Transcript: Nightly Business Report- April 15, 2016

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

BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Doubts grow. One of the
most important oil meetings in decades takes place this weekend. But with
billions of oil dollars on the line, will a deal get done?

SHARON EPPERSON, NIGHTLY BUSINESS REPORT ANCHOR: Tax benefit? Why one of
the big financial benefits of home ownership no longer exists for some.

GRIFFETH: And, virtual reality revolution. The stocks our market monitor
says are in the thick of this massive technological change.

All that and more tonight on NIGHTLY BUSINESS REPORT for this Friday, April
the 15th.

And good evening. I`m Bill Griffeth, in tonight for Tyler Mathisen.

EPPERSON: And I`m Sharon Epperson, in for Sue Herera.

We begin with oil. In a high-stakes meeting this weekend in Doha.
Officials from the world`s biggest oil producers are gathering for what
some call one of the most important discussions in recent memory. The
goal: to reach an agreement that would limit output. Now, if that happens,
it would be the first step in curbing production that has resulted in a
glut of oil worldwide, has hurt commodity-dependent economic and has thrown
companies into bankruptcy.

But as Brian Sullivan reports, reaching a deal won`t be easy.

(BEGIN VIDEOTAPE)

BRIAN SULLIVAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: It`s a global game
of political intrigue with hundreds of billions in oil dollars on the line.
Major oil-producing nations gathering in Doha, Qatar, on Sunday to try to
win a hard fought deal to stabilize or possibly even cut global oil
production. The world is still producing a million barrels per day more
than it needs, even with American output falling this year.

Many of the countries attending the meeting face a catch-22. They
desperately need higher prices to fill their budget holes but they cannot
risk slowing production because they need every dollar they can get.

The biggest conflict comes between Saudi Arabia and Iran. The Saudis along
with Russia reportedly have agreed to cap production at current levels.
And say they need Iran to do the same. But so far, Iran has rejected any
deal and continues to increase exports. Iran needs the money and wants to
rebuild global market share.

Oil ministers in Tehran have no doubt recognized the Saudis and Russians
are trying to freeze their own output at near record levels. And if the
two sides can put aside longstanding animosity and agree to a production
cap, crude oil prices are likely to continue to rise.

Oil, of course, not the only place Saudi Arabia and Iran are at odds. Both
are fighting in Syria and Yemen with their proxies. Sometimes even with
their own troops.

In Syria, the Saudis want Assad out. Iran is fighting to keep him in
place.

Yemen, Iranian-backed rebels have been fighting with massive help from Iran
to push the Sunni-led government out. Both countries, Yemen and Syria, are
now in ruins.

So, while the outcome of Sunday`s summit is uncertain, one thing is certain
— every oil-producing company and country in the world will be focused on
what happens in a hotel 7,000 miles away from America on Sunday.

For NIGHTLY BUSINESS REPORT, I`m Brian Sullivan.

(END VIDEOTAPE)

GRIFFETH: Well, oil prices today fell ahead of that key meeting. Traders
and analysts are just growing skeptical there will be any agreement to help
clear that oil supply glut that Brian was talking about. Today, domestic
crude settled nearly 3 percent lower to just about $40 a barrel.

And as Jackie DeAngelis reports for us, where prices go from here is not
exactly clear, not even to the experts.

(BEGIN VIDEOTAPE)

JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Confusion in the
oil markets. That`s the feeling of traders heading into a key meeting in
Doha this weekend.

In a CNBC poll of analysts, traders and energy funds, there is no
consensus. Street estimates have been calling for a price rebound in oil
in the second half, estimates of $60 to $70, some as high as $85. But
those polls said domestic crude and branch will finish the year at $40 to
$50, basically where we are now.

The upcoming Doha meeting, it could be a short-term catalyst. A little bit
more than half of those polled said that they think there`s more than a 50
percent chance that some deal could be reached, although they don`t know
what it will look like. While they say a no deal outcome will take prices
lower, the majority think that oil saw its bottom earlier this year when it
got close to $26 a barrel.

The most important factor influencing prices right now still oversupply.
That was the overwhelming response. Demand, global risk, and dollar
fluctuations all still key factors.

The one thing we do know is we are in the midst of an oil glut. There
could be downward pressure on prices, but nobody knows exactly what`s going
to happen next.

For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis.

(END VIDEOTAPE)

EPPERSON: Oil and gas firm Goodrich (NYSE:GR) Petroleum has filed for
Chapter 11 bankruptcy protection, becoming the latest company to fall
victim to falling energy prices. Goodrich (NYSE:GR) says it expects to
maintain sufficient liquidity during the restructuring process and will be
able to continue running its operations. The company primarily operates in
Louisiana, Mississippi, and Texas.

GRIFFETH: Now to Wall Street where stocks flopped to close the week,
pressured by energy shares and a decline in oil prices. Some expected the
Dow to take a breather anyway after that 350-point gain in three days that
we had seen, fueled by the rally in the banking sector.

By today`s close, the Dow Industrial Average fell nearly 29 points to close
at 17,897. The NASDAQ dropped by seven. The S&P was off by two. But it
was a winning week overall. All of the major averages rose more than 1.5
percent this week.

EPPERSON: Now to the global economy. China posted its slowest quarterly
growth in seven years during the first quarter. Gross domestic product in
the world`s second-largest economy expanded by 6.7 percent. While it`s the
worst three-month performance since the financial crisis, the slowdown was
expected and the deceleration is actually milder than some had feared.

GRIFFETH: And one of the biggest risks to the markets worldwide is the
possible exit by Britain from the European Union. The so-called Brexit.
This week, the head of the IMF warned there would be a negative economic
impact globally should Britain vote to leave the E.U. and today, U.K.
Chancellor De Exchequer George Osborne echoed that warning.

(BEGIN VIDEO CLIP)

GEORGE OSBORNE, BRITISH CHANCELLOR: I hope the British people vote to
remain in and I think they`re getting very clear messages from around the
world that there are great economic benefits from remaining in and costs if
we leave.

If we do leave, then, you know, of course, we will have to deal with that
situation. There will be a two-year negotiation around the exit from the
E.U. And, of course, our Bank of England will be alert to the financial
stability consequences of that. But, you know, we`re clear, leaving would
cause an economic shock.

(END VIDEO CLIP)

GRIFFETH: Now, that very important vote in Britain is scheduled for June
the 23rd.

And here at home, there are signs of persistent weakness in manufacturing.
Industrial production, a broad gauge of output across factories, slowed in
March. The decline of .6 percent was steeper than expected. Output has
fallen for six of the past seven months.

A separate report showed a decline in consumer sentiment which was lower
for the fourth straight month. Experts say the drop reflects the
reluctance among consumers to spend freely.

GRIFFETH: The president of the Chicago Fed says inflation data will be an
important consideration for the central bank when it comes to raising
interest rates. Charles Evans says that the bank — the bar is high for
any action when it comes to the meeting later this month and he would like
policymakers to wait until inflation reaches or exceeds its 2 percent
target before hiking again.

EPPERSON: Housing is a key pillar of the economy and part of the reason
many people want to own a home is for the tax break.

Well, as Diana Olick explains that financial incentive at least for buyers
who need it most is not what it used to be.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: It used to be a big
factor for first-time home buyers, owning a home gets you a tax break.
Alas, not so much anymore, not for most young buyers anyway. Near record
low mortgage rates and a higher standard deduction make it hard for a lot
of buyers to qualify.

Here`s why. The standard marital deduction has risen from $1,300 in 1972
to $12,600 today, meaning that the first $12,600 of itemized deductions has
no benefit to consumers. A typical first-time home buyer buying a home
around $200,000 pays less than $12,000 in mortgage interest and property
taxes annual, that`s not enough to hit the itemization level. Even with
other deductions that write the taxpayers over that $12,600 limit, the tax
savings are minimal.

Now, the mortgage interest deduction is one o f the largest federal
expenditures at about $70 billion a year but does little to boost home
ownership, because it favors wealthier buyers purchasing more expensive
homes. About 77 percent of the benefits go to homeowners with incomes
above $100,000.

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

(END VIDEOTAPE)

GRIFFETH: Well, the spring selling season is in full swing. Buyers are
out there looking, but so are swindlers. They`re targeting everyone from
land buyers to those looking for investment properties.

And as Andrea Day reports now, real estate fraud is on the rise.

(BEGIN VIDEOTAPE)

DOUG BURNS, FORMER FEDERAL PROSECUTOR: When outlandish claims are made
about how much money you can make, it does get people`s attention.

ANDREA DAY, NIGHTLY BUSINESS REPORT CORRESPONDENT: When it comes to fraud,
this former federal prosecutor has seen just about everything.

BURNS: I was in a case where people signed deed paperwork and turned out
to be invisible ink.

DAY: One of many tricks criminals could use to separate you from your
cash. In the Silicon Valley, the Santa Clara D.A.`s office says that real
estate investment schemes, mortgage fraud, forgery, and rental scams are
all on the rise, in just the last decade, skyrocketing from $14 million in
losses in 2005 to nearly $98 million in losses just last year. And they`re
not alone.

According to the FBI, the amount of money being lost in real estate fraud
nationwide is also way up. The total losses from complaints filed online
in 2015 more than doubled from the previous year.

BURNS: My advice to investors is very simple, and that is number one,
don`t take things at face value.

DAY: Advice that may have stopped investors before they dump nearly $500
million into a massive real estate scheme in Texas that according to
assistant U.S. attorney, Christopher Eason, was nothing more than a fairy
tale told by this guy, Thomas Lucas.

UNIDENTIFIED MALE: Let me finish my question —

THOMAS LUCAS: I`m finishing mine.

DAY: That was Lucas being sued by a group investors after Eason says more
than 250 handed over cash, hundreds of millions. Based on a tip from
Lucas` so-called source.

CHRISTOPHER EASON, ASST. U.S. ATTNY, TX: His secret source had inside
information about where Disney (NYSE:DIS) was planning to expand in the
continental United States, by adding six more theme parks and a resort in
north Texas called Frontier Disney (NYSE:DIS). He sold that lie to
hundreds of investors. So they could buy land with the idea that once
Disney (NYSE:DIS) made its announcement, then they stood to make a lot of
money.

DAY: But that announcement never came and only some lucky investors were
able to pull out of the shady land deal.

EASON: Disney (NYSE:DIS) never intended to come here, they never were
purchasing land to come here.

DAY: He said Lucas` source, just another tall tale.

UNIDENTIFIED MALE: Do you know what his position was with Disney
(NYSE:DIS)?

LUCAS: I know he was a vice president of something.

EASON: He had a lot of arrogance. People who commit fraud crimes do.

DAY: So, how difficult is it to safeguard your investments? Here`s some
advice: consider hiring an investigator to research before you invest.
Don`t buy into wild success stories or promises of extravagant returns.
And last, don`t get caught up in big names or name-dropping. In the end,
Burns says there`s nothing wrong with going with your gut.

BURNS: If something seems too good to be true, a lot of times it is.

DAY: So, what could those investors have done, banking on a secret source?
Well, according to Burns if you can`t do your due diligence, don`t invest.
And there`s always that simple phone call to corporate headquarters. It`s
amazing what you can learn.

I`m Andrea Day for NIGHTLY BUSINESS REPORT.

(END VIDEOTAPE)

EPPERSON: Still ahead, how much did the first family earn last year? We
have the Obamas` tax return.

(MUSIC)

GRIFFETH: Well, here it is. April 15th. Usually Tax Day, but not this
year. It`s Monday instead on the 18th because of a quirk in the scheduling
and while last-minute filers are scrambling as usual we got a look at the
president`s returns today.

Eamon Javers joins us now from Washington with a look at the numbers —
Eamon.

EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Yes. Hi, Bill.

The president did not need those extra couple of days to get his taxes in,
here`s his 1040 form filed today, released to the press this afternoon.

Let me give you some highlights of what the president earned this year. He
didn`t have such a bad year. The president reported adjusted gross income
of $436,065. Total tax of $81,472. That gives the president and his wife
an effective rate of 18.7 percent.

Really interesting to dive into this 45-page 1040 form, because you see a
lot of the details how the president lives his life, including some of the
charitable donations that the president and first lady have made. And a
lot of personal resonance to some of those charities, including the Sidwell
Friends School, that`s the school where his daughters attend school, also
to the Beau Biden charitable foundation, that`s obviously in honor of the
vice president`s late son.

So, some real personal charitable giving there by the president and the
first lady, guys.

EPPERSON: What about the vice president`s return? What did you find out
there?

JAVERS: So interesting. When we looked at Joe Biden`s return, here`s a
guy who made less than his boss but somehow manage to the pay more in
taxes.

Take a look at the highlights of Joe Biden`s return. Adjusted gross income
of $392,233. Total tax, $91,546. That`s about 10 grand more than the
approximated paid, giving him an effective rate of 23.3 percent as compared
to the president`s 18.7 percent.

So, maybe the president has just a better accountant in the Oval Office
than they have over in the vice president`s office.

GRIFFETH: Well, I certainly hope so. Eamon Javers, who clearly enjoys
reading 45 pages of tax returns, thanks for joining us tonight.

JAVERS: You bet.

GRIFFETH: See you later.

EPPERSON: Today, President Obama made it clear that he wants to change the
way you watch and pay for TV. The White House threw its support behind a
rule that would prohibit cable companies from acquiring customers to rent
their set-top boxes.

According to the White House, the president wants better, cheaper versions
of the cable boxes that millions of Americans use to get cable TV. And
supporters of his proposal include Google (NASDAQ:GOOG), Amazon
(NASDAQ:AMZN), Apple (NASDAQ:AAPL). They all want a bigger foothold in the
TV market. Meanwhile, of course, the cable industry opposes it.

GRIFFETH: Then there`s one company that has definitely changed how and
what we watch on television, that would be Netflix (NASDAQ:NFLX). After
soaring more than 140 percent last year, the stock this year has not
performed nearly as well. It`s down about 2 percent.

And now the company is making a risky move by increasing prices for some
consumers.

As Julia Boorstin explains, the potential impact of that price increase may
become clearer when the company reports earnings on Monday.

(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: When Netflix
(NASDAQ:NFLX) reports earnings, subscriber numbers are in focus. Investors
are hoping Netflix (NASDAQ:NFLX) will top the 81 million streaming members
it forecast back in January. The real question is how a price hike kicking
in next month of $2 to $9.99 for long time subscribers will impact
Netflix`s forecast for its second quarter.

NEIL DOSHI, MIZUHO ANALYST: We think with the slowing large U.S.
subscriber base, on top of that a business price increase that`s going to
impact a large number of their subscribers, there could be greater cause
for concern on the U.S. subscriber growth. On the flip side, I think the
international side will continue to grow fairly well.

BOORSTIN: And Netflix`s ability to continue to grow both in the U.S. and
overseas and to rule out more price hikes hinges on its ability to keep on
picking hit content.

This year, we`ve seen hits “House of Cards” and “Daredevil” return, plus
new shows including “Chelsea Does” and “Fuller House.” The company is
planning to launch over 600 hours of original programming in 2016, up from
450 hours last year.

DOSHI: I think we`re going to see a lot more original content coming out
over the course of this year. I think as long as Netflix (NASDAQ:NFLX) can
generate really good original content, they`ve had a very good success rate
thus far. I think that will continue to drive engagement, help with
return, and help keep revenues continuing to grow the company.

BOORSTIN: A recent Morgan Stanley (NYSE:MS) survey found more respondents
said Netflix (NASDAQ:NFLX), rather than HBO, had the best original shows.
That bodes well for Netflix (NASDAQ:NFLX), even at a slightly higher price.

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

(END VIDEOTAPE)

EPPERSON: Citigroup (NYSE:C) report at steep decline in quarterly profits,
and that`s where we begin tonight`s “Market Focus.”

The bank said loans related to the energy industry and lower revenue from
investment banking caused profit to fall 27 percent. However, that was
still good enough to top analyst expectations. Revenue also came in above
targets. Shares of Citigroup (NYSE:C) were down, though, a fraction to
$44.92.

Charles Schwab saw its quarterly profit and revenue increase from a year
ago. The brokerage and banking company reported revenue that topped
analyst estimates while earnings fell in line. Shares of Charles Schwab
fell a fraction to $28.53.

And Bats Global Markets made its debut as a public company. The stock
exchange operator offered over 13 million shares priced at $19 per share.
The company attempted to go public four years ago but a technology glitch
stood in its way. Shares of Bats surged 21 percent to $23.

GRIFFETH: Meanwhile, Costco (NASDAQ:COST) Wholesale has increased its
quarterly dividend to 45 cents a share up from 40 cents. The yield on that
stock is 1.19 percent now. Costco (NASDAQ:COST) shares up 1 percent today
to $153.17.

And Apple (NASDAQ:AAPL) was the biggest drag on the S&P and the NASDAQ
today after a report in the “Nikkei Business Daily” said that Apple
(NASDAQ:AAPL) will continue to reduce iPhone production in light of
sluggish sales. Apple (NASDAQ:AAPL) will not disclose its financial
forecast for the second quarter until April the 25th. Shares though down 2
percent to $109.85.

EPPERSON: And now to our market monitor who has some tech names he says
are poised to benefit from the exploding business of virtual reality and
augmented reality. He`s Chris Bertelsen, chief investment officer at
Global Financial Private Capital.

Hey, Chris, last time you were on in June 2015, you recommended Alps
Medical, that`s down 31 percent. Perkin Elmer, which is down 5 percent.
And Astec Industries (NASDAQ:ASTE), which is up 11 percent.

Today, you`re going to talk about virtual reality and augmented reality
companies. First explain to us what`s the difference between the two?

CHRIS BERTELSEN, GLOBAL FINANCIAL PRIVATE CAPITAL: OK, virtual reality is
actually an imaginary world. It would be like you view something and a
shark swims at you and you cringe and jump out of the way. Whereas
augmented reality is just a little bit different in that you`re in the real
world but you have imaginary things that you manipulate. And one is a
total imaginary, fictitious experience. The other one is something that
you might use more on a practical basis.

EPPERSON: Yes, we did a piece last night on the program about an augmented
reality company, taking a look at how you could use that to purchase an
oven for your kitchen without really having to get the oven but you could
see yourself in the kitchen with it. You say there are certain companies
that are poised to benefit. One of them you like is Sony (NYSE:SNE), why?

BERTELSEN: Yes. Well, Sony (NYSE:SNE), certainly, has been depressed ever
since it was hacked. And although it may not be super cheap, it`s
certainly a contrary name. However, they`ve done a terrific job with their
virtual reality. There`s more programmers writing code for them, they have
more apps available. You`ll see certainly with PlayStation, the
utilization of it.

I think they`re well ahead of Facebook (NASDAQ:FB) and Google (NASDAQ:GOOG)
and others as far as pure virtual reality is concerned. Plus, they have a
huge library which they can interject into their virtual reality scheme.

GRIFFETH: Now, another name that is not by any means a pure play in this
category would be Microsoft (NASDAQ:MSFT). I guess this is another way
that you can almost hedge your bet by investing in a company like this one,
right?

BERTELSEN: Absolutely. Both are sort of risk off bets to them. Microsoft
(NASDAQ:MSFT) — I expect virtual reality to take off starting next year
and be a $200 billion business. Who knows, we may get another Apple
(NASDAQ:AAPL) emerging out of it.

But Microsoft (NASDAQ:MSFT) is also large in the business. Theirs of
course is more augmented reality. And certainly with their HoloLens and
whatever, they`ve done a terrific job of starting off and getting people
interested in it, particularly from a corporate point of view. So, I would
say that they have a big jump in front of the competitors, granted a small
piece of Microsoft (NASDAQ:MSFT), although certainly mike soft is going
through a creative destruction process with a new CEO in the company. So,
I look for progress.

EPPERSON: Now, you say Himax is a name you like. Why do you like that
name? Based out of Taiwan.

BERTELSEN: Yes. Himax makes for the various goggles and headsets that are
used in virtual reality, used by a lot of different companies that are in
essence getting into the business. And they make the chips, they make the
integrated circuits, they make the electromechanical devices, cameras.
Everything comes out of that company. And I think they`re really posed to
explode.

Naturally, they`re not cheap and they`ve had a big run. But certainly if
it takes off the way I think it will, you`ll see them go to another level
over the next few years.

EPPERSON: Yes, I think you also like the dividend there too, Chris.

Thanks so much for joining us. Chris Bertelsen with Global Financial
Private Capital.

BERTELSEN: Thank you.

GRIFFETH: All right. Coming up, sold out. Why one retailer strategy is
actually centered on upsetting some of its customers.

(MUSIC)

EPPERSON: Here`s a look at what to watch next week. On Monday, Dow
component IBM reports earnings, followed by other blue chips later in the
week, including Goldman Sachs (NYSE:GS), Johnson & Johnson (NYSE:JNJ),
Intel (NASDAQ:INTC), and UnitedHealthcare to name just a few. On
Wednesday, we`ll get an update on the spring selling season with a report
on existing home sales. Thursday, the European Central Bank meets, and
that`s what to watch next week.

GRIFFETH: Meantime, the Department of Homeland Security has sent out an
alert to Windows users. If you have Apple (NASDAQ:AAPL) Quicktime
installed, you should uninstall it. Apple (NASDAQ:AAPL) pulled support for
that software and it is not issuing an additional security update on that
and a lack of updates means lack of protection, making it easier for
hackers to access your computer.

EPPERSON: General Motors (NYSE:GM) is recalling 1 million newer trucks for
faulty seat belts. The automaker said the retail covers 2014 and 2015
Chevrolet Silverado and GMC Sierra 1500 pickups. GM says there have been
no reports of crashes or injuries.

GRIFFETH: Well, Target (NYSE:TGT) is doing it again. Following last
year`s wildly successful Lilly Pulitzer limited edition launch, this Sunday
the retailer is selling a line of Marimekko goods, expected to sell out
quickly, leaving many customers empty handed and fuming.

But as Courtney Reagan explains, that`s all part of the plan.

(BEGIN VIDEOTAPE)

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Fashionistas
across the country are drawing up shopping game plans ahead of this
weekend`s Marimekko Target (NYSE:TGT) launch. Target`s latest designer
collaboration with the Finnish designer Marimekko launches early morning
hours Sunday on target.com and in stores when doors open.

There are over 200 colorful patterned apparel and outdoor item in the
collection, most for under $50. And like all of these collaborations, once
merchandise is sold out, there`s no replenishment. It`s all part of the
tragedy. Scarcity makes it more special.

Retailers like H&M and Target (NYSE:TGT) intend for these designer
collaborations to sell out in weeks or less. Last year`s Lilly Pulitzer
for Target (NYSE:TGT) sold out in one day. But even then, these
collaborations are never big enough to truly move the needle for these big
retailers. The goal is to generate buzz.

Target (NYSE:TGT) says the buzz so far is terrific and that the retailer is
really pleased with the early shopper excitement. But it remains to be
seen how that will translate to sales. The challenge will be how well
Target`s website performs under heavier than normal traffic. On both Cyber
Monday and when Target`s Lilly Pulitzer collaboration launched last April,
its website buckled under the traffic, leaving many unhappy customers with
empty shopping carts.

For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan.

(END VIDEOTAPE)

EPPERSON: And before we go, let`s take a look at the day and week on Wall
Street. It was a quiet day today. The Dow fell nearly 29 to 17,897. The
NASDAQ dropped 7. And the S&P 500 was off 2 points.

But it was a winning week. All of the major indexes rose more than 1.5
percent. So, a pretty good week here.

That`s NIGHTLY BUSINESS REPORT for tonight. I`m Sharon Epperson. Thanks
so much for watching.

GRIFFETH: And I`m Bill Griffeth. Have a great weekend. We`ll see you
again on Monday.

END

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