<Show: NIGHTLY BUSINESS REPORT> <Date: June 21, 2013> <Time: 18:30:00> <Tran: 062101cb.

118> <Type: SHOW> <Head: Nightly Business Report> <Sect: Business> <Byline: Tyler Mathisen, Sue Herera, Scott Cohn, Jon Fortt, Eunice Yoon, Jackie DeAngelis> <Guest: Judy Saryan> <Spec: Economy; Federal Reserve; Stock Markets; Trade; Enron; Justice; Trials; Business; Labor; Policies> <Time: 18:30:00>

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

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SUE HERERA, NIGHTLY BUSINESS REPORT ANCHOR: Wild week. We saw ups and big slides down. But now that the nerve-wracking week is over, what happens next?

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Sentenced reduced. He was the man at the center of one of the most notorious financial scandals in U.S. history. And today, the former CEO of Enron was told he`ll get out of jail early.

HERERA: Age of insourcing. After years of seeing jobs go overseas, companies like Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) are reversing the trend and keeping some jobs right here in the U.S.

All that and more tonight on NIGHTLY BUSINESS REPORT for Friday, June 21st

MATHISEN: Good evening, everyone. And welcome. I`m Tyler Mathisen.

Sue Herera joins me tonight. Susie Gharib has the evening off.

Well, you couldn`t really call it a come back day, not after Thursday`s 350-point Dow infarction. But the patient was stabilized, despite some wild swings on the so-called quadruple winching day when certain options and future contracts expire.

On heavy volume, the Dow rocked and rolled and finished 41 points higher at 14,799. The NASDAQ was dragged lower, especially by Oracle (NASDAQ:ORCL), which fell 9 percent on an earnings miss last quarter

reported yesterday. NASDAQ dipped more than seven points, to $33.57. The S&P 500 gained mere four points, to 1,592. The yield on the benchmark 10year treasury note, hitting 2.59 percent, the highest in nearly two years.

Overall, the week answered some questions: no, stocks don`t always go up; yes, the Fed will stop buying bonds sometimes. But it also left some queries hanging in the winds.

(BEGIN VIDEOTAPE)

MATHISEN (voice-over): For most of us, thoughts about our investments this week were unnerving, to say the least.

UNIDENTIFIED MALE: There is a lot of uncertainty out there.

UNIDENTIFIED MALE: If you take a few bruises, you got to put your best game in there. What do you do? That`s the stock market. That`s how it works.

MATHISEN: At the start of the week a two-day run-up on the Dow and S&P put May`s record highs back in sight.

Then came Wednesday, and a 200-point drop after Federal Chairman Ben Bernanke put investors on notice with word the Fed may trim its bond-buying before the end of the year and end it not long after that.

BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: We will continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around mid year.

MATHISEN: With the end of the Fed`s asset buying program in sight, stocks dropped another 300 points Thursday before stabilizing today. Of course, that plan depends on whether the economy continues to improve.

Gone in two days were the last two months of gains in the stock market. For the year, though, stocks are still up more than 12 percent, even if a lot of us have doubts about the health of the economy.

UNIDENTIFIED MALE: Unemployment needs to be fixed, it`s horrible. The housing market still isn`t really good.

UNIDENTIFIED FEMALE: I`m worried about the economy.

MATHISEN: So, what`s next? The year is almost half way down. Corporate reports will come out soon, even experts are nervous. That housing recovery, well, mortgage rates are inching up.

BRAD HUNTER: Everyone is getting a little spooked.

MEGAN MCGRATH: These stocks are going to be very volatile until we

get some clarity around what the Feds doing.

MATHISEN: There is no shortage of opinions even inside the Fed itself.

St. Louis Fed President Jim Bullard, still worried about the economy today said the announcement of a bond-buying pullback was, quote, "inappropriate time".

Others say Bernanke and Fed got just what they wanted.

SCOTT WREN, WELLS FARGO ADVISORS: I think the Fed was purposely trying to take some air out of the housing market and stock market. They don`t want the stock market going up 20 percent every six months. They don`t want house prices rising 10-plus percent year over year for the next five years.

MATHISEN: But others took Bernanke at his word, that the economy is recovering, that a policy charge is just a short-term shock to the system.

DAVID KELLY: We`re bating over medicating this economy. This economy is like a 12-year-old sitting on a bicycle with training wheels. It can cycle forward on its own.

DAVID SEABURG, COWEN & COMPANY: Where are you going to put your

money right now? In cash? I don`t think so.

Are you going to put it in the 30-year? I don`t have an interest in having that duration risk. I`m going to put it in equity.

(END VIDEOTAPE)

MATHISEN: And with the quarter ending next week, market watchers say they expect professional investors to buy blue chips to dress up their portfolios.

HERERA: Some burned investors in bankrupt energy giant Enron may have a little bit more to be upset about today. A shortened prison sentenced for the jailed one-time chief executive, Jeffrey Skilling.

Scott Cohn was in the courtroom for this controversial decision today and he joins us live from Houston.

So, Scott, why the more lenient resentencing and why right now?

SCOTT COHN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, you know, since, Sue, it makes sense for a guy in charge of an energy trading company, this was basically a trade off. A federal appeals court had already said that the original sentence, 24 years, was too harsh. It should be more like 15 or 16 years.

Skilling wasn`t willing to settle for that initially. He was going to charge the government committed misconduct in prosecuting the case. That would drag it out for a whole lot longer.

So, ultimately, the government and Skilling came to this agreement, where Skilling would drop the remaining appeals, $40 million would be returned to the investors, the convictions would stand but he would get out of prison early, basically 14 years. But time out for good behavior, he`ll be out in about 11 or in 2017.

MATHISEN: Give us a sense, Scott, if you would, of the atmosphere in the courtroom today and how did Skilling look? You`ve been working this story for years.

COHN: Skilling is 59 years old and he looks every bit of that. He`s grown a beard since he`s been in prison. He looks like he`s aged somewhat. He was in prison garb. In handcuffs initially and then they took them off.

This courtroom was packed with Skilling supporters. The judge said 250 people had written in support of Jeff Skilling. Among the people in the courtroom, Skilling`s family, his wife Rebecca, members of Ken Lay`s family. Remember, Ken Lay passed away in 2006, shortly after he was convicted, then those convictions wiped out.

One victim spoke for those who are victimized by this scandal, Dianna Peters, a former Enron employee, who said that Skilling betrayed the employees` trust.

HERERA: Talk more about that, Scott. What exactly does this mean for Enron`s victims?

COHN: Well, for one thing, they will get this $20 million held in escrow since the trial in 2006. All of that money will go to the victims.

Now, that`s pittance in terms of the $60 billion or so that was lost and there have been some big settlements in the order of about $7 billion mainly with some of the banks that were involved. But they will get some money back and that`s something that the Justice Department is emphasizing in all of this, that they didn`t come down that much from what the appeals court wanted. People will get their money back and most important, they say, Skilling will not be able to challenge his convictions.

MATHISEN: Scott Cohn, an honorary citizen of Houston after all the type you spent down there -- Scott, have a good weekend.

Good news about jobs to tell you about. Unemployment rates fell in about half in all states in May led by big declines on the jobless rolls in California, West Virginia, New York and Hawaii. California`s unemployment rate is now 8.6 percent, higher than average. But it is at its lowest in

five years.

Overall, North Dakota has the lowest of unemployment, 3.2 percent, and Nevada, the highest at 9.3 percent. The rates rose in 17 states and remained the same in eight more.

HERERA: And there was also good news, about autos sales, but this time, used auto sales. Car Max, the nation`s biggest used car dealership chain with 120 stores nationwide, reported a 21 percent rise in profits last quarter on a 22 percent jump in sales. Prices on those used cars were also up about 1 percent from a year ago.

MATHISEN: If you`re flying instead of driving, there may be some relief on board that plane. The Federal Aviation Administration is expected to relax the ban on using some personal electronic devices during taxiing, take-offs and landings and low altitude flying. The ban of making cell phone calls, however, will likely remain in effect but passengers may soon be allowed to use e-readers, tablets and MP3 players without admonishment from airline staff.

The actor Alec Baldwin who was famously thrown off an American Airlines flight in 2011 for refusing to stop playing the game "Words with Friends" on his smartphone during take off tweeted this reaction, "If you`re flying first class on American Air, I`d still apply an extra measure of restraint."

HERERA: Well, the easing back of those airline rules may have turned the initial public stock offering for Gogo into more of a no-no. Shares of the airline Internet service provider tumbled on their first day of trading today. After pricing last night at $17 a share, Gogo shares closed nearly 6 percent lower, at exactly $16 a piece.

Another big tech company is on the move. The company that makes smartphones for Google (NASDAQ:GOOG) and Mac Pros for Apple (NASDAQ:AAPL) is making efforts to move manufacturing back to the U.S. It`s called onshoring.

And Jon Fortt has our story tonight.

(BEGIN VIDEOTAPE)

JON FORTT, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): It`s become an article of faith in America these days, manufacturing jobs that have gone overseas can`t come back. American workers cost too much and don`t have the cutting-edge skills to build the latest gadgets.

But what if that is wrong? In just the past month, Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) have both announced products they plan to make here. Apple`s, a high end computer.

UNIDENTIFIED MALE: It is designed by brilliant engineers in California and assembled here in the USA.

(CHEERS)

UNIDENTIFIED MALE: It`s a fantastic device we want to get in the hands.

FORTT: Google`s, a risky new smartphone we haven`t seen yet.

(on camera): For Google (NASDAQ:GOOG), it`s a major gamble. If it succeeds, made in America is a major selling point for a cutting-edge phone. If it fails, American dreams and real American jobs are at stake.

ROBERT REICH, UNIV. OF CA (NASDAQ:CA)., BERKELEY: Certainly, it will boost morale. I mean, I think a lot of people for a long time were kind of economic determinist. They assumed that our jobs, particular our low-skill jobs would go abroad to the lowest waged countries, and that was never wholly the case, but when manufacturing does start coming back, people`s hopes will get up.

FORTT (voice-over): Flextronics, the contract manufacturer, will be building both Apple`s Mac Pro and Google`s Motorola X phone, both later this year. Why make them in the U.S.? The cost of labor is raising in China and Malaysia, for one.

And as innovators like Tesla have shown, when there is a brand-new high margin product that needs close attention, sometimes, it`s worth it to have it crafted close to home.

MIKE MCNAMARA, FLEXTRONICS CEO: We`re seeing a lot of work move into places like Texas where we put up the Moto X factory and as well into North Carolina, South Carolina. These kinds of places, the governments are very aggressive at improving regulation so it`s pro-business and keeping taxes down and really working to stimulate jobs.

FORTT (on camera): It will probably take years for this story to play out for us to see if tech really can bring American manufacturing jobs back long-term. But this initial chapter is key. If names as big as Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) can`t succeed at this, chances are the others won`t be about to, either.

For NIGHTLY BUSINESS REPORT, I`m Jon Fortt.

(END VIDEOTAPE)

HERERA: Coming up, how big American companies are taking advantage of an even bigger trend, urbanization, especially in China. But, first, a look at the best performing stocks of the S&P this week.

(MUSIC)

HERERA: Violent protests continue to rock the streets of Brazil`s biggest cities for the second week running. As an estimated 1 million people rallied against the government for raising prices on public service last night, some cities even cancelled the transit fair hikes that set off those demonstrations a week ago. But that didn`t stop the protest. More unrest is expected tonight in Rio de Janeiro, Sao Paolo, and other major cities.

MATHISEN: Two U.S. senators say a Chinese company`s purchase of Smithfield Foods (NYSE:SFD) is quote difficult to square, but the Chinese`s government`s restrictions on U.S. pork and beef exports. Senators Max Baucus and Orrin Hatch, a Democrat and a Republican, say the interest of U.S. farmers and ranchers must be protected, calling for a full review of Shuanghui group`s planned acquisition of Smithfield. That`s the world`s largest pork producer.

HERERA: And in China, the government is pushing ahead with a sweeping plan to move millions of rural residents into more populated areas and this growth and urbanization has not gone unnoticed by some of America`s biggest companies.

Eunice Yoon reports.

(BEGIN VIDEOTAPE)

EUNICE YOON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): All over the world, people are heading to the cities. Nowhere of that more true than in China. By 2030, one in eight people on the planet will live in a Chinese city.

That`s good for companies like Honeywell.

STEPHEN SHANG, HONEYWELL CHINA CEO: The wealth of these people is increasing at a tremendous peak.

YOON: Honeywell is betting big on China`s plans to build up its cities. The American industrial giant has opened up new factories like this one in a midwestern city of Chongqing, expecting its urbanization expertise in the U.S. and Europe to translate here.

SHANG: Urbanization is really, if you look at it, it`s a building of the mega, mega movement and not in one location but all across China, new towns, new subways, new trains, new planes, new hospitals and they are all in the Honeywell scope.

YOON (on camera): If China wasn`t urbanizing at this fast a pace, would your growth be as strong?

SHANG: Of course not.

YOON (voice-over): Honeywell is making and selling brake pads here. It`s targeting sales growth about double the country`s growth rate, which is currently above 7 percent.

To build it cities, China needs everything, Australian iron for steel beams to American bulldozers.

(on camera): At shopping plazas like this one, you can see all sorts of international brands, with more and more for Chinese moving into the city, companies like Starbucks (NASDAQ:SBUX), H&M, and Gucci can make more consumers here than ever before.

SHANG: They create jobs for us in China, but also create jobs for U.S. Many of this product know-how (ph) is in the foreign countries. As in the process of localization, you actually create for jobs for these foreign countries, whether it`s the U.S., Germany or U.K. So everybody benefits.

YOON (voice-over): Welcomed news with economy so weak back at home.

For NIGHTLY BUSINESS REPORT, I`m Eunice Yoon.

(END VIDEOTAPE)

MATHISEN: And tonight in "Market Focus", some bargain hunting on the day after the big Dow dipper.

Bristol-Myers gaining back most of its Thursday`s loss as investors cheered FDA labeling approval for leukemia treatment. Shares of BristolMyers up 2.5 percent on above average volume. It closed at $45.73.

DISH Network (NASDAQ:DISH) meanwhile, touching a new five-year high as it abandoned its efforts to acquire Sprint. DISH took on more than $2.6 billion in debt and interest to finance the Sprint deal. They`re not going to be spending it now. That didn`t matter to the market today as DISH network gained more than 3 percent to close at $41.40. DISH up 7 percent since it lost that Sprint bid back in April.

HERERA: Archer Daniels Midland gained after saying that it`s in talks to sell its coco business, about 4 percent of its overall sales. ADM shares were up almost 1 1/2 percent, closing at $33.09.

And Facebook (NASDAQ:FB) also gained today on an upgrade to buy from neutral over at UBS. And some astonishing stats on Instagram video. One year of video was uploaded in the first eight hours. In other words, it would take a year to watch all of those videos and remember, they are only 15 seconds long.

Facebook (NASDAQ:FB) acquired Instagram in September of 2012. And in today`s trade, shares tacked on 2 1/2 percent, closing at $24.53.

MATHISEN: And time now to turn our attention to this week`s market monitor guest who says she is positive on equities both over the short and the long-term. She`s Judy Saryan, portfolio manager with Eaton (NYSE:ETN) Vance.

Judy, welcome. What a week, great week to have you here with us.

Explain why you think this is not just -- not a fatally wounded bull market.

JUDY SARYAN, EATON VANCE PORTFOLIO MANAGER: Well, I`m very happy to be here, Tyler.

I think that the move by the Fed and the comments by Bernanke indicate that the economy is growing. It`s not growing too rapidly. It`s not growing too slowly. It`s just right.

And I think that is really the key underpin of the market.

So, we`re very positive about the market, both near term and long term. The Fed is basically on the track that they set. There is really nothing new in what they said.

HERERA: Judy, though, we did see a lot of volatility this week and we`ve seen interest rates move quite a bit higher than they were a couple weeks ago. Does that worry you at all? I mean, it`s good for savers certainly. But does it worry you about the market`s ability to move forward in the market?

SARYAN: The interest level has moved up. It was pretty dramatic in the last couple weeks. But at this current level, the 10-year Treasury 2.5 percent, that`s still a very reasonable interest rate. I believe the economy can grow with that rate. It`s not a problem for the housing market.

And, of course, the housing market is key for the growth in the economy but housing is still extremely affordable at record rates in terms of affordability. It would take rates going much higher before we saw that, you know, really affect or impact the housing market.

MATHISEN: I think our viewers have their pencils ready, Judy, for a couple of your stocks picks. And a couple of stocks on your list this week are banks -- one big, one somewhat smaller. Let`s start with the big one, which is Citigroup (NYSE:C).

SARYAN: OK. Well, at Eaton (NYSE:ETN) Vance, where you focus on fundamentals and the fundamentals are very positive for Citigroup (NYSE:C).

There are several positive factors favoring Citigroup (NYSE:C). There`s an improvement in the capital market`s activity.

Also, Citigroup (NYSE:C) benefits from the real estate market. In fact, they are going to be releasing $8.5 billion in reserves from the North American Mortgage business. So that will be a strong tail wind to earnings looking out this year.

On top of that, the evaluation is very attractive. The stock is selling at 63 percent of book, a low P/E ratio and I think the stock could get up to book value.

HERERA: I would assume housing would help the next pick, which is Regions.

SARYAN: Absolutely. Regions Financial is a regional bank. About 55 percent of their portfolio is in loans so they benefit from the real estate market. They are selling at a very attractive valuation. They have a reasonable yield and we`re expecting dividend growth out of Regions as well.

MATHISEN: Let`s see if we can squeeze in two more very quickly, 15 seconds for each. One is Sanofi and the other is Phillips 66.

SARYAN: OK. On Sanofi, it`s a French-based company. Great

pharmaceutical company. Very strong position in the diabetes market place. They`ve got one of the strong insulin drugs and that business is doing very well. They`ve also got some very strong positions in the vaccine business.

MATHISEN: And Phillips.

SARYAN: And on Phillips, they are -- became independent about a year ago from ConocoPhillips (NYSE:COP). Strong free cash flow, over $4 billion we project this year and potential to grow that dividend at a very nice clip, very inexpensive stock, selling at a 7 multiple on P/E. Great stuff.

MATHISEN: I assume, Judy, that your funds own all of these companies or your business does. Any other disclosures?

SARYAN: No, that would be the primary disclosure.

MATHISEN: All right. Judy, thank you very much. Judy Saryan is portfolio manager with Eaton (NYSE:ETN) Vance.

And still ahead, after falling, excuse me, to the bottom of the pizza food chain, we`ll show you how Domino`s turned things around and delivered for shareholders.

But, first, a look at some of the worst performing stocks on the S&P this week.

(MUSIC)

MATHISEN: Starbucks (NASDAQ:SBUX) is raising its prices. The java giant plans to jack up prices on some of its drinks but only by an average of 1 percent. For some markets, the company say it will be the first price hike in about two years.

Even though coffee bean prices have been dropping, Starbucks (NASDAQ:SBUX) blames the increase on higher rents, labor costs and raising prices milk and sugar.

HERERA: And those rising material costs and changing consumer tastes are some of the biggest challenges for eateries. And there is one chain that`s worked very hard to figure out what its customers want and has succeeded, delivering for both diners and investors.

Jackie DeAngelis has the latest in NBR series on "Comeback Companies" with a look at pizza giant, Domino`s.

(BEGIN VIDEOTAPE)

JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDNT (voice-over): In 2009, Domino`s ranked at the bottom of a consumer survey on pizza taste preferences, tied with Chuck E. Cheese`s -- particularly galling for the

company that virtually invented the pizza delivery chain business.

The situation was desperate.

PATRICK DOYLE, DOMINO`S PIZZA PRESIDENT & CEO: The combination of poor results for a couple of years in our domestic business and then, you know, some surveys coming out that were not particularly kind to us and the quality of our pizza, it sent us into a room one day. We made the decision that it was time to really fix this.

DEANGELIS: But, now, four years later, Domino`s is at the top of the latest rankings and people love their pizza.

UNIDENTIFIED MALE: Their food is really delicious. It`s really savoring. It really feels in your taste buds.

UNIDENTIFIED FEMALE: Domino`s is a good place to come because it`s cheap and you get a lot of food for like money and have a lot of good deals.

DEANGELIS: How did Domino`s do it? First, they fixed the pizza.

DOYLE: Brought the team in and said, look, everything is on the table. You can chance anything and we just simply want to have the best pizza out there.

DEANGELIS: Then they stream lined business, adding online ordering for convenience and to drive sales.

DOYLE: Digital orders have been growing about 5 percent a year as a mix of our total sales. So we`re now in the 35 percent to 45 percent range. Customer satisfaction is higher, order accuracy is higher. The ticket on those orders is a little bit higher. The labor cost is slightly little lower. So everything is better.

DEANGELIS: Those who invested in Domino`s Pizza (NYSE:DPZ) has seen a sweet return, after hitting a low of $3.30 a share in November of 2008, the stock has run up nearly 1,800 percent.

The turnaround has been good for investors and also employees.

DOYLE: Over 90 percent of our franchises in the U.S. started as hourly workers in our stores, either as delivery drivers or customer service representatives. They worked their way up through -- to become a manager and then bought their first store.

DEANGELIS (on camera): But there are challenges ahead for Domino`s: one is growing the international business, especially in China, to keep up with the competition.

STEPHEN ANDERSON, MILLER TABAK SENIOR RESTAUTRANT ANALYST: I think one of the ways that Domino`s can succeed in China is having a broad menu approach or maybe specializing in chicken, which is a very popular fast food staple in China.

DEANGELIS: So, the stock that has doubled since last year at this time still have room to run?

ANDERSON: I don`t think it moves much higher right now. I think the challenge that Domino`s faces in the next 12 months. It will be up against a tougher year of comparisons, particularly in the U.S. coming off the introduction of pan pizza very late in the third quarter.

DEANGELIS: For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis.

(END VIDEOTAPE)

MATHISEN: And finally tonight, an appropriate end of what must inevitably be called a roller costar week on Wall Street and it comes just in time for the start of summer.

Take a look at the full throttle rollercoaster debuting today at Six Flags Magic Mountain outside Los Angeles.

I bet, Sue, you grew up going there.

HERERA: I went to Magic Mountain.

MATHISEN: It is the world`s tallest and fastest looping roller coaster top speed 70 miles per hour through a 160-foot high loop.

HERERA: Mercifully, they didn`t have that when I went to Magic Mountain.

That`s NIGHTLY BUSINESS REPORT for tonight. I`m Sue Herera, in for Susie Gharbi. Thanks for joining us.

MATHISEN: And I`m Tyler Mathisen have a great weekend, everybody. We`ll see you back here Monday night.

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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