<Show: NIGHTLY BUSINESS REPORT>

<Date: April 15, 2013>

<Time: 18:30:00>

<Tran: 041501cb.118>

<Type: SHOW>

<Head: NIGHTLY BUSINESS REPORT for April 15, 2013, PBS>

<Sect: News; Domestic>

<Byline: Susie Gharib, Bill Griffeth, Bill Pisano, Jackie DeAngelis, Julia Boorstin, Kayla

Tausche>

<Guest: Nicholas Colas, Jed Kolko>

<Spec: Business; Economy; Stock Markets; Wall Street; Gold; Bombings; Boston,

Massachusetts>

<Time: 18:30:00>

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and

Susie Gharib, brought to you by --

(COMMERCIAL AD)

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Market selloff. The

three major indexes have the worst day since November 7th.

BILL GRIFFETH, NIGHTLY BUSINESS REPORT ANCHOR: Losing luster. Gold

prices see their biggest one-day drop since 1980.

GHARIB: And adding to the concern on Wall Street, a tragedy today in

Boston.

This is NIGHTLY BUSINESS REPORT for Monday, April 15th.

Good evening, everyone. I`m Susie Gharib.

GRIFFETH: And I`m Bill Griffeth. In for Tyler Mathisen, who is off

this week.

GHARIB: Great to have you here, Bill.

GRIFFETH: It`s great to be here.

GHARIB: What a tough day in the markets on many levels.

GRIFFETH: Yes, a lot of drama today this Monday, Susie.

A dramatic reversal of fortune on Wall Street, stocks falling sharply,

with all 30 Dow components in the red. Commodity prices also hit hard

following a new u report with weaker than expected growth in China and a

slower rate of manufacturing in New York state this month.

Crude oil, gold, silver, copper -- I mean, you name it, it was sharply

lower on that day, dragging down shares of energy, mining, transports,

housing, other stocks as well. And adding to the jitters on Wall Street,

two explosions at the finish line of today`s Boston marathon, which killed

at least two and injured many more.

The Dow closed near its lows of the session with volatility turning

sharply higher in the final hour of trade. The Dow finished 266 points at

14,599.

The NASDAQ hit even harder, down 78 points. The S&P down by 36. Both

of those indexes falling by more than 2 percent.

Bob Pisani has more from the floor of the New York Stock Exchange.

(BEGIN VIDEOTAPE)

BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): It

was an ugly day for stocks, down on concern about slower global growth.

But an ugly day for the markets got uglier just before 3:00 Eastern Time

when word come of two explosions at the Boston marathon. The Dow, already

down 165, quickly lost another 50 points and closed down 1.9 percent, the

worst one-day drop since November of last year.

The VIX or Volatility Index, also known as the Fear Index, also jumped

and ended the day up over 40 percent, it`s biggest one day gain in more

than 1 1/2 years.

The day didn`t start out much better. Gold and other commodities

dropped big at the open. Gold in particular, down 10 percent, its worst

one-day decline in 30 years.

Other commodity stocks like Arcelor Mittal, Rio Tinto or Cliffs

Natural Resources were also weak.

Defensive names like Wal-Mart, Campbell and Kimberly-Clark were also

done, but fared better.

(on camera): The main catalyst for the selloff was concerns about

slower global growth. China, for example, reported GDP for the first

quarter below expectations. Now, with Europe in recession and the U.S.

posting weak economic data in March, traders are now wondering, where is

the growth going to come from?

For the NIGHTLY BUSINESS REPORT, I`m Bob Pisani at the New York Stock

Exchange.

(END VIDEOTAPE)

GHARIB: Well, as Bob just mentioned, the price of gold plunged today,

recording its second worst, one-day percentage loss ever, and closing below

$1,400 an ounce for the first time in more than two years. Today was the

first time ever that the Dow and price of spot gold both recorded triple

digit losses.

So, why the selloff and what may be next for the precious metal?

Jackie DeAngelis has our report.

(BEGIN VIDEOTAPE)

JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-

over):

Another massive selloff in the gold market today, but what`s fuelling the

furious rotation out of bullion? Several factors are at play, including

the continued strength in the equity market. As investors look to move

money into riskier assets, gold had lost its luster.

But gold is also an inflation hedge and as long as the Fed continues

with its stimulus program, investors believe inflation is likely to remain

in check.

GEORGE GERO, RBC CAPTIAL MARKETS GLOBAL FUTURES VP: People

thought

the price of gold was a good hedge against stock market moves and forgot

that the price of gold really is an inflationary hedge and then you buy

gold to preserve purchasing power. While we`re not seeing the signs of

inflation because commodity prices have not risen, interest rates have

remained low, so the cost of commodities have not really gone up.

DEANGELIS: But there`s more to the story. Part of bullion`s

breakdown is due to the cent strength in the U.S. dollar.

GERO: Dollar strength impacts gold because if the dollar is strong,

it becomes very expensive for people who do not have dollars to buy gold.

DEANGELIS (on camera): Meantime, troubles in Europe are weighing on

the precious metal as well. It`s believed that the tiny island nation of

Cyprus may need to sell some gold to help cover its deficit. While

analysts don`t feel that sell by Cyprus would have a huge impact on the

overall market, they do worry that it sets a precedent for other troubled

countries.

(voice-over): Still, some analysts believe that the selloff was

overdone and that gold will rebound, the thought is that the pile on

selling doesn`t last.

GERO: The chances are that it will go up and down for a few weeks

around then stabilize and the buyers will then step in.

DEANGELIS: And while some investors are worried about how the decline

in gold might impact their pension plans or 401(k)s, it usually tends to be

a small percentage of a diversified portfolio. The recent decline might be

balanced out by gains in equities.

And there`s even a silver lining. For those in the market to buy the

commodity itself or gold jewelry, this could be a time to jump in.

For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis.

(END VIDEOTAPE)

GHARIB: That tumble in gold prices also prompted a rare retraction

from Bill Gross. He`s the founder and co-chief investment officer of

PIMCO, the world`s largest bond fund. At a "Barron`s Magazine" event last

month, Gross called gold a decent hedge against inflation and predicted

prices wouldn`t move much unless real interest declined further or

inflation expectations rose higher.

Well, neither happened. And today, Gross tweeted this, quote, "OK,

so, I made a bad call at the Barron`s Roundtable. I would still buy gold

here. World reflating," end quote.

GRIFFETH: All right. Joining us now to make sense maybe of today`s

big sell off in both commodities and in stocks, please welcome, Nicholas

Colas, the chief market strategist of Convergex.

Nick, good to see you. Thanks for joining us.

NICHOLAS COLAS, CONVERGEX CHIEF MARKET STRATEGIST: Thank you.

GRIFFETH: You think there`s a dramatic turn for investor technology

for those investments, right now, don`t you?

COLAS: I do. Let`s start with gold, for example. Gold, for many

years, as you pointed out, has been a major inflation hedge. However, with

the threats of many central banks in Europe having to sell a bit of their

gold holding to fund their own restructuring, I think investors are worried

about a lot of supply coming to the market.

Cyprus is just a teeny bit of it. You have areas like Portugal,

Spain, France, even Italy, who have tens of thousands of tons of gold in

their vaults and any part of that comes out, there`s going to be a lot of

supply.

GHARIB: Nick, a lot of investors tonight are scratching their heads

saying, what happened? All these past couple of weeks and months, there

have been new records on Wall Street and all the stock averages and they`ve

been told that the economy is doing great, so what`s changed?

COLAS: You know, what`s changed is that we got a little complacent.

I think everybody looks at the market over the past couple of weeks and

says, well, you know, we weren`t really fully gauging what might happen if

the economy slows down or it doesn`t speed up. And I think today was

really just the reckoning for a lot of those concerns.

GRIFFETH: You know, we`ve been in a period where people have been

expecting what they call a correction, maybe as much as 10 percent pullback

from whatever highs we`ve been hitting here lately. Do you think this is

the beginning of that correction right now?

COLAS: I think we`re certainly seeing a bit of a correction. I don`t

know how much more it has to go, however, because fundamentally, we have

very low interest rates and U.S. corporations are still posting basically

record high levels of earnings against the backdrop of a very weak global

economy.

I think the concern is that if we get a big downdraft from either

whatever happens out of Boston or some other macro factor, that`s a real

risk factor. But as far as the fundamentals near term, very strong

earnings, very low interest rates, hard to argue against stocks with that

backdrop.

GHARIB: Nick, you just mentioned the Boston marathon incident. We`re

still getting bits of information. We don`t have the complete story on

that tragedy.

But events like that do impact investor psychology. How much of an

impact?

COLAS: Yes, that`s exactly right, Susie. You know, really two

factors to focus on here. First, what effect does it have on consumer

confidence? Because these kinds of events, obviously, scare people and

rightly so.

First question is, how does it affect consumer spending? How does it

affect consumer psychology?

You know, the broader issue is a bit more nebulous, which is what are

the geopolitical ramifications of the event? We`ve had examples over the

past 20 years of horrible tragedies like Oklahoma City or even 9/11, some

of them have very profound impacts on geopolitical balance and the economy

and some don`t have quite a bit as much. We just don`t know which one of

these it is yet.

GRIFFETH: Since the lows of last year, Nick, there`s been a mindset

of investors to buy the dips, as we say. As the market comes lower, they

step in and see an opportunity to buy.

Now, we`ve had a pretty good selloff in the past couple of days. Do

you -- and so far, nobody`s stepping in. Do you think they will or should

they at that point?

COLAS: You know, I think in terms of thinking about how to invest and

over what time frame you are investing, if you`re investing for a three or

five-year horizon or longer, then ultimately you`d focus on the fact that

corporate earnings are strong despite a very weak global economy and buying

made sense.

If you`re a trader or if you have seen the action over the past couple

of days and it scares you and you think you`re overexposed to equities,

then the opposite advice is true. It`s probably just time to take some off

the table because you`re overexposed and your risk comfort is obviously out

of reality.

GHARIB: Nick, you have a standard asset allocation. Sixty percent

stocks, at 40 percent fixed income, and you really don`t change it when the

market, stocks are going up or the stocks are down. So, what is your

advice to investors? What should they do right now, just sit tight?

COLAS: Yes, 60-40 is a very solid split. It maximizes return and

minimizes volatility. I think if you have seen the action over the past

few days and you`re comfortable, it makes sense to sit.

My concern is that a lot of your viewers probably are sitting on some

pretty sizable gains over the past few years. Maybe that 60-40 isn`t quite

where it should be. Maybe it`s 80-20. For those investors, for those

viewers, I would recommend paring back on equities because you`re

overexposed, even those stock markets obviously done well.

GRIFFETH: Nick Colas, the chief market strategist at Convergex thanks

for joining us.

COLAS: Thank you.

GHARIB: Well, shares of Sprint were as good as gold today, shooting

up nearly 14 percent, easily making it the biggest gainer in the S&P 500.

Now, the reason, the DISH Network is offering to buy Sprint for $25 billion

and this is the second takeover bid for the wireless phone carrier.

Julia Boorstin has more.

(BEGIN VIDEOTAPE)

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Wireless

provider Sprint is at the center of a takeover battle. Today, DISH,

offering to buy the company and trump the proposal from Japan`s SoftBank,

sending Sprint shares soaring.

Dish is saying its offer is a, quote, "superior alternative" to

SoftBank`s proposal, a 13 percent premium to SoftBank`s $20 billion bid to

buy 70 percent of Sprint. DISH chairman Charles Ergen saying quote, "A

transformative DISH/Sprint merger will create the only company that can

offer customers a convenient, the fully-integrated nationwide bundle of in-

and out-of-home video, broadband and voice services."

Ergen is trying to push DISH from the slower growing pay TV business

into the faster growing wireless industry and to break the mold of his pay

TV rivals like DirecTV and Comcast, by offering mobile phone services.

DISH`s bid comes at a time of consolidation in the wireless industry

and growth in the broadband business.

Ergen wants to offer a wireless alternative to broadband by making

this deal with Sprint, which he says is well-positioned to deliver high-

speed Wi-Fi in dense areas. DISH shares dropped more than 2 percent today

on the offer, a bold move in a competitive landscape that raised concerns

for some analysts.

JONATHAN CHAPLIN, NEW STREET RESEARCH SENIOR ANALYST: On the

one

hand, capital. DISH would be spending everything they have in order to

acquire Sprint. They then don`t have the capital to invest in Sprint and

extract all the value from the spectrum they would have amassed.

The second concern is operating skill. They don`t have a track record

in wireless.

BOORSTIN: Now, the ball is in Sprint`s court. If it decides DISH`s

bid (INAUDIBLE) SoftBank, Softbank could make a counteroffer. And if DISH

snags Sprint, it will push all the pay TV providers to find new ways to

distinguish their bundle.

For NIGHTLY BUSINESS REPORT, I`m Julia Boorstin.

(END VIDEOTAPE)

GHARIB: Also from the wireless phone industry today, the board at

Metro PCS, this is the nation`s fifth largest carrier, has approved an

amended takeover bid from rival T-Mobile and is urging shareholders to OK

the deal as well.

GRIFFETH: Coming up, the one big bank earnings report you need to

watch this week.

But, first, a look at how the international markets closed today.

(MUSIC)

GHARIB: Despite the huge selloff in the stock market today, there

were still some bright spots. We begin our "Market Focus" with a look at

$13.5 billion deal in medical technology.

Thermo Fisher Scientific, a maker of lab equipment, is buying Life

Technologies which makes gene-sequencing machines. Both companies touched

all time highs at the open. Thermo Fisher finished down 1 percent to

$78.58 but Life Technologies jumped to $73 a share.

GlaxoSmithKline also touched an all time high after the Food and Drug

Administration gave a better than expected review of an experimental

treatment for lung disease. This could open the way for approval when the

new treatment will be reviewed by an FDA panel on Wednesday.

GSK gained more than 1.5 percent to $49 a share.

GRIFFETH: Well, as the media space reshapes itself, BTIG Research

began coverage of Netflix with a $250 per share target price. Noting that

the service is being offered as part of Internet bundles as well as cable

providers, Rich Greenfield, an analyst, said Netflix has an improved price

relationship. Netflix shares gained about 2 percent on an otherwise down

day today.

Energy, though, was the worst performing sector today as oil dropped

below $89 a barrel. Anadarko dropped almost 6 percent. The blue chip oil

major, Chevron and Exxon Mobile, they were near the bottom of the Dow, each

down about 3 percent in today`s trade.

GHARIB: Solid quarterly earnings from Charles Schwab today, but they

missed analyst estimates by a penny a share. That`s partly because the

firm weighed fees on money market funds. So, investors did not receive a

negative return due to low interest rates.

Schwab shares tumbled almost 4 percent to $16 a share.

GRIFFETH: And on a day that saw shares of nearly every bank or

financial firm lower, Citigroup shares bucked that trend, rising a fraction

higher after beating analyst estimates last quarter, chalking up a profit

of $4 billion by pulling in more revenue and its investing banking unit and

setting aside less funds for bad loans.

GHARIB: Now that Citigroup has reported its latest result, joining

Wells Fargo and JPMorgan, investors are waiting to hear from one more huge

bank and that one may reveal more about the health of the banking sector

more than any other lender.

Kayla Tausche tells us which bank and why as we begin a new series

this week, "Earnings Spotlight."

(BEGIN VIDEOTAPE)

KAYLA TAUSCHE, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-

over):

For Bank of America, it`s been a year of reckoning. Legacy lawsuits put

behind it, the stock doubling. And after years of pushback from

regulators, capital is finally being returned to shareholders.

Earlier this month, B of A took advantage of this good news with an ad

campaign, reconnecting with customers now that it`s had a facelift.

But its the biggest test comes Wednesday when the nation`s second

largest bank reports earnings. Sturdy rival JPMorgan and Wells Fargo

reported last week, showing some first quarter weakness. The reason: the

mortgage boom going quiet.

Homeowners once rushing to refinance at low rates boosting bank`s loan

volume and canceling out thin margins. Now, it`s clear that`s a thing of

the past. Wednesday will show how much B of A has a stake there.

Then, there`s expenses. Deep into $8 billion of cost cuts, thousands

of layoffs.

Analyst Jeff Harte is looking for progress in one specific area.

JEFF HARTE, SANDLER O`NEILL & PARTNERS: Big thing for Bank of America

is how quickly can they get the problem loan mortgage servicing portfolio

down, because that`s where a lot of the expenses come into play. And

that`s an important part of taking Bank of America where it is now, which

is not a particularly efficient bank, to where I think it should and will

be as one of the more efficient banks in the country.

TAUSCHE: Harte says the banks should benefit from more companies

selling stocks and bonds in the first quarter. Investment banking, a

surprise positive for peers like Citigroup and Wells Fargo, with franchises

far less developed than B of A`s.

Nomura Analyst Glen Schorr says investor expectations for Wednesday`s

results are high, a welcome change for a bank with a troubled past.

GLENN SCHORR, NOMURA ANALYST: I think Bank of America has been

executing on their plan for a good year now, coming off bottom and proving

their capital ratios, talking out costs where they need to, and the

investment bank has actually performed pretty well.

TAUSCHE: The question, whether the momentum can continue.

For NIGHTLY BUSINESS REPORT, I`m Kayla Tausche.

(END VIDEOTAPE)

GHARIB: Tomorrow, our earning spotlight series continues when we

highlight the one tech report to watch.

But still ahead on the program tonight, rising home prices, strong

demand, even bidding wars. Is this what the healthy housing recovery looks

like?

But, first, let`s take another look at commodities.

(MUSIC)

GHARIB: Shares of homebuilders got hammered today, along with the

rest of the market, after homebuilder sentiment fell in April for the third

month in a row.

The NAHB/Wells Fargo housing market index slid to a reading of 42,

down from 44 last month. The index also fell below economists

expectations.

Now, despite the housing recovery, builders say they`re worried about

getting hold of construction loans and rising costs for materials.

But our next guest is shrugging off today`s downbeat report. He says

the housing recovery remains robust.

Here to tell us why, Jed Kolko. He`s chief economist at Trulia. This

is a real estate with website.

So, we are getting mixed reports. Some places, home prices are up.

And other -- you know, a lot of demand, other markets, just the opposite.

Is this a regional housing recovery?

JED KOLKO, TRULIA CHIEF ECONOMIST: We`re seeing the recovery

strongest in two types of markets. Markets that have strong job growth

like San Francisco Bay Area, Seattle, Denver, they`re seeing strong price

increases but there`s strong job growth to support it.

But we`re also seeing strong price increases in places that were hit

hard in the housing bust. Places that saw big price declines line Phoenix,

and Las Vegas and Detroit are now seeing a big rebound today.

GRIFFETH: I was in Los Angeles over the weekend. And the lead story

of "The Los Angeles Times" on Sunday was a bubble market, as they where

describing it. Where there are options happening once again for homes that

are being sold there, mainly because of a dearth of supply. They`re not

building homes as fast as they used to out there.

KOLKO: That`s right. Inventory is very tight, especially in

California, but across the country. There are a few reasons for that.

First of all, prices bottomed about a year ago nationally and nobody wants

to sell at the bottom, but everyone wants to buy at the bottom. So people

who have the choice may be waiting to sell until the prices are higher.

There are some people who are under water, and construction levels still

are low.

Even though they`re up from where they were at the worst point of the

bust, construction is still way below normal levels. So, it`s not keeping

up with the increase in the rate of household formation.

GHARIB: And, Jed, we know that there are still a lot of homes in the

foreclosure process and at some point, they`re going to be put on the

market. So, what is that going to do to business demand, home prices?

What happens?

KOLKO: That foreclosure backlog, the shadow inventory --

GHARIB: Right.

KOLKO: -- is actually now pretty localized.

In places like Florida, New York, New Jersey and Illinois, there`s a

large shadow of inventory of foreclosed homes. Not in the most of the rest

of the country. It`s really in those places, where the judicial process,

the legal process, means the foreclosures take very long to go through the

process and then there`s therefore big backlog.

GRIFFETH: Interest rates, a key component in all of this and the Fed

has a lot to say about that. By keeping long rates low, mortgage rates are

still near record lows right now.

How much longer do you think that lasts?

KOLKO: Mortgage rates are still near historic lows. Most expect

rates to go up, maybe 0.6 or 0.7 of a point between now and a year from

now.

The biggest effect that will have is on refinancing. It will have

smaller effect on home purchases, though, because so many factors go into a

decision about whether to buy or to rent and prices are still very low

relative to rents. Even if rates went up two full points, it would still

be cheaper to buy than to rent in most of the country.

GHARIB: All right. So, here`s a question that a lot of people are

shocked with. If you`re a buyer, do you buy now when the prices are still

low as you say? And if you`re a seller, do you hold out because maybe

prices are going to go up? Is this a buy or a seller`s market?

KOLKO: It`s definitely a seller`s market. Inventory is very tight

and now that the economy is recovering, there are more buyers who are

interested and more take advantage of today`s low rates. The challenge for

buyers is even if they can halt back for mortgage and have enough for a

down payment, there`s not much to choose from. So, buyers want to jump in

before prices and probably mortgage rise raise further might find that they

have little to choose from and might have to settle.

GRIFFETH: Lenders, we are told, have still been pretty tight.

KOLKO: Right.

GRIFFETH: Not as loose as they were before the debacles of 2009. Are

they lending as much as they could be right now for people looking to buy a

home?

KOLKO: Right now, the average credit score, people are getting

mortgages is still very high. The average downpayment is still higher than

it typically is. That reflects the fact that lending is still tight.

When people asked, is there a bubble going on? One reason why there`s

not is that it`s very hard for people to borrow more than they can afford.

Those tight lending standards are one of the things that`s preventing us

from getting back into bubble territory.

We`ll have to see whether some of these new mortgage rules that are

designed to outlaw or make less common the toxic lending that we saw during

the bubble has a big impact on mortgage credit.

GHARIB: A lot to think about. Jed, thank you so much for coming by.

We really appreciate.

KOLKO: Thanks for having me.

GHARIB: Jed Kolko, he`s the chief economist at Trulia.

It`s a different market depending on where you live.

GRIFFETH: What`s the old saying, all real estate is local. And we

can talk all we want about national trends in real estate. I think it`s

clear that the housing market is recovering, but there are so many factors

that go into it, as he was pointing out.

You know, certain regions that are the hardest hit may bounce back

quicker than those that have been steady through this whole process.

GHARIB: Those auctions and bidding wars make it tough for people who

really do want to buy.

GRIFFETH: I went through that process in Los Angeles years ago. That

does not bode well, if that`s the case here.

Finally, tonight, Susie, just a friendly reminder, it is Tax Day. A

new study from a group called the National Taxpayer Advocate, which is

actually part of the IRS uses confidential tax data to determine who gets

audited for being most likely to fudge on their returns. Some of the hot

bed areas for tax cheats, Los Angeles, San Francisco, Houston, Atlanta and

Washington, D.C.

And, Susie, some of the top small businesses that raise red flags are

construction companies, real estate rental firms, because they tend to

write-off so much.

So, there`s so much going on there that we have to keep an eye on

those tax cheats.

GHARIB: First, you got to file your taxes.

GRIFFETH: And hurry up if you haven`t done it already, right?

GHARIB: You`ve got until midnight.

That`s NIGHTLY BUSINESS REPORT for tonight. I`m Susie Gharib, thanks

for watching.

GRIFFETH: I`m Bill Griffeth. Have a great evening. We`ll see you

tomorrow.

END

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