`m Tyler Mathisen. Thanks from me as well. Have a great evening everyone. A happy Passover and a happy weekend.

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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