Transcript: Nightly Business Report — June 25, 2015

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

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Landmark ruling. The highest court in the land keeps the president`s controversial Affordable Care Act intact as hospitals and health insurance stocks soar.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Just crush it. Nike
(NYSE:NKE) reports a blowout quarter. Will the Dow component and the world`s largest footwear maker set the tone for trading tomorrow?

HERERA: No deal. Greek bailout talks breakdown without an agreement, as the deadline to get something done quickly approaches.

All that and more tonight on NIGHTLY BUSINESS REPORT for Thursday, June 25th.

MATHISEN: Good evening, everyone, and welcome.

The Supreme Court hands a big win to President Obama and a cutting defeat to opponents of his signature health care law. In a 6-3 ruling today, the justices upheld a key provision of the Affordable Care Act, preserving subsidies that millions use to pay for coverage, and allowing the largest government-sponsored health insurance expansion in decades to remain intact.

In its landmark decision, the court said that federal subsidies are legal under the law. And with that ruling, shares of hospital stocks took off. HCA, Tenet, Community Health and Universal (NYSE:UVV) Health Services all gained at least 7 percent. With some, rising double-digits and hitting new all time highs.

The same was true for insurers, like UnitedHealth, Anthem, Cigna, Humana (NYSE:HUM) and Aetna (NYSE:AET), which saw their shares rise as well.

Hampton Pearson has more ruling, the scathing dissent by one of the justices and the reaction in Washington.

(BEGIN VIDEOTAPE)

ACA SUPPORTERS: ACA is here to stay!

HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Jubilant supporters of the Affordable Care Act emerged from the Supreme Court after the high court upheld nationwide tax subsidies that provided health insurance for millions of Americans. It`s the second time President Obama has won a constitutional challenge to his most significant domestic achievement.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And today, after more than 50 votes in Congress to repeal or weaken this law, after a presidential election based in part on preserving or repealing this law, after multiple challenges to this law before the Supreme Court, the Affordable Care Act is here to stay.

PEARSON: In a 6-3 ruling, the justices said the subsidies that more than 8 million Americans now receive to make health insurance more affordable, do not depend on where they live.

Opponents argued a strict reading of the law said those subsidies should only be available through state run exchanges.

But Chief Justice John Roberts speaking for the court majority disagreed, quote, “Those credits are necessary for the federal exchanges to function like their state exchange counterpart. And to avoid the type of calamitous result that Congress plainly meant to avoid.

Justices Antonin Scalia delivered a blistering dissent. “So it rewrites the law to make tax credits available everywhere. We should start calling this law SCOTUScare.” SCOTUS is the acronym of the Supreme Court of the United States.

On Capitol Hill, House Speaker John Boehner said Republicans would continue efforts to repeal the law.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: It`s raising costs for American families. It`s raising cost for small businesses. And it`s just fundamentally broken.

PEARSON: In the fine years since the Affordable Care Act became law, more than 10 million people signed up for health insurance, more than 6 million people in 34 states will now keep their subsidies as a result of today`s Supreme Court ruling.

Still to come, in the remaining days of this term of the United States Supreme Court, a possible landmark decision on same sex marriage.

Hampton Pearson, NIGHTLY BUSINESS REPORT, at the Supreme Court.

(END VIDEOTAPE)

HERERA: As we reported, Humana (NYSE:HUM) and Aetna (NYSE:AET) shares moved higher following a Supreme Court decision. But shares of Humana
(NYSE:HUM) jumped even further mid-afternoon on a Bloomberg report that Aetna (NYSE:AET) is close to buying it, according to that report, a deal could be signed as early as this weekend. Humana (NYSE:HUM) has also received an offer from Cigna, but the board prefers the Aetna (NYSE:AET) offer.

MATHISEN: Ceci Connolly joins us now to talk more about today`s Supreme Court decision and what it will mean overall for the health care industry. She`s managing director at PricewaterhouseCoopers and works in its health research institute.

Ceci, welcome. Good to see you.

CECI CONNOLLY, PRICEWATERHOUSE COOPERS MANAGING DIRECTOR: Nice to see you.

MATHISEN: Well, if investors` interest in health care stocks were any gauge, this was a good ruling for hospital companies and insurers. You agree?

CONNOLLY: Yes, absolutely. First and foremost, as you know, certainty is always so critically important to businesses.

But even more so, we did some calculations. If those subsidies had been overturned by the court today, next year alone, health insurance companies would have lost about $36 billion in premium revenue. Hospitals would have lost about $9 billion just in consumer health care spending.

So, there were real financial implications to this.

HERERA: What about from employers. You mentioned briefly that employers now kind of have more sure footing on this particular issue. But what are the ramifications for them?

CONNOLLY: Well, for many employers, the Affordable Care Act has simply offered one additional option, if they want to direct their employee to those exchanges that we`ve been talking about today. But still 150 million Americans are still in that employer based health insurance market.
So, the ACA has not had a major impact on them, employers are facing some additional fees and, of course, in 2018, we`re bracing for a Cadillac tax on high priced plans. That`s something that`s worrying many employers.

MATHISEN: One of the things that worries households is the rising cost of health care insurance and the premium increases that many of them expect to face or have already faced when they buy that insurance on those health care exchange, the health insurance exchanges. What do you forecast for the rise in premiums over the next couple years on those exchanges?

CONNOLLY: Well, remarkably, the pricing on the exchanges and the increases in the first few years has tracked very closely to the rest of our health insurance market. So, nobody should be pleased with their health insurance costs these days. They still exceed GDP which is just too high and unsustainable. But that`s not unique to the exchanges. We are seeing that for all insurance across the board, average increases somewhere between 4 percent and 6 percent.

HERERA: So, this is basically a new healthcare economy. Do you anticipate there will be new entrance into this particular sector of the economy?

CONNOLLY: Yes, absolutely. And keep your eye on these new entrants.
They are nontraditional players. Many of them are start-ups that are getting VC funding right now, but also, we`re seeing players from the retail sector and from technology that are moving into health care, it`s a
$2.9 trillion sector and growing. They see a lot of opportunity to woo away customers that are cost-conscious and they`re looking for much greater convenience than they`ve gotten so far.

MATHISEN: Final question, Ceci, and it`s a quick one. Consolidation in the big players in health insurance, you expect that to continue?

CONNOLLY: We do expect health care consolidation to continue. Right now, businesses are looking for economies of scale, and a much bigger footprint out there in the marketplace.

MATHISEN: Ceci, thank you very much. Ceci Connolly with PricewaterhouseCoopers.

CONNOLLY: My pleasure.

HERERA: The Supreme Court also upheld a housing discrimination. The justices ruled that housing discrimination need not be intentional to be illegal. The 5-4 decision is a blow to both lenders and insurers, and it upholds a legal strategy that civil rights groups and the federal government have used for decades to fight lending and zoning laws.

MATHISEN: On Wall Street today, that rally in health care stocks was not enough to lift the broader market. Stocks cleared near their lows of this session, as concerns over a lack of resolution to Greece`s debt crisis weighed. We`ll have more on that in just a moment.

Now, by the close, the Dow Jones dropped 75 points. It finished at 17,890. The NASDAQ gave up 10 points and the S&P 500 lost 6.

HERERA: Late day earnings from Dow component Nike (NYSE:NKE), which saw profits rise by 24 percent. The world`s largest footwear maker reported earnings of 98 cents per share, well above the 83 cent estimate.
Revenues were also better than expected, coming in at $7.78 billion, up more than 4 1/2 percent from a year ago. The report sent shares initially higher to an all time high after the closing bell.

Sara Eisen now with the one key takeaway from Nike`s earnings.

(BEGIN VIDEOTAPE)

SARA EISEN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Another solid quarter for Nike (NYSE:NKE) — from running, to sportswear, to basketball, strength across the board.

But when it comes to Nike (NYSE:NKE), one metric matters most, and that is futures orders, an indication of what Nike (NYSE:NKE) sees ahead around the globe.

Those orders came in 13 percent, strong and above analysts` estimates of 11 percent. But Nike (NYSE:NKE) is a company that is heavily exposed to currency swings, that gets more than half of its business overseas. So, that strong dollar hurts, and if you add in those effects, futures orders were only up 2 percent.

Looking by geography, Nike (NYSE:NKE) is actually seeing the most growth in China. After that, Eastern Europe and Japan. North America is also strong, with double digit growth.

The one weak spot for Nike (NYSE:NKE) right now is emerging markets, where economies there have slowed. But the bottom line, this company continues to innovate and leverage a very strong brand around the world, helping drive what has been very solid profitability this quarter and in the past. Nike`s beaten earnings estimates 90 percent of the time over the last five years.

For NIGHTLY BUSINESS REPORT, I`m Sara Eisen.

(END VIDEOTAPE)

MATHISEN: More on Greece now with the meeting of finance ministers ended today without an agreement on Greece`s debt, and with just days until the deadline, the pressure is mounting.

Julia Chatterley has more from Brussels where the high levels were taking place.

(BEGIN VIDEOTAPE)

JULIA CHATTERLEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Another day passes here in Brussels and still no deal between Greece and its creditors.
But when the finance ministers left the meeting earlier today, the president of the Eurogroup, Jeroen Dijsselbloem said the door remains open.

JEROEN DIJSSELBLOEM, EUROGROUP PRESIDENT: The institutions are going to look at the last proposals, as I said. If anything of that is useful, we will use it, of course. We are very on a number of issues, quite far apart. So, it`s going to be difficult.

CHATTERLEY: He hopes that the Greeks will come up with fresh proposals. But when Yanis Varoufakis, the Greek finance minister, he suggested that there were other people around the table that also disagreed with what the creditors, the ECB, the IMF, are demanding of the Greeks.

That doesn`t necessarily sound like a man I think who`s willing to compromise at this stage, particularly given pressures the government faces back home in Greece.

Remember, this is another day towards the IMF payment that`s due on Tuesday of next week, at the end of June. And we did get a warning from the IMF today, they said that they were be no leeway for the Greeks on that payment, it would be consider a default, even if there were talks on going to try to reach a solution.

But there also was a bright spot. The suggestion that they would not pay Greece the money they owe them, if the Eurozone leaders don`t agree to have debt relief to Greece in the future, that could be music to Alexei Tsipras` ears and a way to sell this deal back home. But for now, a deal is what we`re still waiting for. These talks will continue.

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

(END VIDEOTAPE)

HERERA: Greece is just one issue e global financial markets are paying close attention to. There are a number of others as well, including the Federal Reserve, the health of earnings and as investor Carl Icahn pointed out yesterday, a potentially overheated market.

Dominic Chu has more on what investors need to watch over the next couple months.

(BEGIN VIDEOTAPE)

DOMINIC CHU, NIGHTLY BUSINESS REPORT CORRESPONDENT: There`s a slew of bigger picture concerns that investors are paying close attention to as we hit the heart of the summer season. One of the biggest concerns comes from across the Atlantic in Europe.

Will Greece be able to meet its debt obligations? And more broadly, will it stay in the European Union?

SCOTT WREN: If something does happen with Greece, and they do fall out of the Eurozone, if you hurt sentiment, whether it`s business sentiment in Europe, whether it`s consumer sentiment in Europe, that`s not good for business.

CHU: Bringing things back to our home shores, our nation`s central bank continues to be a source of worry. The Fed has made it very clear, it won`t be ratcheting up interest rates in a rapid manner but uncertainty remains.

ED YARDENI, YARDENI RESEARCH PRESIDENT: Even if they only do a minor little increase later this year, there`s a lot of anxiety about whether the global economy can handle that, after having interest rates near zero for so long. So, I think it continues to hang over the market.

CHU: And then, there`s the upcoming earnings season. American companies have been able to keep profit growth alive, but will the trend continue? Many of them took a hit, because U.S. dollars have been very strong, versus other currencies around the world. And that eats into foreign profits that later have to be converted to U.S. dollars.

JOHN BUCKINGHAM, AFAM CAPITAL: The dollar is another wild card in the market, because key one profits were significantly impacted by the dollar`s strength. Now, we`ve had some dollar weakness here in Q2. And so, I think the impact is going to be somewhat dissipated. But it is still is a head wind for many of the companies, especially the larger names in the S&P 500.

CHU: Those are just a handful of the concerns that are facing investors, and the reason why many are trying to plan for any possible market volatility in the weeks ahead.

For NIGHTLY BUSINESS REPORT, I`m Dominic Chu.

(END VIDEOTAPE)

MATHISEN: And still ahead, the battle to build the next generation bomber is heating up. There`s 55 billion at stake. Some of America`s biggest defense company.

(MUSIC)

MATHISEN: The House of Representatives today voted to renew assistance for American workers hurt by international trade. Without action by Congress, the worker aid program would have expired at the end of the month. Support came from both Democrats and Republicans.

The Senate already passed the worker aid bill, which now goes to the president for him to sign.

HERERA: Consumers are loosening the grip on their wallets, personal spending which measures spending on everything from autos to health care, rose at its fastest pace in almost six years, up 0.9 percent in May from a month earlier. That`s according to the Commerce Department.

Economists say this report is another sign that the economy is rebounding from a tough winter. Personal income also increased point 5 percent last month.

MATHISEN: Well, the labor market remains healthy. Filings for unemployment benefits held below 300,000 for the 16th consecutive week.
According to the Labor Department, jobless claims increased modestly last week, rising 3,000 to 271,000.

HERERA: And now to the oil markets, where crude prices fell for a second straight day. And there`s a new report that shows OPEC`s risky strategy of not cutting production when prices were tumbling may have backfired.

Jackie DeAngelis has more.

(BEGIN VIDEOTAPE)

JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Oil prices have been stuck, hovering around $60 for the last month, leaving analysts and investors wondering if OPEC`s strategy to maintain production in a relatively low priced environment is working.

In it`s annual bulletin, however, the cartel reported that for 2014, it`s market share dropped, to the lowest in a decade. A seemingly simple fact, but is making market participants believe OPEC`s strategy isn`t a strategy at all. It`s actually the group`s only option.

ANTHONY GRISANTI, GRZ ENERGY FOUNDER AND PRES.: This is OPEC`s Waterloo moment. You know, they tried to hold on to market share. That`s not working at this point. The only thing left that I can see they do is actually cut production, get the prices up and then worry about market share later.

DEANGELIS: And now, OPEC`s hardship, a perceived boon for U.S. shale.

U.S. producers are not being squeezed. In fact, the EIA reported last week that U.S. production ramped to over 9.6 billion barrels a day. It appears there`s a sea change occurring. OPEC once known to be the global swing producer could be relinquishing that title to shale.

So, how are the shale players going to manage this?

GRISANTI: Shale right now has 2,000 wells that are just sitting almost at the point of completion. So, if prices rally to $60, $65, even $70, those are coming online within a matter of weeks. And you`ll see production ramped up again, and you see all this roller coaster of prices begin to happen again.

DEANGELIS: But everything could change after the summer. When driving demand wanes, expectations for another price drop. How low we go is still unknown.

For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis.

(END VIDEOTAPE)

MATHISEN: We begin tonight`s “Market Focus” with another disappointing quarter from Barnes and Noble (NYSE:NE).

Demand for the retailer`s Nook tablets continued to fall and customers stayed away from its stores. Still, its loss was narrower than expected.

Barnes & Noble (NYSE:NE) (NYSE:BKS) also disclosing a management shift. CEO Michael Huseby will leave his post and become executive chairman of the company`s college bookstore group after the firm spins it off. Shares of Barnes & Noble (NYSE:NE) (NYSE:BKS) down 1 1/2 percent to $25.94.

A round of job cuts meantime at General Mills (NYSE:GIS). The food company expects to eliminate up to 725 positions abroad, in an effort to reduce costs and invest more in innovation in its international business.
This as the firm adapts to changing consumer tastes and economic challenges across the board. Shares off a fraction to $56.49.

Kroger (NYSE:KR) hiking its dividend, launching a 2-for-1 stock split and buying back a half billion dollars worth of its stock. This as the grocery chain has reported stronger results in recent quarters. The new dividend is 21 cents a share and going to be paid to shareholders in September. Kroger (NYSE:KR) has a yield a little below the market average of about 1 percent. Shares were up a little bit there, a penny, $72.95 was the close.

Winnebago out with earnings and revenue that topped estimates. This as the motor home maker shipped more vehicles. The firm attributes the increase to Americans spending more on big-ticket items and an improving economy. Shares popped 9 percent to $22.57.

HERERA: McDonald`s is selling stores in Taiwan to a franchise operator in an effort to expand its franchise business in China. This as the company tries to turn around its fortunes in Asia and also cuts costs.
In the U.S., the chief of the burger chain says that they`re trying to bring back the brand with small changes.

(BEGIN VIDEO CLIP)

STEVE EASTERBROOK, MCDONALD`S CEO: Recently, for example, we made an announcement that we`re going to withdraw the use of antibiotics out of the chicken supply chain. And it`s things like the customers recognize and they`re grateful that they can have sort of aspirational quality, they can buy (ph) aspirational goal and add the value of McDonald`s.

(END VIDEO CLIP)

HERERA: Shares slipped to just a fraction to $95.79.

TransUnion making its Wall Street debut today. The credit reporting firm raised about $665 million in its trading debut. Shares were priced at
$22.50 a piece. That was near the high-end of the range. The stock closed at $25.40, a gain of about 13 percent.

Micron reports earnings and revenue that missed estimates after the closing bell. The chip maker blaming the miss on weakness in the personal computer sector. Shares slid initially after the close. But in regular trading, the stock was off a fraction to $24.02.

And the animal health company Zoetis was halted late in the day after it was approached by Valeant Pharmaceuticals about a takeover. That`s according to “The Wall Street Journal.” The firm had a market cap of about
$25 billion before the report of that approach. And shares shot up about
11 percent on the report. Valeant also rising into the close.

MATHISEN: Taxi drivers took to the streets across France to protest the expansion of the ride hailing service Uber. Taxi drivers burned tires, blocked traffic as part of a nationwide strike, which turned chaotic in some areas. The drivers say Uber`s lower cost service is taking away their livelihood.

HERERA: So, which company will build the next generation bomber? The Air Force is expected to make a decision this summer. And for companies like Boeing (NYSE:BA), and Lockheed and Northrop, there`s $55 billion on the line.

Jane Wells has more.

(BEGIN VIDEOTAPE)

JANE WELLS, NIGHTLY BUSINESS REPORT CORRESPONDENT: The next defense contract will be the bomb, well, really, the bomber. The nation`s B-2 stealth bomber is now over 20 years old, built by Northup Grumman, at a cost of $2 billion per aircraft.

Now, the Air Force wants a new bomber at a quarter of the price.

Northrop is competing for the deal against the team from Lockheed Martin (NYSE:LMT) and Boeing (NYSE:BA), total value of the contract could reach $70 billion. But as the B-2 ages, along with older B-1s and B-52s, it`s anybody`s guess who will win the secretive contract. Northrop has expertise in building stealth bombers. Boeing (NYSE:BA) knows how to build a lot of aircrafts and could benefit from Lockheed`s technology.

And since this will be the last big contract for a manned combat aircraft for perhaps 20 years, whoever loses may have to get out of that business. In fact, some analysts wonder if Northrop wins, will Boeing`s incoming CEO be under pressure to buy his rival. Lockheed is OK either way, as it has the massive F-35 contract. California and Florida are offering hundreds of millions of dollars in tax credits, hoping to land those manufacturing jobs, but they may have to wait a while, because there`s always the possibility that when the contract is announced later this summer, who loses will protest that decision, because so much is on the line.

For NIGHTLY BUSINESS REPORT, Jane Wells, Los Angeles.

(END VIDEOTAPE)

HERERA: Coming up, will the companies that help people find love find love themselves in the public market?

(MUSIC)

HERERA: An update on the Taylor Swift Apple (NASDAQ:AAPL) exchange we told you about earlier this week, the artist deciding today to let Apple
(NASDAQ:AAPL) music stream her 1989 album, making it the only service allowed to do so. This after Miss Swift wrote a public letter to the tech company about its policy not to pay artists during the trial period. Apple
(NASDAQ:AAPL) quickly and somewhat surprisingly changed the policy only a few hours after that letter was written.

MATHISEN: Interactive group found some love from investors today.
Shares rose 5 percent, after the company said it would spin off its online dating group called the match group.

Julia Boorstin has more on this multibillion dollar industry.

(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Chairman Barry Diller is planning an IPO for IAC`s match group in the fourth quarter, giving investors the opportunity to bet on the biggest portfolio of digital dating company.

BARRY DILLER, IAC CHAIRMAN: In a match group, we have dozens of dating services, that go from very narrow niches to extremely broad niches.
Match.com is the broadest. Okcupid is very broad. They all probably eat off of each other, but the thing is, people tend to use multiple services.

BOORSTIN: Match is the largest service in the portfolio, with 2.4 million subscribers, and more than 850 million in revenue last year.
Tender is just starting to make money from the 16,000 swipes the app has every second, as it recently announced a premium version.

DILLER: This is kind of a little quick silver to get you over the hump of being bold. That`s a great tool for people.

BOORSTIN: The group also owns premium OKcupid, as well as activity oriented howaboutwe.

The dating business which comprises of 30 percent of IAC`s first quarter revenue, helped drive IAC shares up 80 percent so far this year.

Benefiting from the explosion of mobile devices so people can use dating services constantly, and network effects, meaning the more people who use the services, the more valuable they become. And investors like the company offers a range of products.

SHELLY PALMER, LANDMARK VENTURES MANAGING PARTNER: You can find long lasting love, you can find something to do tonight and everything in the middle.

BOORSTIN: But it`s a crowded space with giants including e-harmony and startups such as Hinge and Coffee Meets Bagel. And digital daters can be fickle, we can always expect another hot startup to steal attention from leading apps, just as Tinder did before IAC bought it

And online dating is a rare business that loses customers when it`s successful.

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

(END VIDEOTAPE)

HERERA: Last night, we told you which state ranks highest in CNBC`s annual list of America`s top states for business. Now we have a list of the worst states for business, scored in more than 60 metrics and 10 categories, including things like cost of living and quality of life.

So, here you go, the third worst, Rhode Island, second, West Virginia and the worst state for business, Hawaii, although it might be hard to conjure up sympathy for a state known for hula dancers and surfers. The Aloha State`s infrastructure is one of the poorest in the nation.

MATHISEN: Maybe the worst state for business, but for the best state to visit, I`ll tell you.

HERERA: I was going to say, the best to — well, now, we`re going to get letters from other states.

(CROSSTALK)

MATHISEN: But a really good state to visit.

HERERA: All right. That does it for NIGHTLY BUSINESS REPORT tonight.
I`m Sue Herera. Thanks for joining us.

MATHISEN: And I`m Tyler Mathisen. Have a great evening, everybody.
We hope to see right back here tomorrow night.

HERERA: We like all states.

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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