Transcript: Nightly Business Report- December 3, 2015

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

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Sharp drop. With the
markets on edge, is it time for long-term investors to shift their strategy
and take on less risk?

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Search for stability. The
stocks that may provide some calm in a volatile and changing world.

MATHISEN: And what to watch. Will tomorrow`s jobs report seal the deal
for an interest rate hike in just two weeks?

All that and more tonight on NIGHTLY BUSINESS REPORT for Thursday, December
3rd.

HERERA: Good evening, everyone. Welcome.

A new reality, the European Central Bank cut interest rates to kickstart
that region`s economy. The Federal Reserve may be on the verge of
tightening rates for the first time in nearly a decade. And there`s the
possibility that yesterday`s mass shooting in San Bernardino was an act of
terror.

All three events, a changing of the macro economy and the fight against
terrorism, will play out over the long term. All three weighed on
investors` minds today.

By the close, the Dow Jones industrial average slid 252 points to 17,477.
The NASDAQ fell 85. The S&P 500 dropped 29.

Steve Liesman takes a closer look at the events that kept investors on
edge.

(BEGIN VIDEOTAPE)

STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Concerns gripped
markets today from two completely different sources. In Frankfurt,
Germany, the European Central Bank announced a sweeping new round of easier
monetary policies that nevertheless fell far short of market expectations.
It strengthened the dollar, sent bond yields surging and weighed on stocks
around the globe.

And then in the early afternoon, new details emerged about the horrific
shootings in San Bernardino. Increasingly, the event looks less domestic
and more potentially international, with NBC reporting one of the suspects
had been radicalized.

Fed Chair Janet Yellen was asked about the potential economic effects of
terrorism in her testimony before the Joint Economic Committee today.

JANET YELLEN, FEDERAL RESERVE CHAIR: Those risks are ones that we watch
very carefully, and I would agree with you that it does have the potential
to have a significant economic effect. I would not say that I see a
significant effect at this point.

LIESMAN: Yellen gave every impression that despite risks and concerns that
might be out there, including a stronger dollar and weak overseas growth,
the committee looks ready to hike. Her comments follow an ECB press
conference where President Mario Draghi laid out new measures to ease and
stimulate the European economies. They included by extending by six months
the minimum amount of time the ECB would buy bonds and broadening the kinds
of bonds it would buy. They also cut interest rates another ten basis
points, down to negative 30.

But it wasn`t enough. Markets wanted more and expected more and the euro
surged against the dollar. Stocks fell. Then, Draghi faced a barrage of
questions from reporters, had to defend his moves, saying they were
adequate to the task.

MARIO DRAGHI, EUROPEAN CENTRAL BANK PRESIDENT: We are confident that these
decisions actually are adequate to achieve our objectives. I don`t think
our communication was wrong. I think these measures need time to be fully
appreciated. And we will see.

LIESMAN: Draghi speaks in New York tomorrow and markets around the world
will follow his every word, as they will the increasingly awful news of San
Bernardino. And they will weigh those events against a November jobs
report that should show employment in the United States is relatively
healthy, likely prompting a Fed rate hike.

For NIGHTLY BUSINESS REPORT, I`m Steve Liesman.

(END VIDEOTAPE)

MATHISEN: And as Steve just reported, the stock market took a leg lower
today on reports that one of the suspects in the San Bernardino shootings
had been radicalized, in contact with people holding Islamist extremist
views. Jane Wells has been covering the story and has more on today`s
developments.

Hi, Jane.

JANE WELLS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Hey, Tyler. We are now
right across from where this massacre happened. This is the building
behind me where those 14 people died, where 28-year-old Syed Farook was
having a holiday party with co-workers. Police said he left and then
returned at some point with his wife, Tashfeen Malik, dressed in tactical
gear and began opening fire.

We have video shot a short time ago of people bringing some flowers,
escorted by chaplains. They tell us that the woman who was very emotional,
her fiance is one of those who died in this. And as we show you video of
the scene here yesterday, right where I`m standing now behind me, a total
of 14 people killed. They have now said 21 people were injured.

Two dead suspects. As we show you where they were killed, they died in a
shootout with police in a rented SUV that they were supposed to return
yesterday. Hundreds of rounds exchanged there in their car and in the
house the two of them were renting thousands of rounds of ammunition. A
total of 15 pipe bombs, including three which were here at the original
scene, and police had to neutralize those last night before they could even
start to extract the bodies.

What we do know is as NBC News is reporting, that Syed Farook had traveled
abroad, he met his wife abroad, brought her here. She`s from Pakistan.
He`s a U.S.-born citizen. And that while he was on nobody`s radar, he had
been, quote, “radicalized to some extent” and was meeting with people who
are on the radar.

Still, Tyler, the FBI will not characterize this as terrorism yet. They
have their hands on computers, thumb drives, cell phones. They`re going to
try and piece this together.

The two had a six-month-old daughter which they left with his mother
yesterday morning, saying they had to go to the doctor. We`re not sure
where that baby is now. But police say that the Farook`s relatives have
been cooperating, they have been interviewed.

And while police believe the situation here is safe and that the two
shooters are dead, it`s not clear if anybody else knew about this and may
have helped in some way. Many, many questions.

Back to you.

MATHISEN: That is certainly some part of the ongoing investigation.

Early today, Jane, you recited some remarkable numbers about the arsenal
that was discovered in that home in I believe it`s Redlands, California.

WELLS: Yes.

MATHISEN: You remember some of those statistics. It was truly mind-
blowing.

WELLS: In the home, there were a total of at least 4,500 rounds of
ammunition either for the assault, semi-automatic rifles they had or for
the semi-automatic handguns. There were 12 pipe bomb-type devices is what
police — how police describe them.

There were tools to make IEDs. There was a lot of stuff in this home where
the two of them were renting, and in the SUV — in addition to the 4,500
rounds at least in the home — in the SUV, there were 1,600 rounds.

As for the guns, police believe they were all legally bought. They are
common. They are common sporting rifles or handguns. But in this case of
course, it was used obviously to deadly intent.

MATHISEN: All right. Jane wells in San Bernardino — thank you.

HERERA: Well, in light of what we`ve just told you about, is it time for
long-term investors to shift their strategies and start taking on less
risk?

Hugh Johnson joins us. He`s chief investment officer of his own money
management firm, Hugh Johnson Advisors.

Hugh, this is a great night to have you here because I know you take a
longer term view and I think you can give our viewers some great advice.

So, if I am a longer-term investor, given the changing global environment
on many different levels, what would you do right now?

HUGH JOHNSON, HUGH JOHNSON ADVISORS CEO: Well, first of all, I wouldn`t
get too caught up in day-to-day events. Certainly, there were a lot of
surprises today with the European Central Bank, what Draghi did was a
little bit of a surprise. It wasn`t quite as much as we`d expected and
certainly the events in California were very, very much a surprise.

When you get that kind of surprise, Sue, you get a lot of volatility and
significant declines in the stock market. What I`m simply saying is don`t
get caught up in the day-to-day volatility of the markets. Take a longer-
term point of view.

And I think if you do that, Sue, quite frankly I`m trying to ask myself the
question is there any reason to really change my now somewhat positive but
cautious on the basis of valuation, but somewhat positive view about where
the stock market economy and interest rates are going. And I`m not going
to change my view based on what I`ve seen today. What I`ve seen today was
a surprise, but I`m not changing my view.

MATHISEN: But can you blame, Hugh —

JOHNSON: So, you know, hang tight.

MATHISEN: Hugh, you and I have known each other a long time, which speaks
more to our age than anything else. But can you blame individuals who are
sitting there and looking at the three factors you mentioned, the European
Central Bank — don`t know how that`s going to play out. The Federal
Reserve — don`t know how that`s going to play out. And now the
possibility that this individual or those individuals involved in San
Bernardino were some kind of domestic terror cell.

Can you blame `em for wanting to step back and say, hey, I want to wait and
see, I want to take some money off the table?

JOHNSON: No, I can`t blame anybody for being a little bit frightened by
this. It even frightens me. But I think if I do back away and I continue
to do a hard-boiled analysis of the current state of affairs, you know,
we`ve known about the divergence in monetary policy. We know that`s going
to put upward pressure on the dollar. We know that`s going to hurt
exports. We`ve known about that for some time.

Terrorism is not new. Coming to our shores is perhaps a little bit new.
It`s gone global. And that to some extent means maybe you have to take a
look at companies, say, a Raytheon (NYSE:RTN) or Northrop or a Lockheed
Martin (NYSE:LMT). Add those to your portfolio.

But as far as changing your basic strategy, I wouldn`t do that. But I
certainly understand when somebody gets scared by these events, they`re new
and they want to step back, hold the line for the time being and see it
settle down. I certainly understand that, and that`s just fine.

HERERA: Very quickly, you also like Lowe`s, Hugh, in consumer
discretionary and in technology Apple (NASDAQ:AAPL) and Google
(NASDAQ:GOOG). So, you do see some value in the market.

JOHNSON: Well, I see some value in the market. I see some value in those
names. And those names are in our portfolios and we`d add to them.

I think my only concern right now as far as the market goes is that it`s a
little bit overvalued. We`ve come from being very overvalued a couple of
days ago down to being fairly valued. But you`ve got to pick your entry
points.

In my judgment, the entry point, a good entry point is going to be lower
than we currently are. So, exercise some patience. Exercise with
discipline. And if you want to sit it out for a couple of days because
you`re concerned about the changing events as Tyler points out, that`s just
fine too. But again, a lower entry point I think is what you have to wait
for.

HERERA: All right. Thanks so much, Hugh. Good to see you again. Hugh
Johnson with Johnson Advisors.

MATHISEN: And still ahead, the great divide. Why OPEC`s meeting tomorrow
is expected to be more contentious than ever.

(MUSIC)

HERERA: As Steve Liesman reported earlier, tomorrow`s employment report is
expected to reflect a healthy job market. And today the number of
Americans filing for unemployment benefits last week remained at a level
consistent with a strengthening job market. A separate report from
outplacement firm Challenger Gray & Christmas says layoffs last month were
at a 14-month low.

Hampton Pearson takes a closer look now at tomorrow`s employment report.

(BEGIN VIDEOTAPE)

HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: Ahead of the
November jobs report, the Labor Department says first-time unemployment
claims actually went up last week but the less volatile four-week moving
average declined by 1,750 jobs to just over 269,000, an historically low
level.

Earlier this week, a closely watched survey of private sector job growth
forecast an increase of 217,000 new hires, the most jobs in five months.

On Capitol Hill today, Fed Chair Janet Yellen was accentuating the positive
about jobs and the overall economy.

YELLEN: We want to see the economy being on a path where we`ll continue to
erode that labor market slack over time. So we`ll be looking very
carefully at that. But we can`t overweight any particular number. We need
to be looking at underlying trends in the data and not overweighting any
number.

PEARSON: In October, employers added 271,000 jobs, the biggest monthly
increase this year, and headline unemployment fell to 5 percent.

The November consensus forecast projects 200,000 new jobs and a steady
unemployment rate. But there are potential speed bumps to job growth.

New data from the Institute for Supply Management shows a slowdown in both
manufacturing and the service sector. It turns out service sector
businesses last month grew at their slowest pace since May. And services
have been an engine of job growth, adding 2.5 million jobs, 85 percent of
jobs created according to the Labor Department.

Still leading economists say the overall job market is robust.
Unemployment is at a seven-year low. And wages, while stagnant, are
finally showing some signs of improvement. Trends, those economists say,
that support a change in monetary policy at the Fed.

ALAN KRUEGER, FORMER CHAIRMAN, WHITE HOUSE COUNCIL OF ECONOMIC ADVISER: I
think we`re getting very close to full employment. I think it would be
prudent for the Federal Reserve to start to normalize monetary policy.

PEARSON: Tomorrow could turn out to be the most important jobs report of
the year, coming just two weeks before the Federal Reserve meets to decide
if now is the time to raise key short-term interest rates for the first
time in nearly a decade.

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

(END VIDEOTAPE)

MATHISEN: New orders for factory goods bounced back in October. This
follows two straight months of declines. The Commerce Department reports
that new orders for manufactured items rose 1 1/2 percent on rising demand
for transportation equipment. But the overall manufacturing sector remains
pressured by a strong dollar and a cutback in spending by the energy
sector.

HERERA: Oil prices rose today, recouping all of yesterday`s losses. The
dollar fell sharply against the other major currencies after the ECB
disappointed the market with the amount of stimulus that it announced and
the falling dollar increased demand for most commodities, including
domestic crude. At the settle, prices rose nearly 3 percent to $41.08.

MATHISEN: Despite the rise today, oil prices remain relatively low. That
will be the main focus of discussion at tomorrow`s gathering of the largest
oil producers in the world. But will it be enough for the cartel to act?

Jackie DeAngelis takes a look at what to expect from tomorrow`s big OPEC
meeting.

(BEGIN VIDEOTAPE)

JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT: For oil prices,
it`s a moment of truth. The last OPEC meeting of the year tomorrow, the
event that global oil producers and investors have been waiting for.

Consensus going in is that there will be no cuts to production. The cartel
is expected to stand firm, to cope with low prices and to maintain market
share, to force other players to reduce their output. Do they have a
choice? Profits have been lost in a low-price environment, creating a need
to pump more products, propelling a vicious cycle that will only contribute
to the current oil glut.

ANTHONY GRISANTI, GRZ ENERGY FOUNDER AND PRESIDENT: OPEC`s inaction could
be the action. In other words, that if they don`t cut, other countries
won`t cut either. And you`ll have a world that`s even more awash with oil
and prices will trade lower.

DEANGELIS: But could there be a mutiny coming inside the cartel?
Countries like Venezuela and Ecuador are choking on low oil prices. Saudi
Arabia has more tolerance to wait it out.

GRISANTI: They`re struggling right now. They`re struggling to pay their
bills.

And I think that what`s happening is and what you see with OPEC is they`re
producing 31.77 million barrels a day on a 30 million quota. That`s other
countries cheating because they can`t get the revenue they have from past
oil prices. So as the price drops, they have to produce more.

DEANGELIS: The Iranians, they`re planning to bring 500,000 to a million
barrels a day online as soon as they can.

Saudi Arabia has said it will cut production but only if all producers cut.
That means the U.S. and Russia too. Cooperation like that is hard to come
by.

Yet there`s always a chance that OPEC goes rogue, and that`s why crews are
steady into the meeting. But many think investors will sell on the news
and into the end of the year.

For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis.

(END VIDEOTAPE)

HERERA: Kroger (NYSE:KR) beats and hikes guidance. And that`s where we
begin tonight`s “Market Focus”.

The grocer increased its profit estimates as sales rose in the company`s
most recent quarter. The firm said the performance shows signs that
consumer confidence is still strong. Shares rose nearly 5 percent to
$39.91.

Costco (NASDAQ:COST) reported same-store sales for November that were
basically flat, but that was better than forecast, which was for declines.
The stock was more than 1 1/2 percent higher to $163.67.

Sears (NASDAQ:SHLD) saw its revenue fall 20 percent in its latest quarter.
This as apparel and consumer electronics sales declined. The company also
said it plans to continue to take significant actions to alter its capital
structure and position it for profitability. The shares tumbled 7 percent,
or nearly so, to $19.

Avon is in talks to sell its North American business to a private equity
firm according to Dow Jones. This comes as the cosmetics company has been
under activist shareholder pressure. Shares rose nearly 7 percent to
$3.99.

MATHISEN: Express (NYSE:EXPR) saw earnings rise 80 percent in the
company`s latest quarter, and it hiked its guidance for the year. The
clothing retailer offered fewer discounts, and that turned into higher
profits. Shares were 6 percent lower nonetheless to $16.33.

Mixed quarterlies from dollar general. The company`s core customer base
spent less. But bottom line results were better than expected as the
company kept its costs down. The stock up 4 percent in this otherwise
nasty day. It finished at $68.12.

Michael`s saw its profits jump but currency headwinds weighed on results.
The retailer cut its 2015 guidance because of fewer store openings. Shares
were off 1 percent at $21.69.

Barnes & Noble (NYSE:NE) (NYSE:BKS) reported a wider than expected loss.
They did it late today. The book retailer saw sales of its Nook E-reader
drop by more than 30 percent. Shares tumbled initially after the close.
During the regular session the stock was off more than 4 percent. It
finished at $12.05.

HERERA: Coming up, searching for stability. “Fortune” magazine`s investor
guide for 2016 has a list of names you may want to own in this volatile
world.

(MUSIC)

HERERA: Here`s a look at what to watch for tomorrow. As Hampton reported,
it is jobs Friday. We`ll find out how many jobs the economy added in
November. Also on the data front, a read on international trade. European
Central Bank President Mario Draghi will speak at the Economic Club of New
York. And that is what to watch for on Friday.

MATHISEN: And after more than two years, the Securities and Exchange
Commission case against the billionaire hedge fund founder Steven Cohen is
set now to move forward once again. Cohen will face the regulators`
allegations that he failed to supervise two former fund managers over
insider trading. A legal stay had stalled those proceedings. A judge has
now lifted that stay and scheduled a prehearing conference for later this
month.

HERERA: Standard & Poor`s cut the credit ratings of eight major global
banks. The downgrade decision comes after the Federal Reserve adopted a
new rule that would limit future emergency lending to failing companies.
The downgrade affects the holding companies of Bank of America (NYSE:BAC),
Bank of New York Mellon (NYSE:BK), Citigroup (NYSE:C), JPMorgan (NYSE:JPM)
Chase, Morgan Stanley (NYSE:MS), State Street (NYSE:STT), Goldman Sachs
(NYSE:GS), and Wells Fargo (NYSE:WFC).

MATHISEN: “Fortune” magazine has just published its investor guide for
2016. It includes a list of stocks that it says offer a measure of
stability in the midst of chaos. Susie Gharib is here to discuss it.
She`s senior special correspondent at “Fortune” and NIGHTLY BUSINESS REPORT
contributor.

Susie, welcome. Good as always to see you.

So, how did “Fortune” come up with this list of good stocks for bad times
and does “Fortune” really think 2016`s going to be bad?

SUSIE GHARIB, FORTUNE SENIOR SPECIAL CORRESPONDENT: Well, nobody knows
what it`s really going to be. But what they decided to do, the “Fortune”
team was looking for companies that given all the volatility that`s going
on, especially on a nervous day like today, that offers some safety.
They`re reasonably valued companies. They are established high-quality
companies and these are companies that will — don`t depend on a
supercharged economy to perform well.

I mean, obviously, Tyler, no company is immune to some of these forces.
But at least they offer stability as you said in a volatile world.

HERERA: One of them, one sector anyway, Susie-s airlines. I kind of
question that because a lot of investors have been burned by losses and
bankruptcies and troubles with mergers and the like.

GHARIB: We remember all of that, don`t we, Sue?

HERERA: Yes.

GHARIB: We reported on all of that.

Well, airlines are now making money. We all complain about the extra fees
we have to pay for baggage or more comfortable seats, but we do pay them
and the airlines are making money off of that. Jet fuel prices are lower
as you know.

And, you know, you`re not seeing the price wars like we used to because of
all the mergers and consolidation. The two companies that “Fortune” chose,
Delta and Virgin America, Delta is prepared for takeoff. It`s made a lot
of smart moves. Its earnings are expected to go up. Ditto for Virgin
America and Virgin America also has a dividend, 5 percent.

HERERA: Yes.

GHARIB: Good stocks to hold.

HERERA: That will do it.

MATHISEN: Every time I get on a plane these days, Susie, I say there are
too many people on these planes. Of course, the airlines love that.

GHARIB: I know the feeling.

MATHISEN: Let`s move on to banking. What`s the attraction here? Your two
choices are not the big banks but a big broker, Schwab, and Capital One.

GHARIB: Exactly. And look, we talk every day about what the Fed`s going
to do. Ultimately interest rates are going to go up, as rates become more
normal. These are two companies that will benefit. It`s expected that the
profitability on money market funds will triple. That`s a big area for
Schwab. So, that`s in its favor.

Capital One known for credit cards, but it`s been expanding its branches.
It has a lot of deposits. It will also benefit from higher rates.

HERERA: And in technology one new tech and one older tech, Susie.

GHARIB: That`s right. Microsoft (NASDAQ:MSFT), a lot of people consider
as old tech.

HERERA: Right.

GHARIB: But the CEO, Nadella, you`ve got to hand it to him. He`s
transforming the company. And the stock has been up 17 percent this year.
And it`s expected to continue next year.

Google (NASDAQ:GOOG) officially now Alphabet. What can I say? It`s firing
on all cylinders. The stock up more than 40 percent this year. It`s got a
lot of cash. Most likely, that`s going to help to make that stock go even
higher.

MATHISEN: Susie, great to see you.

GHARIB: Same here. Nice seeing you, Tyler and Sue.

MATHISEN: Susie Gharib, special correspondent with “Fortune” and NIGHTLY
BUSINESS REPORT contributor.

HERERA: You guys coordinated your colors.

MATHISEN: How do you like that with the tie?

HERERA: Very good.

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

We`d like to remind you this is the time of year your public television
station seeks your support.

MATHISEN: And I`m Tyler Mathisen. Thank you very much for your support.
And we hope to see you right back here on jobs Friday.

END

Nightly Business Report transcripts and video are available on-line post
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on Nightly Business Report is not and should not be considered as
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