<Show: NIGHTLY BUSINESS REPORT>

<Date: March 28, 2013>

<Time: 18:30:00>

<Tran: 032801cb.118>

<Type: SHOW>

<Head: NIGHTLY BUSINESS REPORT for March 28, 2013, PBS>

<Sect: News; International>

<Byline: Susie Gharib, Tyler Mathisen, Diana Olick, Jon Fortt, Michelle Caruso-Cabrera, John

Harwood>

<Guest: Mike Holland, David Riedel, Brian Rehling, Jeff Saut>

<Spec: Business; Economy; Dow Jones Industrial Average; NASDAQ; S&P 500; Stock

Markets; Policies>

<Time: 18:30:00>

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and

Susie Gharib.

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Record high on the last

day of the quarter. The S&P finally closes at a record high. And the Dow

hits another milestone.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: And second quarter

outlook. Can stock move higher from here? If so, what should you buy? If

not, what should you sell? Answers tonight as we look ahead.

GHARIB: Good evening, everybody.

We have a special report to help you make decisions for your

portfolio.

And so, Tyler, we`re going to cover everything. We`re going to look

at stocks, U.S. and international, bonds, commodities.

MATHISEN: Tell you what to do, give you a road map to the rest of the

year ahead.

Susie, today was yet another record setter in a quarter full of them.

The S&P 500 after days of lingering on the doorstep of an all-time

closing high finally broke through. It ends the first quarter of 2013

higher than it has ever finished before.

And for its part, the Dow Industrials closed at another all-time high,

its tenth record close of the year.

Here are the numbers: The Dow up 52 points to 14,578. NASDAQ up 11 to

3,267. And the S&P 500 breaking through to an all-time high close, up more

than six to 1,569.

Today`s gains cap off one of the best quarters for stocks in years.

In fact, the Dow`s 11.2 percent rise was its best first quarter run in 15

years. The S&P ended roughly 10 percent higher, and NASDAQ sandbagged just

a little bit Apple (NASDAQ:AAPL), finished more than 8 percent higher.

The quarter`s gains were widespread. None of the 10 sectors that make

up the S&P 500 lost money. And we`ll have much more on the first quarter

and a road map for the months ahead throughout the program.

GHARIB: Well, Tyler, not any upbeat superlatives to describe today`s

reports on the U.S. economy. In the job market, the number of Americans

filing new claims for unemployment benefits rose last week by 16,000. But

according to most economists, that`s not enough to suggest the labor market

is weakening.

As for the overall economy, growth during the final quarter of last

year shows as the economy expanded at a revised rate of 0.4 percent, not a

blowout number for GDP, but more than the government previously estimated.

So, what`s next for the U.S. stock market? Let`s get some answers

from Mike Holland, chairman of his own money management firm, Holland &

Company.

You know, Mike, you have been in this industry, in the markets for

years. And you were telling that this has been the least enthusiastic

market rally of your career. Do you think by Monday, after everybody has

seen this kind of numbers, are going to be more enthusiastic? What`s next?

MIKE HOLLAND, HOLLAND & COMPANY CHAIRMAN: I don`t think so, Susie. I

think the comments I heard today from a lot of people who are in the

marketplace, it`s a smaller number than there used to be at market highs, I

should add. The people are looking for when will the next correction be?

Is this over?

It isn`t the way it was when the market had its recent highs several

years ago. This time around, the market valuations are as low as I`ve seen

them, at a new market high -- in other words, 10, 15 times earnings rather

than 20, 30 times earnings. And also the psychology is totally different.

Much more negative.

GHARIB: All right. Much more negative.

But still, for those who are positive and do want to invest, you say

the U.S. stock market is the place to be. Tell us why.

HOLLAND: Well, I think as you were just talking about a second ago,

the numbers in the U.S. economy continue to be better than most other

places in the world. So say for a place to be, look at Europe, it`s more

predictable. Look at China. And we do have a valuation level here that I

think continues to be one that is actually kind of crazy to me in terms of

attractiveness. It`s crazy attractive. And I think that when you get

great companies in the U.S. trading at 10, 12, 14 times earnings with 1

percent, 2 percent, 3 percent, almost 4 percent yields in some cases versus

what else is out there, it`s not even a close call.

GHARIB: I want to make a quick switch over to commodities. I know

you`re not a fan of gold. It closed just under $1,600 an ounce.

But you like other commodities. Which ones and why?

HOLLAND: Well, I think overall, the economy is going to grudgingly

move up lead by China and the U.S. I think overall the commodities --

therefore, I don`t expect the kind of run over the past decade when China

was red hot. But I think I have the support level under the commodity

markets. But I actually would probably buy the stocks rather than

commodities directly. I think if you bought, for example, in the energy

area, Exxon and Devon Energy (NYSE:DVN), a natural gas and a world great

commodity player, I think you could do very well over the next five to 10

years.

GHARIB: All right. In a few words -- really few words -- best advice

to investors right now.

HOLLAND: Please lose some of your fear as the market goes down over

the next year and get reinvested in the stock market.

GHARIB: OK. Fair enough.

Thank you so much, Mike. Mike Holland, chairman of Holland & Company.

MATHISEN: One of the few bright spots this quarter has been housing.

Earlier this week, we learned that home prices are rising faster than at

any time since 2006. But as we look ahead to the second quarter and

beyond, Diana Olick says the outlook may not be all sunny days and warm

nights.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT: Here`s what to

watch for in the housing sector in the quarter ahead.

Spring is supposed to be the busy season, but a severe lack of

inventory may push sales lower or at least keep them from surging ahead.

Prices will push higher due to this short supply. Watch for the

possibility that foreclosures will ramp up as banks seem to be pushing more

delinquent loans through the system more quickly.

But hungry investors are waiting and that continues to be good news

for home builders. Expect to see new orders rise even more, but watch for

slower deliveries as the builders are lacking in both land and labor.

That`s your Q2 channel check for NIGHTLY BUSINESS REPORT, I`m Diana

Olick.

(END VIDEOTAPE)

MATHISEN: And from housing, we move to technology. An earnings

surprise from BlackBerry, the company formerly known as Research in Motion

(NASDAQ:RIMM), returned to profitability last quarter selling about a

million of its new Z10 smartphones worldwide, even before they went on sale

here in the U.S. Chief executive Thorsten Heins says last quarter net

profit was no fluke and that the company is positioned now for sustainable

profits despite the competition.

(BEGIN VIDEO CLIP)

THORSTEN HEINS, BLACKBERRY PRESIDENT & CEO: We have designed

BlackBerry now in a way that its cost structure going forward is a very

competitive cost structure. So, what we`re talking about is not a one-time

effect in Q4. We have established an efficient engine in BlackBerry that

allows us going forward on the volumes that you will be seeing to be

profitable in the future.

(END VIDEO CLIP)

MATHISEN: Well, that may be a tough sell with investors, though.

Shares of BlackBerry down nearly 1 percent today.

GHARIB: BlackBerry isn`t the only company that will have to convince

investors it`s on the right path -- from Oracle (NASDAQ:ORCL) to Qualcomm

(NASDAQ:QCOM). As Jon Fortt reports, a number of other tech giants have

their work cut out for them in the current quarter.

(BEGIN VIDEOTAPE)

JON FORTT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Here`s what to

watch for in the technology sector in the quarter ahead: mobile ads and

enterprise.

In mobile, watch Apple`s iPod sales and Qualcomm`s chip set forecast,

and contrast that with the trend of PCs from Dell (NASDAQ:DELL) and HP. We

know they`re going to sell less of everything than in the holiday quarter,

but how much less is the question?

Over at Google (NASDAQ:GOOG) and Yahoo (NASDAQ:YHOO)!, the display ad

business has been under tremendous price pressure. We`ll see if it can

recover.

And, finally, enterprise. After Oracle`s big top line miss, we`ll

have to watch Cisco (NASDAQ:CSCO) and EMC (NYSE:EMC) to see whether it was

Oracle`s salespeople or customers just had an overall reluctance to sign on

the dotted line.

That`s your Q2 channel check.

For NIGHTLY BUSINESS REPORT, I`m Jon Fortt.

(END VIDEOTAPE)

GHARIB: Turning to some overseas news.

In Cyprus today, a big sigh of relief. Banks finally reopened after

being closed for nearly two weeks. Branches opened on time, lines were

long, restrictions on how much money people could withdraw, and officials

were prepared for the worst.

But as Michelle Caruso-Cabrera tells us from Nicosia, things remain

calm and the worst never came.

(BEGIN VIDEOTAPE)

MICHELLE CARUSO-CABRERA, NIGHTLY BUSINESS REPORT

CORRESPONDENT: The

banks here in Cyprus open for the first time in nearly two weeks. The

event marks a key step for the country`s economy and also puts an end to

days of uncertainty.

(voice-over): Late last week, the panic started to set in. Word

spread the E.U. was forcing Cyprus to shut down at least one of the

country`s two largest banks. The CEO of the bank destined to be liquidated

appears stunned after being informed at parliament he`ll be out of a job

soon.

(on camera): Is this not more fair that the most troubled bank and

the investors in that most troubled bank are the ones who suffer the most?

TAKIS PHIDIA, ACTING CEO, LAIKI BANK: It`s absolutely fair, if the

causes of that failure belong to the bank.

CARUSO-CABRERA (voice-over): The protests strengthened over the

weekend as bank employees learned thousands will lose their jobs.

MAGDA KYRIACOU, BANK OF CYPRUS EMPLOYEE: I`m going to lose every

penny with no job, no pension, no money, nothing.

CARUSO-CABRERA: The ATMs give less and less money.

UNIDENTIFIED MALE: Only 100.

UNIDENTIFIED MALE: Only 100?

UNIDENTIFIED MALE: Only 100.

CARUSO-CABRERA: The days roll on, but the economy screeches to a

halt. Security is needed to protect the employees of the central bank.

And today, after much preparation and negotiation, the banks finally

reopen to depositors desperate for their cash.

(on camera): There are restrictions in place to prevent runs on the

banks. Deposit holders are limited to withdrawals of no more than 300

euros per day. That`s nearly 400 U.S. dollars. No checks will be cashed.

They can only be deposited.

Business owners, they can do transactions up to 5,000 euros per day.

Beyond that, they have to get special permission from a committee at the

bank.

For NIGHTLY BUSINESS REPORT, Michelle Caruso-Cabrera, Nicosia, Cyprus.

(END VIDEOTAPE)

MATHISEN: Well, generally speaking, major market global stocks failed

to keep pace with U.S. shares in the first quarter. The overall (ph)

exception: Japan up almost 19 percent.

But many emerging markets struggled. Brazil lost more than 7 percent,

for example. And the MSCI (NYSE:MSCI) emerging markets index down about 2

percent since the beginning of the year.

But our next guest sees plenty of buying opportunities on the horizon.

David Riedel is president and founder of Riedel Research Group.

David, welcome.

How are valuations across the emerging markets as a group? Are they

relatively value priced?

DAVID RIEDEL, RIEDEL RESEARCH GROUP PRESIDET: Well, they`re at 11

times P.E. They`ve got very strong balance sheets, very good growth, and

they`ve got stronger economies behind them than many of the developed

countries. So, I think they`re a great value.

MATHISEN: There are some stumbles in the emerging markets group in

the first quarter. I wouldn`t include Italy there, but India didn`t do

very well. Russia didn`t do very well. And China, both Hong Kong and

Shanghai, were roughly flat, down about 2 percent by the numbers I see.

Where in the emerging markets do you see the greatest upside potential

second quarter and beyond?

RIEDEL: We would be looking at midcap Hong Kong. We think the

Chinese economy is going to surprise to the upside.

We think that Europe, especially Germany is actually going to surprise

to the upside. So, we`d be big buyers of Poland and Turkey, those markets

that are really tied to that industrial growth in Europe, which we think is

going to surprise.

MATHISEN: Poland was one that had a pretty rough first quarter. But

you think as Europe comes back, it will pull Poland and some of the other

emerging countries in that part of the world along with it.

RIEDEL: That`s exactly right. Poland is the largest economy in

central Europe. They were first into the euro. So they`ve gone through a

lot of those teething pains. They kept their own currency which gives them

some more monetary flexibility. It`s a very good, established market with

a lot of domestic pension activity. It`s a great place to invest.

MATHISEN: Let`s go to Cyprus now and a country that is near to it,

and that is Turkey. That is a country that you like going into the future.

RIEDEL: Yes, we saw S&P upgraded their sovereign debt today,

improving environment there. We think people are starting to recognize

what solutions Turkey provides for European corporates, a very skilled,

large, young work force that has the ability to manufacture cars and white

goods and all kinds of other things for those European countries.

It`s almost like Greece without being part of the euro. They`ve got a

lot of great advantages including their demographics. And it would be a

place we`d definitely have on our radar screen for the second quarter and

beyond.

MATHISEN: Let me take you back to China. You began by saying that

the way to play China is through Hong Kong. Why?

RIEDEL: The Shanghai exchange is not an appropriate place for people

to invest. It`s dominated by very low-quality companies.

Hong Kong over the last 20 or 30 years has proven itself for the best

gateway for investing into China. The companies are well-regulated, they

are well -vetted, well-run and good at getting earnings to the bottom line.

It`s a great market for U.S. investors to look at.

MATHISEN: David Riedel, we`ll leave it there. Thank you very much.

Have a great weekend.

RIEDEL: Thank you.

MATHISEN: David Riedel is president and founder of the Riedel

Research Group.

GHARIB: And still to come on the program, it`s the question most

American investors want answered. Is the bull market in bonds ending?

But, first, the best performing sectors of the first quarter and a

look at how the international markets closed today.

(MUSIC)

(BEGIN VIDEOTAPE)

JOHN HARWOOD, NIGHTLY BUSINESS REPORT CORRESPONDENT: Here`s

what to

watch for in Washington in the quarter ahead. Here at the Supreme Court,

the nine justices are going to decide the fate of two cases that have been

argued involving the right of same-sex couples to marry. In the Capitol,

the House and Senate are going to try to work out a deal on comprehensive

immigration reform, both involving enforcement and a potential path to

citizenship.

And at the White House, President Obama and his economic team are

going to continue to work with both rank-and-file and leaders in Congress

to try to come up with a long-term budget deal involving some tax increases

and some cuts to entitlements.

That`s your second quarter channel check.

For NIGHTLY BUSINESS REPORT, I`m John Harwood.

(END VIDEOTAPE)

MATHISEN: Policy out of Washington, as usual, is likely to drive the

bond market in a big way for the remainder of the year. Treasury yields

had been creeping higher but then have settled back in light of Europe`s

struggles.

So what`s your best move in bonds and fixed income right now?

Welcome to the program, Brian Rehling, chief fixed income strategist

for Wells Fargo (NYSE:WFC) Advisors.

Mr. Rehling, welcome.

BRIAN REHLING, WELLS FARGO CHIEF FIXED INCOME STRATEGIST: Thank

you.

MATHISEN: What is your outlook for yields in treasuries between now

and year end, up from here? Flat? Down?

REHLING: We do see treasury yields moving a bit higher, modestly

higher. We have a 250 yield target on the ten-year for year end. We think

as we get into late this year, there will be some visibility on the end or

the scaling back of Fed purchases which should lead interest rates to creep

up a bit.

MATHISEN: So yields on the ten-year today are about 1.85. You see

them going to 2.5. That would suggest that you feel that people might well

lighten up on their bond holdings.

REHLING: Absolutely. People have been piling into bonds over the

last four years. They`ve provided great returns. But those returns are in

the past -- really mathematically possible to see those type of returns in

the future. Even if interest rates stay relatively low, we`re looking at

very low single-digit returns.

So it`s time to begin liquidating, especially some of those longer

maturity positions at these quite high prices. You know, shifting some of

those assets into the equity market.

MATHISEN: So what ideally should a portfolio have in it? I mean,

obviously, everybody`s different with respect to fixed income. Is it 30

percent now? Is it 45 percent? Is it 60 percent?

What is it?

REHLING: You know, obviously, everyone, as you mentioned, is

different. Kind of in our most popular models, kind of in the middle of

the risk spectrum, we have about 40 percent to 45 percent across all of our

fixed-income asset classes. But remember, you want to be very well

diversified there, not just in the U.S., but also have some, you know, high

yield emerging market and international fixed income positions.

MATHISEN: A lot of individuals, with their fixed income, reach for

higher yields. And I`m looking at high yield or junk bonds, among other

things.

What is your advice for them, and what do you foresee in the high

yield and corporate market for the remainder of the year?

REHLING: Well, I do think high yields will provide better returns. I

don`t see a big selloff there. However, I don`t necessarily think there`s

a lot of value for the risk clients are taking.

So, we`re neutral in that sector. One thing that concerns me a little

bit is we are starting to see the covenants of the new issues. It`s really

more of a seller`s market. So, the issuers are holding the upper hand

here. So I`m a little bit concerned that we are seeing some of the -- some

of those covenants lighten up a little bit which is concerning for the

ultimate buyer.

MATHISEN: Very quick thought on munis if you don`t mind.

REHLING: Munis, we continue to like munis. We buy higher quality

munis. We think they should continue to perform in valuations there,

continue to look relatively attractive to us at least relative to the other

sectors in the fixed income market.

MATHISEN: Brian Rehling, thanks so much.

REHLING: Great. Thanks for having me.

MATHISEN: Brian is a chief fixed income strategist for Wells Fargo

(NYSE:WFC) Advisors.

And coming up, you thought this quarter was strong. That`s nothing

compared to what the monitor is predicting for decades to come. There`s a

little hint: the best and worst.

Though, first the best and worst performing S&P stocks this quarter

and a look at commodities, treasuries and currencies.

(MUSIC)

GHARIB: EBay`s big goals is where we start our "Market Focus" for

tonight.

CEO John Donahoe telling analysts, quote, "We are now playing

offense." EBay plans to almost double its active users, up to 200 million

in three years, by expanding globally and using mobile technology. The

company`s also planning to double the volume of its PayPal unit to almost

$300 billion. EBay stock closed up more than 4 percent to $54.22.

GameStop was the top gainer on the S&P 500, thanks to better than

expected quarterly sales and earnings. But the video game retailer warned

of weaker-than-expected results for the year as customers wait for the

rollout of new game consoles. Still, investors focused on the positive and

shares jumped more than 5.5 percent to about $28 a share.

MATHISEN: Susie, metroPCS is being sued by shareholders seeking to

block its merger with Deutsche Telekom`s T-Mobile USA unit. Earlier,

metroPCS urged its shareholders to vote for the merger after ISS, an

advisory group, urged them to vote against the deal. During the trading

day, investors bid up the shares of metroPCS on heavy volume, betting that

T-Mobile USA will have to sweeten the proposal. MetroPCS closed up more

than 3.5 percent at $10.90.

PVH which owns brands like Tommy Hilfiger and Izod was the big loser

on the S&P 500 today, after warning that its acquisition of Warnaco will

weigh on earnings for the rest of the year. Now, PVH bought Warnaco last

month, getting full control of the Calvin Klein brand, among other things.

And PVH said Warnaco needs more investment than it had estimated. Shares

of PVH lost more than 5 percent, down a big $6.

And the IPO of the day, Pinnacle Foods, debuted nicely. Pinnacle`s

brands are names you know like Bird`s Eye, Vlasic Pickles, and Celeste

Pizza. I don`t recommend eating them all at the same time.

Pinnacle priced at $20 a share and it closed up more than 11 percent

on its first day.

GHARIB: Our market monitor tonight says we`re in a new secular bull

market -- and get this -- that lasts decades. He`s Jeff Saut, chief

investment strategist at Raymond James.

So, Jeff, really? Decades?

Make the case for this bull market.

JEFF SAUT, RAYMOND JAMES CHIEF INVESTMETN STRATEGIST: Well, the

last

time that the Dow Jones Industrial Average and the Dow Transports broke out

to new all-time highs was after a long multiyear -- in fact, it was about

17-year trading range between 1965 and 1982. Both averages broke out to

new all-time highs in late `82 and early 1983, and you started an 18-year

secular bull market.

This just happened again. You have the transportation break out to

new all-time highs? January and the Dow Jones Industrial Average just

confirmed it about three weeks ago. That is the fourth Dow theory buy

signal since the bottom in March of 2009.

GHARIB: And that`s even though the U.S. economy is still on the weak

side. We can still have that kind of a market rally over the next couple

of years? Decades?

SAUT: The market has been a better predictor of an improving economy

than any economist I know.

And I think there`s a lot of good things afoot here. I think you`re

getting a change in the constituency of Congress for the better. I think

you`ve got this reindustrialization of America going on, this energy

independence. And my energy team thinks we`re going to be energy

independent by 2020.

I think all of those things are vastly bullish for the U.S. economy.

GHARIB: All right. Jeff, let`s go down your list of stocks you think

will do well in this rally. At the top of your list you have Walgreens.

The stock is now at $47. You have a $60 target on it.

What`s going to power WAG ticker symbol on the big board?

SAUT: Well, Obamacare is going to drive more people into the

drugstores. They made an acquisition a couple months ago, Alliance Boots,

which was the largest drug chain in Europe. And it was actually

misunderstood initially, and the stock kind of stutter stepped.

But when the -- all the metrics come together, my fundamental analyst

who has an outperform rating on it thinks that they have $5 a share in

earnings power in fiscal 2015. If you put a decent multiple on it, you get

a $60-plus stock.

GHARIB: OK.

All right. The next one, Rayonier, the big timber and lumber company.

I`m guessing that this is a play on the housing boom that we`ve been

seeing.

What`s the story here?

SAUT: The housing stocks have been hot. We have been in front of

that up until recently. My team downgraded most of the housing stocks a

few months ago.

This is a second derivative play on the housing market. They have 2.8

million acres of timber. They`ve increased their dividend recently. And

yet, they still have about a 3 percent dividend yield. We like the company

a lot. And here, too, we have it outperform rated.

GHARIB: All right. So, you like Callaway Golf (NYSE:ELY), right in

time for golf season. The stock hasn`t been that popular with investors.

Tell us why you like ELY.

SAUT: That`s why they got a new CEO, Chip Brewer. I think it`s

appropriate to have a CEO with the first name Chip.

(LAUGHTER)

SAUT: And he, in essence, turned Adam`s Golf around. Anybody that

knows anything about Adam`s Golf and the specialty clubs they made, it was

a huge win. He is now CEO of this company. He`s gotten them out of the

golf ball business that they couldn`t make any money on, out of the

clothing business. And he`s refocused --

GHARIB: OK.

SAUT: -- the direction of the company on the golf clubs.

GHARIB: We have less than 30 seconds. See if we can squeeze in the

last one. It`s an ETF for Technology. Tell us why you like this because

tech stocks haven`t really benefited.

SAUT: That`s one of the reasons. Technology as a group is priced

cheaper than the utilities. And the market is telling you that they`re

expecting utilities to grow more than technology over the next few years.

And I don`t believe it. I think tech`s undervalued. They have clean

balance sheets and I think you`re going to do well going forward.

GHARIB: All right. You`ve given us a lot to think about.

Any disclosures to make, Jeff? Do you own any of these stocks?

SAUT: I do.

GHARIB: All of them?

SAUT: All of them.

GHARIB: All of them. OK, great. Thanks a lot. Have a great

weekend.

Jeff Saut, chief investment strategist at Raymond James.

MATHISEN: And tomorrow with the markets closed, we`ve got a special

report on the American recovery. It`s been an interesting first quarter.

Let`s look forward to the second.

GHARIB: Be sure to tune in for that. I`m Susie Gharib. Have a great

weekend, everyone.

MATHISEN: And I`m Tyler Mathisen. Thanks so much for watching.

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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