<Show: NIGHTLY BUSINESS REPORT> <Date: June 6, 2013> <Time: 18:30:00> <Tran: 060601cb.

118> <Type: SHOW> <Head: NIGHTLY BUSINESS REPORT for June 6, 2013, PBS> <Sect: News; International> <Byline: Susie Gharib, Tyler Mathisen, Steve Liesman, Kayla Tausche, Eamon Javers, Julia Boorstin> <Guest: Bonnie Glaser> <Spec: Business; Economy; Employment and Unemployment; Labor; Stock Markets; Trade; Defense; Government; Policies; Telecommunications; China; Meetings; World Affairs> <Time: 18:30:00>

ANNOUNCER: This is NIGHTLY BUSINESS REPORT with Tyler Mathisen and Susan Gharib, brought to you by --

(COMMERCIAL AD)

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Not too hot, not to cold. Investors are looking for a jobs number that`s just right. But what happens if they don`t get it and why is this report so important?

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Teaming up. How big business and Uncle Sam are working together in the name of national security.

GHARIB: And historic summit. What does it say for American businesses as the world`s two economic superpowers, the U.S. and China, get ready to meet?

We have all that and more tonight on NIGHTLY BUSINESS REPORT for this Thursday, June 6th.

MATHISEN: Good evening, everyone.

The Dow staged its biggest comeback this year, turning a triple-digit loss midday into an 80-point gain at session`s end. Trade in the day was driven by a big selloff in the dollar. But more than that, by speculation of tomorrow`s monthly jobs report.

Now, the jobs numbers are always key, but the data may take on added importance now because of how they could influence Federal Reserve policy. And in turn, stock prices and rates on everything, from bonds to mortgages and more. And the consensus is that the economy added 165,000 new jobs last month.

Steve Liesman has the story.

(BEGIN VIDEOTAPE)

STEVE LIESMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): The reason the market is so nervous about the jobs report is that Ben Bernanke recently said the Fed could ease back the amount that it`s pumping into the economy if job creation is strong.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: If we see continued improvement and we have confidence that that is going to be sustained, then we could -- in the next few meetings, we could take a step down in our pace of purchases.

LIESMAN: The consensus on Wall Street is that payrolls grew by 169,000 in May after a similar jump in April. The unemployment rate will remain changed at a high 7.5 percent. But any number above 200,000 or unexpected jump in the unemployment rate could spook stock investors into thinking the Fed might act soon.

DARRELL CRONK, WELLS FARGO REGIONAL CHIEF INVESTMENT OFFICER: I think anything less than probably 200,000 jobs, the market actually probably responds favorably, right, because it keeps the Fed on the table, which I think is what the market is looking for. Whether we agree with that, or like it or not, I think that`s the reality of the situation.

Now, certainly anything down around the 100,000 number one concerning of kind of a stalling effect in the economy.

LIESMAN: That`s why investors will scrutinize the jobs report for such details as whether more people have part-time jobs but want to be working fulltime. Did employers ask workers to go work longer hours during the month, and how much did employees` wages go up during the month? Finally, was job growth broad-based across many industries or only in a few?

The Fed insists that just easing back on stimulus still means it`s helping the economy just by less than it was. But given lofty levels of the stock market and the nervousness of bulls, they may be less inclined to listen to the Fed`s reasoning and more inclined to sell first and ask questions later.

For NIGHTLY BUSINESS REPORT, Steve Liesman.

(END VIDEOTAPE)

GHARIB: Well, no matter how you analyze that Friday report, the jobs of some bankers could be in jeopardy. It`s connected with rising interest rates on mortgages. The higher they go, the more likely the bankers could get pink slips.

Kayla Tausche explains.

(BEGIN VIDEOTAPE)

KAYLA TAUSCHE, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): For the last two years, consumers left and right were rushing to refinance their mortgages. Rising home prices made it easy. Low rates made it attractive. Government programs in some cases made it possible.

(on camera): Jobs followed suit. The mortgage banking industry grew 10 percent in 2012 alone. As refinancing boom slows now, that number is being right size, too.

RICHARD X. BOVE, RAFFERTY CAPITAL VP EQUITY RESEARCH: There was a fairly sizable refi boom, and that refi boom is slowing down somewhat, which means you will be letting people go.

TAUSCHE (voice-over): For one example, JPMorgan (NYSE:JPM), the largest U.S. bank by assets, has outlined a round of up to 15,000 layoffs in its mortgage banking unit alone, to be completed by 2014. The bulk of those layoffs will center around the servicing of bad loans as credit gets better. But sources say, now, a fraction will focus on origination too, as rates on a 30-year fixed mortgage hit their highest point in a year, applications to refinance fell 15 percent. Applications to purchase down 1.6 percent.

Still some like Bank of America (NYSE:BAC) are betting on more home purchases, adding loan officers in branches to get that business.

Wells Fargo (NYSE:WFC) taking a similar tack.

JOHN STUMPF, WELLS FARGO CHAIRMAN & CEO: The purchase money business will become a bigger part of the business, it might be overall less. If it`s less, we also have figured out how to adjust our cost structure.

TAUSCHE: Franklin Codel, head of mortgage production at Wells Fargo (NYSE:WFC) says being flexible is key. Well Fargo`s loan officers are paid on commission and tend to quit when business is slow.

The bank`s interim mortgage processors handle booms, but understand their jobs will be cut in a bust. Codel says strong underwriters are always in demand, but even they are vulnerable if the market falls off a cliff. That cliff could yet be ahead.

Mike Fratantoni, vice president at the Mortgage Bankers Association forecasts the mortgage market will keep shrinking, to $1.1 trillion in 2014 from $1.7 trillion last year.

For NIGHTLY BUSINESS REPORT, I`m Kayla Tausche.

(END VIDEOTAPE)

MATHISEN: As we mentioned at the top of the broadcast, stock trading was driven by two things today. A steep selloff in the dollar versus the yen, and discussion about tomorrow`s jobs report and what it could mean for Fed policy.

For much of the day, the Dow seemed destined for its first three-day losing streak of the year. But when the bell rang, the Dow was up 80 points, the NASDAQ added 22 and the S&P 500 was higher by 13.

As for the dollar, it posted the biggest lost against the yen in three years. It fell against the euro, too, after the European central bank`s chief said further stimulus measures are being kept, quote, "on the shelf" and that he was confident the eurozone would begin recovering later this week.

GHARIB: One of Wall Street`s most respected bankers says investors should prepare fore even more volatility in the markets. JPMorgan (NYSE:JPM) CEO Jamie Dimon told a "Fortune" magazine global forum in China today that as long as the Federal Reserve tries to orchestrate efforts to keep long-term interest rates from rising, he expects the markets to be, quote, "scary and volatile until things return to normal."

MATHISEN: And scary is how a lot of people are describing revelations that one of the nation`s best known companies has been involved in what some would say is corporate spying -providing Washington, the government, with telephone records of millions of U.S. customers.

With more on the close relationship Verizon (NYSE:VZ) has forged with the government, Eamon Javers is live in Washington -- Eamon.

EAMON JAVERS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Good evening, Tyler.

Well, we began the day today with a huge scoop from the London "Guardian" newspaper, which reported that Verizon (NYSE:VZ) had received a court order from a secret intelligence court called a FISA Court, ordering Verizon (NYSE:VZ) to turn over communications records from Americans, phone calls both here in the United States and overseas. What they were after was the so-called metadata, information about that calling.

After that scoop hit the news in Washington, we saw a huge effort by Republicans and Democrats here in town to rally around the intelligence community and really defend this,

including from the chairman of the House Intelligence Committee -- importantly here the chairman is a Republican -- defending the Obama administration here. He said this kind of data gathering has helped to save lives.

Take a listen.

(BEGIN VIDEO CLIP)

REP. MIKE ROGERS (R-MI), HOUSE INTELLIGENCE CHAIRMAN: And the reason they use this, and I can tell you why this program is important, that within the last few years, this program was used to stop a program -- excuse me, stop a terrorist attack in the United States. We know that. It`s important.

(END VIDEO CLIP)

JAVERS: In addition, let me walk you through a couple of bullet points here that a senior administration official gave us this morning, explaining why they thought this was not as serious a story as at least some of the first impressions were this morning. They said this order doesn`t allow the government to listen in on the calls, it just allows them to get information about the calls. It doesn`t include the content of those communications or the names of people who are engaged in them.

And it also says it relates exclusively to the metadata, the phone numbers the calls originated from, how long the calls lasted, who called whom, that sort of information.

And, guys, I can tell you that a sort of establishment Washington now has come out very much in favor of this program. There have been critical voices in town today, and Verizon (NYSE:VZ) sent a note to its own employees explaining that they couldn`t confirm or deny whether this happened, but if it did, that under the law, they would have had to follow this court order, guys.

GHARIB: Eamon, tell us a little bit more about some of those critical voices, because, certainly, this was a topic everywhere in the country, not just in Washington, you know, at water coolers in every single office. I mean, what are critics saying?

JAVERS: Yes. What was interesting was how this has kind of reversed things in Washington. You saw Dick Durbin come out. He`s one of the president`s biggest allies traditionally. He said he thought that this was disturbing today. But then you have Republican voices like Rogers (NYSE:ROG) and others, who came out and said, you know what, we think this is perfectly fine. It`s being handled appropriately and Congress had the right oversight.

So, it sort of flipped Democrats and Republicans, kind of an interesting, strange bedfellows here in Washington today.

MATHISEN: I want to turn you back to the thing you just said, and it was that no names were attached to these data. But then you said that the government was interested in who was calling whom. What is it then?

JAVERS: Right.

Well, what they`re doing is they`re tracking the phone numbers them selves. And so, then, if they get a particular number that`s of interest, they can go back and reverse-engineer those under a specific process of going into this database that can go and look at who was calling that person and the number that person called, then they can go back and reverse-engineer those names if they need them.

But officials were at pains today to say that it`s only rarely that they go into the database and it has to involve a special transparent process for that doing that. It`s not something that they`re doing and just trolling to this database on a regular basis.

MATHISEN: Got it. So they use those numbers to sort of describe a web presumably of communications.

JAVERS: Exactly.

MATHISEN: Eamon Javers -- Eamon, thank you very much.

JAVERS: You bet.

GHARIB: Also from Washington today, some head winds and congressional efforts to overhaul the nation`s immigration laws. The House so-called "gang of eight" reached a tentative deal to overhaul immigration rules last night, but the measure is facing a lot of opposition in the full house.

At issue here, House Republican concerns about enforcing current laws regarding the deportation of young, illegal immigrants and who is responsible for health care costs for undocumented immigrants?

MATHISEN: Also on Capitol Hill, the Senate failed to pass two measures that would prevent the interest rate on student loans from doubling on July 1. The current rate on Stafford loans is slated to jump up from 3.4 percent to 6.8 percent in less than four weeks, unless lawmakers can agree on a new plan.

GHARIB: And still ahead on the program, the U.S.-China summit, and why the meeting tomorrow between these two superpowers means so much for American business.

But first, let`s look at how the international markets closed today.

(MUSIC)

GHARIB: We begin our "Market Focus" tonight with an earnings surprise. Ciena reported a small quarterly profit. Analysts were expecting a loss. Revenues also came in better than expected, thanks to telecom spending on switches and other Internet gear. More mobile video and data means more business for firms like Siena.

Investors filed into the stocks, pushing the price up more than 17 percent to $19.50.

Disappointing earnings, though, from Ann Inc. This is the retailer that operates Ann Taylor and LOFT stores. Profits plunged 27 percent from a year ago, saying cold weather hurts spring sales. It also cut its revenue outlook for the year, but said the company is on track for higher profitability.

Well, investors were encouraged by that forecast and shares gained about 1.5 percent on twice normal volume.

A confusing day for investors in SodaStream. The stock surged on the report that it`s in talks to sell the company to Pepsi. But Pepsi`s CEO Indra Nooyi told CNBC today the report was untrue.

By the close, the home soda maker was up more than 2.5 percent to $71 and change on heavy volume.

MATHISEN: Thor Industries (NYSE:THO) which makes those iconic airstreams and other RVs and buses, reported 6 percent increase in profit. That beat estimates and revenues jumped 13 percent on strong RV sales. Before the report, Thor gained a fraction in choppy trading. It closed at $41.24.

J.M. Smucker (NYSE:SJM) reported a profit gain of 25 percent on stronger volume, helped by lower prices on coffee and peanut butter. But Smucker`s outlook for the current quarter is in line merely with a year ago, and that outlook led to an almost 4 percent drop in shares on triple the usual volume. Smucker finished the day at $98.38.

GHARIB: And more selling in Turkey`s stock market as investors worry about the impact of street riots. Over the past week, there have been violent protests in several cities over plans to turn an Istanbul park that`s popular with the city`s secular young residents into a shopping plaza. Today, Turkey`s prime minister said the government won`t be swayed from its

plan to redevelop that area, and that sent Turkey`s stock exchange down 5 percent. It`s plunged 22 percent over the past two weeks.

MATHISEN: Insider trading charges are marring the largest investor ever by a Chinese concern buying a U.S. company. Wall Street regulators obtained a court order to freeze the assets of a Thailand based trader. Officials say he reaped more than $3 million in illegal profits by acting on a tip ahead of the announced $4.7 billion acquisition of the pork producer Smithfield Foods (NYSE:SFD) by China`s Shuanghui International last week.

And more news about China. Tony Soprano may be headed there. The entertainment giant Time Warner (NYSE:TWX) is teaming up with China media capital, looking for investments and even more media partnerships in the world`s most populous nation. For Time Warner (NYSE:TWX), owner of Hollywood`s Warner Brother Studio and top watched cable channels like HBO, TBS, TNT, it will open new platforms and markets for content.

GHARIB: While creating closer business and economic ties between the U.S. China will likely be one of the topics President Obama will discuss with China`s President Xi when they meet tomorrow in California, our guest tonight says a lot is riding on the two-day meeting and could make a fresh start in the relationship between the U.S. and China.

She`s Bonnie Glaser, a China expert at the Center for Strategic and International Studies in Washington.

You know, Bonnie, there has been such a buildup about this meeting of people saying it`s a very crucial meeting for the U.S. and for China. What are the risks, what are opportunities of this meeting? What can we expect to come out of it?

BONNIE GLASER, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: Well, this is indeed a very important meeting. I think there are real opportunities for the two leaders to express their concerns directly to each other, their expectations to try and identify some areas where they can cooperate in ways that they can benefit both of their country`s economies.

I think that on the agendas of both the Chinese President Xi Jinping and President Obama will be issues pertaining to market access for their companies. They are interested in expanding trade, and President Obama will be particularly concerned to talk about the cybersecurity hacking issues that have cost American companies a great deal in the stealing of intellectual property.

MATHISEN: You know, I would say intellectual property and hacking are two issues of great certain to the American side. But the Chinese are very proud and there are things that we do that get under their skin. From their point of view, what are we doing wrong? What`s bothering them about us?

GLASER: Well, what`s bothering the Chinese is a long list of things. It begins with the fact that the United States is rebalancing to Asia, strengthening ties with our allies, increasing our military deployments and missile defenses around China`s periphery. And in terms of economic issues, the United States is seen as not facilitating the entry of Chinese investment into the United States. And we are seen as blocking the transfer of high technology to China, because we maintain sanctions on China.

GHARIB: Obviously, both sides have things that they want. American businesses are really keen on solving some of the issues that you were talking about -- opening up our trade, dealing with this whole cyber security. That`s a big problem for American businesses.

But is this meeting going to get granular and deal with some of these things or is this more of just kind of getting to know each other between Obama and Xi?

GLASER: It`s very unlikely that there will be concrete agreements or deliverables that come out of this meeting. The hope is that the two leaders are going to establish some rapport, understanding of each other, lay the groundwork so that they can find ways to move the relationship forward. They might then instruct their bureaucracies to begin to resolve some of the problems that have been building in the relationship.

And about a month after this meeting, the U.S. and China will hold their annual strategic and economic dialogue. And so, some concrete agreements could be seen coming out of that meeting.

GHARIB: Well, certainly, everybody is going to be watching it very closely. Thank you so much, Bonnie, for a preview.

GLASER: Thank you.

GHARIB: Bonnie Glaser from the Center of Strategic and International Studies.

MATHISEN: And coming up, we will meet Hollywood`s newest start, Google (NASDAQ:GOOG), and find out whether its gamble to play a bigger role on the silver screen will pay off.

But, first, a look at how commodities, treasuries, currencies fared today.

(MUSIC)

MATHISEN: Chrysler is recalling more than 300,000 Jeep SUVs to fix faulty airbags software and transmission fluid leaks. This recall involved Jeep Patriots and Compasses from the years 2010 through 2012 for the airbag problem, and Wranglers from 2012 and 2013 for the transmission issue.

Now, these vehicles have nothing to do with the older Jeep models that government safety officials want Chrysler to recall for a gas tank issue. The company is fighting that recall.

GHARIB: Tomorrow is a big day for General Motors (NYSE:GM). The automaker will return to the S&P 500 once again four years after emerging from bankruptcy. CEO Dan Akerson told shareholders at GM annual meeting today that the company`s finances are strong enough to consider paying a dividend or repurchasing additional shares from the government.

Now, yesterday, we told you that the Treasury Department was getting ready to sell 30 million more GM shares. Well, today, those shares were put up for share and the proceeds will be about $1 billion.

MATHISEN: And Google (NASDAQ:GOOG) is another company that hosted a shareholder meeting today. And not only is the tech company talking to investors, but is also starring in a new Hollywood movie that hits screens tomorrow.

This weekend, FOX opens up "The Internship" in 3,000 theaters, jumping on a trend Sony (NYSE:SNE) started with "The Social Network", looking to cash in on the growing fascination with powerful Internet companies.

Julia Boorstin takes a look.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Google (NASDAQ:GOOG).

UNIDENTIFIED MALE: You got us a job at Google (NASDAQ:GOOG)?

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): FOX`s comedy "The Internship" follows Vince Vaughn and Owen Wilson as they navigate internships at the search giant after they`re fired from their salesman job. Though FOX is tapping into a similar fascination with Internet giants as Sony (NYSE:SNE) did with "The Social Network" with Facebook (NASDAQ:FB), the studios and companies took opposite approaches. "The Social Network" skewered Mark Zuckerberg and Sony (NYSE:SNE) didn`t get any cooperation from Facebook (NASDAQ:FB), which called the film fiction.

FOX and Google (NASDAQ:GOOG) went in the opposite direction. "The Internship" paints the search giant as fun and quirky. Vince Vaughn approached Google (NASDAQ:GOOG)

with a screenplay and Google (NASDAQ:GOOG) agreed to help out. They allowed FOX to shoot on campus for five days, consulted on accuracy, provided 100 extras, including co-founder Sergey Brin, and suggested changes.

(on camera): It sounds like the mother of all product placement, but no money changed hands. Google (NASDAQ:GOOG) said it participated because it wanted to get kids more excited about technology. Now, it could benefit from a surge in job and internship applications.

(voice-over): Brand analysis firm Millward Brown Optimor says Google`s image list comes at a key time as competition for talent heats up with younger companies like Facebook (NASDAQ:FB) and Twitter.

PHILIPPE DUPREELEE, MILLWARD BROWN OPTIMOR: The movie can be a very new face, a very new way of looking at Google (NASDAQ:GOOG), and to the company that could definitely help them, especially in the talents fight that these companies are running against each other.

BOORSTIN: Now a sea of bedding on Google`s brand pays off for FOX, who spent a reported $58 million to make the film and more to market it.

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

(END VIDEOTAPE)

GHARIB: Another tech titan is trying something new. Apple (NASDAQ:AAPL) is said to be planning an iPhone trade-in program for the very first time as it tries to lift slumping sales and keep customers from sampling other smartphones made by rivals like Samsung, HTC and BlackBerry.

MATHISEN: Finally tonight, how do you honor a billionaire who pledged to give away nearly all his fortune, while urging others like him to donate at least half of theirs?

For starters, how about bringing in U2`s Bono to sing?

(BEGIN VIDEOTAPE)

U2`S BONO (singing): Oh give me a home where the dividends roam. And the deer graze on Berkshire Hathaway (NYSE:BRK.A). Where Warren plays bridge, Cherry Cokes in the fridge. And Munger makes wisecracks all day

(END VIDEO CLIP)

MATHISEN: Maybe not Bono`s best but pretty good nonetheless.

Investor Buffet was given a lifetime achievement award for philanthropy at a private reception hosted by "Forbes" magazine. That occurred on Wednesday. And Bono credits Buffett`s advice and encouragement for his own philanthropic efforts.

GHARIB: The only thing missing there was Buffett playing his ukulele. You know, he plays the ukulele and sing.

MATHISEN: He does. He could have accompanied him there.

(CROSSTALK)

MATHISEN: -- should better watch out.

And I believe the bidding ends tomorrow on Buffett`s lunch. If you want to have lunch with Buffett, proceeds go to a charity, get in before long. It`s like $2 million, $3 million lunch.

GHARIB: I think it`s up to $1 million. It`s gotten as high as $3.5 million in the past. So, it`s a real power lunch.

MATHISEN: It goes to a good cause. And you get to sit down and have a hamburger with Buffett.

GHARIB: That`s it for us on NIGHTLY BUSINESS REPORT. Thanks for watching. And, remember, this is the time of year your public television station asks for your support.

MATHISEN: And thank you for being with us tonight. And on behalf of your public television station, thank for your support. Have a good night, everybody. And we`ll see you back here tomorrow. Big jobs day tomorrow.

END

Nightly Business Report transcripts and video are available on-line post broadcast at http://nbr.com. The program is transcribed by CQRC Transcriptions, LLC. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Nightly Business Report, or CNBC, Inc. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c) 2013 CNBC, Inc.

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