Transcript: Nightly Business Report- March 11, 2016

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

SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Strong finish. Stocks take
off to close the week. The Dow gains more than 200 points. Why? Well,
some think a long-time market antagonist, oil, may have hit a bottom.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT: Quite a fall. One of the towns
that reaped the rewards of the oil boom is now feeling the pain. We`ll
take you there.

HERERA: And this week`s market monitor says you should own this stock,
which he says could nearly double in the next year. He`ll tell us what it
is.

All that and more for Friday, March 11th.

MATHISEN: Good evening, everyone, and welcome.

Stocks closed out the week on a strong note, surging more than 1 percent to
four straight weeks of gains, the first such surge since November. Now,
the catalyst, well, some pin it on investors, taking a more optimistic view
yesterday`s moves by the European Central Bank to cut rates and expand its
stimulus program. Others by contrast say it was a report that helped lift
oil to its highest price since December. More on that in a moment.

Well, whichever one you choose, it was a good day for stocks. The Dow
roles 218 points to 17,213. The NASDAQ gained 86. The S&P 500 rose a big
32.

As for the week, the Dow and S&P added roughly 1 percent, the NASDAQ a
little less than that.

HERERA: Oil got that lift today following a report by the International
Energy Agency which said that prices may have hit a bottom. As a result,
domestic crude finished up nearly 2 percent to $38.50 a barrel, the highest
level since December, and a 7 percent gain for the week.

Jackie DeAngelis tells us what the IEA sees.

(BEGIN VIDEOTAPE)

JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT: The million-
dollar for question for oil, have prices bottomed?

The International Energy Agency said today it`s possible. The report
citing reduced output in the United States and from other non-OPEC
producers as one reason supply and demand should begin to come back in
line. It also said Iranian output hasn`t been as dramatic as believed
before.

In fact, here in the United States, the agency expects production will
decline this year by more than half a million barrels per day. It also
said OPEC pumps 90,000 less barrels per day last month. All positive signs
that will support oil prices.

But it`s not just the IEA report influencing prices, it`s also seasonality.

JEFF GROSSMAN, BRG BROKERAGE PRESIDENT: Usually around starting Memorial
Day is where we have our climax here to see if the market really is a
strong usage market. Again, I can`t foresee it yet. I think it`s going to
be a big driving season. And I do see the prices holding firm.

DEANGELIS: Forty dollars is a key psychological level for oil prices.
We`re edging closer and closer. But does this rally have legs to break
through and hold?

GROSSMAN: Crude oil, I would think we`re talking about $36 to $42 near-
term. I think with a very strong driving season, we could work our way
probably to the high 40s.

DEANGELIS: Still, last year, we saw similar bounce in oil prices in early
spring but in late June, prices dropped dramatically again. The concern
right now is the recent rise in price might actually encourage more
production, which would only depress prices once again.

GROSSMAN: I don`t think this is a market that`s a runaway bull market.
There`s a lot of inventory out there, and there`s going to be a moderate
growth year say in the price over the next three to six months, which would
make perfect sense here.

DEANGELIS: Another risk to the downside, the dollar. Relatively quiet for
now, but another move higher could hit commodities.

For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis.

(END VIDEOTAPE)

MATHISEN: When oil prices were booming one of the states that benefits the
most was North Dakota. It was awash in cash and its budget more tripled,
to $6 billion since 2007. But now, after the fall in oil prices, North
Dakota has become a state of pain with a budget shortfall and a governor
looking for cuts to save money.

Brian Sullivan is in the town emblematic of the highs and lows, Williston,
North Dakota.

(BEGIN VIDEOTAPE)

BRIAN SULLIVAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: No town in America
may have benefited more from oil`s boom than Williston, North Dakota. But
now, no town in America may be feeling the hit from oil`s collapse as much
either.

Those who came here from all over America looking for a job are now going
back home. The work just simply isn`t there, as overproduction has forced
the number of new wells being drilled to dry up.

We went out to one of the few remaining oil rigs and spoke with its manager
about what`s happening together workers.

TAPPAN SOUTHER, LIBERTY RESOURCES MANAGEMENT CO.: The problem is, you lost
the crews that you trained up, those guys are now gone. That`s the problem
with the down cycle is getting — you lose all your talented people, now
you`ve got to retool, respool, you got to retrain.

SULLIVAN: During the peak of the oil boom, tens of thousands of workers
came to North Dakota. Most of them lived in what they call a man camp.
The nice word is hotel, basically 1,000-plus workers all living in
dormitory-style arrangements with a big master hall.

This was pretty much considered the cream of the crop, the best ones, the
Capital Lodge. At its peak, 1,200 workers, three hots and a cot every day.
This was the main hangout, TV, blackjack, workout rooms. Now it sits empty
as oil slump has caused the workers to go back home.

By the way, this $40 million facility is now for sale. It can be yours.

It`s not just the oil industry jobs that are being lost either. All the
businesses that grew to support the once-booming industry are also taking a
hit. Hotels and restaurants in particular.

How severe has the downturn been for you and the town?

MARCUS JUNDT, WILLISTON HOLDING CO. CHMN. AND CEO: For us, our business
from top line revenue standpoint is down 50 percent. And it varies week to
week. But every week, it keeps getting worse. So, we don`t know where the
bottom is. We`re not there yet.

SULLIVAN: Williston may be located hard up against the banks of the
Missouri River but it is oil that really flows through this town. Nearly
everyone we spoke with here said that if the price of crude doesn`t move
back to $50 or $60 a barrel sometime soon, the economic miracle that was
the black gold rush may turn into a bust.

For NIGHTLY BUSINESS REPORT in Williston, North Dakota, I`m Brian Sullivan.

(END VIDEOTAPE)

HERERA: Despite the rally in gold — and oil prices, I should say, our
next guest says he doesn`t believe the oil market has reached a bottom.

Joining us is John Kilduff, founding partner of Again Capital, and he joins
us to make the case for why he thinks we could test that $18 mark which you
predicted on our show.

You know, I slipped and I said gold because it has been —

MATHISEN: Feels that way.

HERERA: It`s likened to the gold rush, right, John?

JOHN KILDUFF, AGAIN CAPITAL: Oh, absolutely, that story that Brian
Sullivan just reported, 100 percent — classic American boom/bust story.

HERERA: So, why do you think that $18 may be in the cards? You don`t feel
the bottom in this market yet?

KILDUFF: No, because really, nothing has changed materially in terms of
supplies. For all the talk of OPEC getting together with Russia, there`s
really strident discord amongst those participants. There was supposed to
be a meeting on March 20th, I don`t think that`s going to come together at
this point.

And when that deal, this freeze deal they`ve touted out there, falls apart,
Sue, I think that the market`s going to punish them for all this rhetoric.

MATHISEN: We`ve seen oil go pant, now up about 40 percent from those lows
back a month or so ago. How much of that, if any of it, is fundamental?

That has changed. I think a lot of it`s short cover.

KILDUFF: It`s been a big short covering rally. Also, too, a lot of
bargain hunters came into this market and have bought it up. We`ve seen a
lot of speculators come in from the long side of the market. Not just
short covering but also a wave of money —

MATHISEN: The market can, forgive me, Sue. The market can defy
fundamentals but only for so long.

KILDUFF: That`s right, but for a while. And can really put some pain on
you. That`s if that`s all you`re banking on.

The other thing I`m figuring in here on this call still is that the
economic data has not been great. So, the demand side of this equation is
slipping as well, which is why you saw massive action from the European
Central Bank this week. And we`ll see more of it next week from the Bank
of Japan.

So, slowdowns in Asia, slowdowns in Europe, and no end in the supply glut
just equals lower prices not higher.

HERERA: So, that`s going to be — you know, I wondered if it would be
external shock that would take the market back down to your target. It
sounds like it`s what we already know that`s out there — a weak global
economy, our Fed on a raising trajectory and the rest of the world on an
easing trajectory. Those are the fundamentals that the market will wake up
to once again.

KILDUFF: That`s right. An easing trajectory in response to bad facts on
the ground. We had a bad week from China in terms of data this week,
except for their inflation. But the import/export numbers were terrible.
And they, too, are stepping up to the plate to try to do something to spur
their economy.

The oil market needs that demand from China to stay up around even here and
to stabilize. So, that`s what we`re focusing on.

MATHISEN: So, you`re highly skeptical there will be any sort of production
cap?

KILDUFF: I don`t believe it for a second. The Saudis are intent —

MATHISEN: Let alone a cut.

KILDUFF: Let alone a cut, no.

Because the deal breaker`s going to be from Iran. Iran said again just
today that they will not agree to a freeze until they get their market
share back and that`s the rub for this whole thing. That`s how the Saudis
of set this up to say, sure, we`ll cooperate with everyone, as long as
everyone agrees to a freeze, we`ll agree to a freeze.

And not everyone`s going to agree to a freeze, we know that for a fact.

HERERA: Interesting. Such an interesting story.

John, thank you very much, and a great weekend.

KILDUFF: Thank you. You too.

MATHISEN: All righty. Now to a story that hits very close to home for
many who commute to work. New Jersey Transit, the third busiest commuter
rail line in the country, on the verge of striking for the first time in
more than three decades. A disruption would hit more than 100,000
commuters who work in New York City and thereabouts. At stake, unions want
a double-digit wage increase and lower out-of-pocket health care
contributions.

The agency that governs NJ Transit argues that would cost an additional
$183 million annually. That would mean fare increases.

But as Morgan Brennan tells us, while the argument may be local, it has
much bigger implications.

(BEGIN VIDEOTAPE)

MORGAN BRENNAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: More than 4,000 New
Jersey transition rail workers could walk off the job as soon as Sunday
morning, if a labor dispute isn`t resolved, affecting travel and America`s
biggest metro area.

New Jersey Transit has contingency plans in place but they cover less than
40 percent of the state-operated carrier`s Big Apple (NASDAQ:AAPL)
commuters. Officials warn an additional 10,000 vehicles could hit the road
at peak hours, creating bottlenecks stretching up to 25 miles long.
Business advocacy group partnership for New York estimates a strike could
cost New York City businesses nearly $6 million per hour in lost
productivity — particularly in the finance sector, Wall Street.

Major employers are planning for the worst. Citigroup (NYSE:C) for one has
said it will modify employee hours, encourage telecommuting if necessary.
And a strike could also affect freight railroads that use New Jersey
Transit`s track, causing diversions or service interruptions. Norfolk
Southern (NYSE:SO) isn`t commenting and CSX (NYSE:CSX) says it doesn`t,
quote, “anticipate significant operational impacts”, but is monitoring the
operation.

It all speaks to a larger issue affecting New Jersey, as well as other
states and local governments — a shortfall in transportation funding.
Many are struggling to fix budget deficits, facing difficult decision to
raise fares and address ballooning spending, including labor costs.

In New Jersey, talks continue as both sides scramble to reach a deal. But
there is one person notably absent, Governor Chris Christie, who after
dropping out of the GOP race for president has been on vacation, though
reportedly keeping tabs on the situation.

For NIGHTLY BUSINESS REPORT, I`m Morgan Brennan.

(END VIDEOTAPE)

HERERA: And coming up, this week`s market monitor thinks the market will
turn in gains by the end of the year, and he has three names he thinks will
help your portfolio get there too.

(MUSIC)

HERERA: Last year was a strong one for commercial real estate. But there
are cracks forming in that sector.

And as Diana Olick tells us, some of the trouble has a familiar ring to it.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: 2015 was a banner year
for big buildings across the nation. Commercial real estate vacancies were
low and rents ran high. Loans for commercial development were also big.
But what a difference a few months make.

JAMIE WOODWELL, MORTGAGE BANKERS ASSOCIATION: There`s been a really
interesting shift in the capital markets writ large across not just
commercial real estate debt in the public markets but also high-yield debt.
And what we`ve seen there is the beginning of this year, the spreads
blowing out.

OLICK: Investors are demanding bigger yields and commercial loan debt
isn`t doing it for them anymore. This debt called CMBS is bonds backed by
buildings. It is the second-largest form of financing behind the big banks
and here`s the issue — ten years ago, we also had a commercial real estate
boom and a lot of it was backed by CMBS. Those bonds have a 10-year life
span and have to be refinanced now.

BRIAN STOFFERS, CBRE: We think some of these are going to be re-monetized
through sales, through asset sales. But some will certainly hit the
foreclosure list and end up on a special servicer`s list of loans to be
worked out.

OLICK: CBRE estimates at least $43 billion in loans could face trouble
this year and next. With secondary markets like Kansas City, Cleveland,
Minneapolis, Jacksonville, and Hartford hit hardest.

Yes, banks could step in. But they`re getting hit with a lot of new
regulations this year that are making them more skittish about real estate.

WOODWELL: There are other rules coming out on general debt that are going
too be affecting appetites from banks for the CMBS market, from others, to
provide capital. That could affect availability. It could also affect
pricing of some of those loans.

OLICK: On top of that, commercial real estate prices fell in January for
the first time in seven years, according to Moody`s (NYSE:MCO). And that
is not going to make investors feel any better about the sector.

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

(END VIDEOTAPE)

MATHISEN: General Motors (NYSE:GM) gets serious about the self-driving car
market and that`s where we begin tonight`s “Market Focus.”

The carmaker bought Cruise Automation, a software company focused on
creating those driverless cars. General Motors (NYSE:GM) did not disclose
how much it paid for the startup but the transaction reportedly worth more
than $1 billion. Shares of GM up about 1.5 percent today to $31.26.

Ligand Pharmaceuticals (NASDAQ:LGNDD) (NASDAQ:LGND) got a bump today after
the investment banking firm Roth Capital increased its price target to $147
a share on the drugmaker. Earlier this week, the company`s CEO sold over
10,000 shares of company stock. Those shares were up nearly 5 percent to
$101.83.

According to a late-stage trial, Regeneron Pharmaceuticals (NASDAQ:REGN)
experimental rheumatoid arthritis drug has proven to be more effective in
treating symptoms of the disease than rival AbbVie`s medication.
Nevertheless, shares of Regeneron fell fractionally today to $377.12.

HERERA: Investors had their chance to react to Bojangles earnings which
came out after the bell yesterday and, boy, did they react. The fast food
chain`s profit fell as poor weather drew in fewer customers. But the
company still managed to top street estimates on both earnings and revenue
targets. Those shares soared more than 23.5 percent to $18.57.

The people`s council for the District of Columbia has weighed in and said
that she opposes the latest merger proposal between energy companies Pepco
Holdings and Exelon (NYSE:EXC). Now, the council cited unguaranteed rate
protection as the reason. She is one of several city officials who have to
approve that deal. District regulators have rejected the merger twice and
D.C. is the only area in the mid-Atlantic not to approve the deal.

Shares of Pepco fell 9 percent to $22.07. Exelon (NYSE:EXC) was unchanged
at $34.73.

MATHISEN: And now to our market monitor who is expecting one of his stock
picks to rise nearly 50 percent over the next year. This is his first time
joining us on the program. He`s Michael Binger, senior portfolio manager
with Gradient Investments.

Michael, welcome, good to have you with us.

MICHAEL BINGER, GRADIENT INVESTMENTS: Thanks for having me.

MATHISEN: If all of your stocks go up 50 percent over the next year you
can come back, how about that? That`s a deal.

BINGER: Thank you very much. Life would be easy then, wouldn`t it?

MATHISEN: It would be very easy and I`ll send you all my money.

What do you see for the market between now and year end? It`s come back
very nicely in the past few weeks. My sense is that now we`ve got to see
some profits.

BINGER: Well, we do. Let`s think about it. So, earlier in the year when
oil was face it crashing, interest rates were going back down towards 1.5
percent. I mean, people were interpreting that as we`re going into
recession.

But the economic data didn`t support that. In fact, the economic data was
pretty good, especially the consumer spending and consumer sentiment data.

So, it looks like the recession is off the table. Oil is now come back a
lot and interest rates are moving up a little bit in anticipation of
growth. So, I see positive returns for the market this year. Like you
said, the wild card is earnings. We need to see earnings growth and we
think the third and fourth quarter, the back half of `16, earnings will
begin to grow again.

HERERA: You`ve given us three stocks. And there is a general theme to
them, and that is dividends and value. So, let`s start with your first
pick, General Motors (NYSE:GM). And they`ve had some good quarters.

BINGER: They have. They`ve had fantastic quarters. And auto sales in the
U.S. are hitting record highs.

But there`s this pervasive fear in the market that we`re hitting the top or
the peak. I don`t think we are. The company says we`re not.

I think sales will continue to be strong in the U.S. and globally. This
stock pays a dividend yield right around 5 percent. It`s cheap at five or
six times earnings. I think it`s a steal here.

MATHISEN: They`ve got very stylish cars coming on too. The Impala, a
couple of the Buicks, the Cadillac, as well.

Let`s go to your second pick, which is Omega Healthcare Investors
(NYSE:OHI). You say it`s kind of being tarred with a broad brush.

BINGER: I believe it is. So, Omega is a health care property REIT, which
means they buy properties and then they lease them to health care
providers. So, I think they have a great demographic tail wind behind him.
You know, none of us are getting any younger and we`re going to need more
and more health care as we get older.

This company executes outstanding, it has a 6 percent plus yield. There`s
a competitor of theirs that hasn`t had a problem with one of their tenants
who Omega has no exposure to. And I think at 6 percent yield, a company
that`s executed flawlessly, and its fundamentals are great, the stock is
cheap, it`s a buy, too.

HERERA: All right. The last name I think might be controversial to some.
It`s Twitter, because there have been those who have forecast Twitter`s
demise. But this is the stock that you think could be close to 50 percent
higher. Tell me why.

BINGER: OK, so this year, right, this as battleground stock. It`s in the
social media area. I think investors are kind of overlooking the fact that
this company is still growing its top line over 30 percent on a year over
year basis. On top of that, they`re doing it profitably. Now, the market
wants to focus on MAU, or monthly average user growth, which has come down
a lot to almost zero.

But I think the company has rededicated themselves to fixing that to make
it more user friendly, to make — to make Twitter expand. I think it`s
going to grow again. And as soon as it does, as soon as investors see
that, I think the stocks in the 20s.

MATHISEN: All right, Michael, thank you.

BINGER: On its way to 30.

MATHISEN: Fantastic. Michael, thank you very much. Michael Binger with
Gradient Investments.

HERERA: Coming up, how a new rule is making brokerages rethink how they
advise you on your retirement plans.

(MUSIC)

MATHISEN: Here`s a look at what to watch. Tuesday, a read on inflation at
the wholesale level with the release of the so-called producer price index.
Wednesday, we bring inflation back to our level, the consumer price index.
Inflation, of course, a key component on the Federal Reserve`s watch list
with respect to interest rates.

And speaking of the Fed, the Central Bank will wrap up its two-day policy
meeting Wednesday with chair Janet Yellen holding a news conference.

That`s what to watch next week.

HERERA: A new rule expected to be finalized by Department of Labor in the
coming weeks may impact millions of investors with retirement accounts.
Along with the brokers and the other firms that manage those monies. It`s
designed to prevent financial advisers that putting a client`s retirement
savings into high-priced products, benefiting the advisers` wallet more
than the investors`. And the rule will rewrite how trillions of dollars of
retirement money is managed.

Mary Thompson takes a look at who wins and who loses when that rule comes
down.

(BEGIN VIDEOTAPE)

MARY THOMPSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: United in their
support of acting in the client`s best interest, the Department of Labor
and the financial industry disagree on whether a pending rule helps as the
Labor Department says it will to protect investors from backdoor payments
and the hidden fees in retirement investment advice.

The securities industry trade group SIFMA counters this rule will hurt
investors.

KEN BENTSEN, SIFMA PRES. & CEO: It`s going to limit investors` choice,
it`s going to raise their costs.

THOMPSON: The rule requires broke brokers and firms providing investors
advice how to invest or move their retirement money to disclose information
on compensation and product fees and to develop new systems to track client
activity.

SIFMA`s Ken Benson says it will make smaller retirement accounts too
expensive for a lot of firms to manage.

BENTSEN: It`s going to limit what firms can provide and how they can
provide services to those investors and those plan sponsors by adding a
tremendous amount of new regulatory and legal liability that firms are
going to find very difficult to take on.

THOMPSON: If the final rule reads like the initial proposal, its expected
costs will keep smaller brokerages from complying, forcing them to either
lose accounts or move client money to fee-based rather than commission-
based accounts, accounts SIFMA argues can be more costly.

Morningstar (NASDAQ:MORN) forecasts any money lost from small brokerages
will likely find a home in self-directed accounts offered by discount
brokers like Charles Schwab. While Credit Suisse forecast firms offering
low cost exchange traded funds or ETFs like Blackrock will see more new
money coming in.

Morgan Stanley (NYSE:MS), one of the biggest traditional brokers, says it`s
been prepping for the rule change. It doesn`t expect to lose smaller
retirement accounts. The Morningstar (NASDAQ:MORN) sees variable annuities
like those from Prudential losing favor as high fees and added disclosures
will discourage advisers from selling them.

The pending rule promising changes that will change the world of retirement
investing.

For NIGHTLY BUSINESS REPORT, I`m Mary Thompson.

(END VIDEOTAPE)

MATHISEN: Comedian Jerry Seinfeld put his 18 vintage Porsches up for
auction today. But many of the top cars missed their low estimates.

The big one was this 1973 Can-Am Spider estimated to sell between $5
million and $7 million. Uh-uh, top bid, $2.8 million. Seinfeld bought it
for nearly $4.5 million back in 2012.

But this 1955 Spyder did get $5.3 million, topping its $5 million estimate.

This could be, Sue, the sign of a first crack in this market.

HERERA: That`s right. I think you`re right.

MATHISEN: Art, who knows?

HERERA: Who knows? We`ll be watching it for you, though.

That does it for NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera.
Thanks for watching. And we`d like to remind you, this is the time of year
your public television stations seek your support.

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