<Show: NIGHTLY BUSINESS REPORT> <Date: April 1, 2013> <Time: 18:30:00> <Tran: 040101cb.

118> <Type: SHOW> <Head: NIGHTLY BUSINESS REPORT for April 1, 2013, PBS> <Sect: News; International> <Byline: Susie Gharib, Tyler Mathisen, Jackie DeAngelis, Bertha Coombs, Kate Kelly, Jane Wells, Brian Shactman> <Guest: Seth Masters, Ian Bremmer> <Spec: Business; Economy; Stock Markets; Defense; North Korea; World Affairs; Major League Baseball; Sports> <Time: 18:30:00>

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

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TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Calling a time-out. Stocks take a breather to begin the second quarter. Are dividend payers still your best bet now?

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Rising tensions. North Korea`s dictator ratchets up the rhetoric. What does he want, how big of an economic threat is he really? And what`s the way out?

MATHISEN: Play ball. Baseball is back, but you probably can`t guess what`s helping boost the value of major league franchises big time.

All that and more on NIGHTLY BUSINESS REPORT.

Well, good evening, everyone. And welcome.

You know, Susie, maybe it was the manufacturing data today. Maybe it was just time, but either way stocks took a bit of a day off.

GHARIB: On this April fool`s. And it was no joke, stocks starts the first day of a new month on a down note.

Investors turned cautious in reaction to the disappointing economic report. A key manufacturing gauge came in weaker than expected. The Institute for Supply Management`s March index fell to 51.3 percent. That`s the lowest level since December and well below estimates. Any reading above 50 is a sign that American factories are expanding.

Wall Street history shows that April is traditionally the best month

of the year for equities but no sign of that today. The Dow fell 5.5 points. The NASDAQ off 28. The S&P fell 7 points.

MATHISEN: And as Susie just mentioned, April is traditionally the best month of the year for stocks, averaging a nearly 3 percent gain over the past 20 years, and that`s a good sign for investors. Since the Dow is coming off its best first quarter in 15 years, adding roughly 11 percent.

So what usually happens after a strong first quarter? Well, since 1950, there have been 12 other times that the Dow was up more than 8 percent in the first quarter and eight of those times, the average added at least 1 percent in the ensuing or second quarter, and five of those times, the Dow rose more than 4 percent.

Of course, history is rarely a perfect guide to the future and what you want to know now is what might make you some money in the second quarter and beyond.

Well, one strategy that has paid dividends in recent years is to invest in companies that pay dividends. But our market guest tonight says that approach is so 2011.

He`s Seth Masters, chief investment officer at Bernstein Global Wealth Management.

Mr. Masters, welcome. Good to have you with us.

Why are you down on dividend-paying stocks as an investment strategy right now?

SETH MASTERS, BERNSTEIN GLOBAL WEALTH MANAGEMENT CO.: Well, they`ve simply gotten quite expensive. And that`s because as you said they were extremely popular after the 2008 crash really. A lot of investors who wanted to stay in stocks but wanted something relatively safe within the stock market felt that higher-yielding companies were a safer version of stocks. And as a result, they have outperformed the rest of the stock market over most of the last four years.

GHARIB: So, Seth, what should people do if they have their portfolios loaded up with these blue chip high quality companies that pay good dividends? Can they still hold on to them for a little bit longer at least for the next couple of months, or do you suggest that they unload them right away?

MASTERS: Well, I think it would be an excellent time to look at the other things that there are in the stock market that are right now we think quite a bit more attractive. And here`s an easy way to think about that. Dividend paying stocks that have relatively high dividends historically have been about a third of the total capitalization of the S&P 500.

Today, they`re almost 45 percent of the broad index. And usually, things like that are cyclical. Things that have done really well and have become bigger and bigger in the index tend to revert back to their long term level. And that means that the rest of the stocks, the other 55 percent of what`s in the market, is likely to outperform we think going forward.

MATHISEN: From what you just said, I can infer that you think that indexing, and index funds then that sort of mimic, excuse me, the S&P 500 are overvalued as well?

MASTERS: Tyler, that`s a great point, absolutely. Look, indexes sometimes outperform, sometimes don`t. It`s a -- just -- index is just another portfolio that happens to be built by the S&P or another index provider. And right now, those indices are rather dominated by high dividend-yielding stocks.

And I do think that when we look back at today from perhaps two or three years in future, we will find that this will have been a very good time the next couple of years for stock pickers.

GHARIB: Well, tell us a little bit about where investors should be picking their stocks. I know you can`t give us specific names, but give us some guideposts of where to put our money for the next couple of months.

MASTERS: Well, I think the places that are going to be interesting are the places that are the opposite of perceived safety, right? Dividend yield is perceived to be safe. What`s not perceived to be so safe is things that have a lot of growth and can be exciting or a lot of value, because they can be very cheap.

So let me give you an example of each. In the value domain, right now, we think there are lots of opportunities from stocks that were really hit hard because of 2008. So, for example, the residential real estate market was the source of the problem in 2008 really and the companies that were most involved with it were hammered over the last few years. And now, some of the stocks in that domain, including some of the lenders who financed real estate, some of the title search companies, some of the home builders, we think actually have pretty attractive outlooks for growth -for -- as a stock to own, because they`ve become so cheap.

MATHISEN: Forgive me, Seth, as we run out of time here, I thought the home builders had been on a good run. Some of them have more than doubled over the past year, if my recollection serves. So if you tie that thought together with a thought on growth companies for us.

MASTERS: Right. So, in the growth domain, I think there are a number of areas which are very interesting. One of them is in energy. There are lots of companies that are in the oil field service area in particular that we think stand to benefit dramatically from the explosion in production of

tight energy, both oil and natural gas that is unfolding across the United States and we think will continue for the next few years.

MATHISEN: Very interesting. Seth Masters, thank you very much for your perspective tonight.

Seth is chief investment officer at Bernstein Global Wealth Management. And we appreciate his being here with us tonight.

Well, coming up later, investment clubs are making a comeback. And Jane Wells is going to show us how these small investors are trying to come up with the right strategies to handle today`s markets.

GHARIB: Speaking with the markets, investors were also closely watching political tensions in North Korea. The U.S. sent stealth fighter jets to South Korea and the U.S. Navy shifted a guided missile destroyer in the Pacific.

Now, these moves come as North Korea`s leader Kim Jung Un said over the weekend he`s entering a state of war with South Korea, and threatened military action against South Korea and the United States.

Joining us now to talk about what all this could mean for the global economy and the markets, Ian Bremmer. He`s the president of the Eurasia Group. It`s a political risk, research and consulting firm.

Ian, let me just begin with a very basic question that a lot of people are probably wondering. What does Kim Jung Un really want?

IAN BREMMER, EURASIA GROUP PRESIDENT: Well, it`s very clear that his state of war does not preclude doing business with the South. Their joint industrial park in Kaesong in North Korea is still open. So it`s not like he`s about to start launching rockets into South Korea.

I think what he clearly wants is more money, more respect and he probably wants a restart of the negotiations with the United States from a position of greater strength. He has clearly failed on absolutely every one of those counts over the last two weeks. I think that`s what`s actually agitating observers, not the notion that we`re at the precipice of war.

MATHISEN: This guy is new, Ian. He`s 28, 29 years old. Maybe 30 if we`re to believe the press reports.

Where is his off ramp? How does he get out of this and not lose face with the generals who have so much power in his country?

BREMMER: You know, the funny thing, he`s actually the longest standing head of state in East Asia, compared to Xi Jinping, Shinzo Abe, or president of South Korea, President Park of South Korea. He`s got the

longest run of power, but he`s only been in place for about a year, 29, 30 years old.

And the question of how he backs up the truck is an interesting one because -- look, it`s not hard for him to do it in terms of the people because they`ve got extraordinary propaganda. He can say white is black and probably get away with it.

The real question is how does he look to the military, how does he look to the political leaders as everything he has done over the past months has failed. And so if he backs off, do we start to see instability in the regime? And if he feels the need to continue to provoke, at what point does that lead to the kind of action that actually really is dangerous? That does blow up a ship or, you know, he does actually take an action that requires South Koreans or U.S. military engagement?

I don`t think we`re there yet. But, you know, that has to be an issue that we are now in the markets watching closely in a way that a couple of months ago frankly we didn`t care.

GHARIB: Let me ask you, Ian, something more on the business side of this, because we know that South Korea is a big economy and it`s a big player in the whole tech supply chain. So, if there`s any disruptions, I mean, they supply everything for the components that we need for TVs and cell phones and computers.

If there`s any kind of disruption here because of the political side of the equation, what kind of economic threat is there?

BREMMER: Well, it`s one of the largest economies in the world. And it`s very integrated with the West. In terms of supply chain and direct trade, South Korea matters. And a lot of American companies have a lot of investments over there. They`ve got a lot of expats over there and so far, nothing has changed.

If we were to start to see North Korea really implode and I think more likely than them blowing up the south is that the regime starts to fall apart and then you see refugees and you see major tensions between the U.S. and China, then suddenly South Korea is in a very bad place. The equity markets would come up very dramatically and very suddenly, and supply chains would be disruptive -- certainly the kind of disruptions we saw after the Fukushima incidents in Japan, where suddenly, you know, you`d had Toyota (NYSE:TM) having huge problems with production all over the world.

I mean, you know, you`d see major electronic manufacturers globally suddenly shorthanded in terms of product. That would absolutely happen in that environment. It`s North Korea, it`s just not a stable place. And it`s an issue to watch out for.

GHARIB: OK. We will be watching it. Thank you so much, Ian -- Ian

Bremmer, president of the Eurasia Group.

BREMMER: Sure.

GHARIB: Well, investors bailed out of many chip makers on those news developments in North Korea that we`ve been talking about because so much of their products are produced in South Korea. Also, an industry sales report showed that chip sales were down sharply earlier this year.

So, Dow component Intel (NASDAQ:INTC) dropped 2 percent. AMD off more than 4 percent. And Micron Technology (NASDAQ:MU), biggest loser, with a drop of more than 6 percent.

Toys "R" Us is pulling its plan to take the company public. The nation`s largest stand alone toy retailer is citing tough market conditions and that its CEO is stepping down. Well, despite Toys "R" Us` decision, the IPO market itself remains active as we move into the second quarter.

Jackie DeAngelis takes a look now at what`s in the pipeline for the quarter and the rest of the year.

(BEGIN VIDEOTAPE)

JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT: IPO activity held steady in Q1, with 31 deals for companies with market cap over $50

million, raising $7.6 billion according to Renaissance Capital. IPO performance outpacing the broader market with an average total return for the quarter of 18 percent. There was also a notable shift toward yield plays.

That said, when looking at the pipeline for the rest of the year, couple of things to consider, including recent legislation that allows smaller companies to file confidentially. Many are electing that option. That could make the pipeline appear smaller, but Renaissance Capital says there`s actually a lot of activity occurring behind the scenes.

That`s some of the deals we`ll be watching for in the coming months, Bausch & Lomb, ING, Coty, SeaWorld, also CDW. Those deals covering a broad range of sectors.

And while financial deals were pervasive in Q1, more tech deals are expected later this year. Companies like Marketo, FireEye and also Glam Media have filed confidentially, according to Renaissance, while several other tech companies have reportedly hired banks in preparation for IPOs.

Now, on tap this week, independent bank group of price range of $24 to $26, a 3.2 million share offering. And a smaller deal, Harvard Apparatus Regenerative. So, watch for that.

For NIGHTLY BUSINESS REPORT, I`m Jackie DeAngelis.

(END VIDEOTAPE)

GHARIB: A big decision by the government today impacting millions of Americans who get their insurance through Medicare advantage.

Bertha Coombs is here to tell us about it.

It`s a complicated story, isn`t it, Bertha?

BERTHA COOMBS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, it is with everything with health care. But Medicare Advantage is the private insurance that people buy from private insurers, Medicare actually does reimburse those insurers. More than 15 million -- 14 million seniors or so buy those from insurers -- they`re popular -- to get some extra coverage beyond Medicare itself.

Now, CMS, the Health Department`s Center for Medicaid and Medicare Services today said that the growth rate for reimbursing those insurers in 2014 is going to be over 3 percent. It`s a big reversal from their proposal last month that would have cut Medicare Advantage reimbursement rates by more than 2 percent. They based that reversal in part because of a statutory Medicare rule that normally cuts doctor reimbursement rates. Next year it would be a cut of more than 20 percent.

But the doctor rate reimbursement cuts which most people in Medicare watch very carefully never happened. For 10 years, Congress has instituted the Doc Fix.

So, after heavy lobbying from insurers and members of Congress and from both sides of the aisles, and from seniors themselves, tens of thousands of them contacting Congress, CMS today said it is setting plan growth at 3.3 percent instead, they`re assuming that there will be no Doc Fix -- that there will be a Doc Fix, and there will be no cuts to doctor reimbursement next year, which is unprecedented, analysts say.

And at the same time, they`re capping how much plans can increase rates on seniors to no more than $34 a month, down from $36 a month. On average, it might be about $20.

MATHISEN: So, two quick questions: What does this mean for the Medicare advantage seniors who use that coverage? And what does it mean for insurance companies?

COOMBS: Well, Karen Ignagni, the head of the insurance lobby AHIP, was saying she applauded this. She says CMS is taking an important step to help stabilize Medicare Advantage, at a time when the program faces significant challenges.

A number of these carriers might have pulled out of Medicare Advantage

for next year, which would have left seniors with fewer options and most likely higher costs. So, now, it`s more stable. They`ll continue to provide it next year.

MATHISEN: So the bottom line is, it`s good news for Medicare Advantage participants.

COOMBS: Good news, and good news for the Medicare Advantage insurers as well. If you look at Humana (NYSE:HUM) shares, a couple of months ago, when they first announced cuts --

GHARIB: They really rallied.

COOMB: -- they went down significant. Today, they rallied again.

MATHISEN: Bertha Coombs, thank you very much.

And coming up as the market strengthens, investment clubs are making a bit of a come back. We`ll show you how they are approach the new market conditions. But first, a look at the international markets today.

(MUSIC)

MATHISEN: Stephen A. Cohen is a Wall Street legend. He runs SAC Capital, one of the largest and most successful hedge funds. But the

arrest Friday of a top Cohen deputy on insider trading charges refocuses attention on how federal authorities are building a possible case against Cohen himself.

Kate Kelly joins us now with the very latest.

How is SAC Capital reacting to this most arrest of Mr. Steinberg who was a close confidant?

KATE KELLY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, in an interesting development, Tyler, they`re actually showing quite a bit of support for Michael Steinberg, this gentleman who was indicted on Friday, on five different counts of securities fraud and related charges, of course, stemming back to insider trading. This is an outgrowth of a prosecutorial effort that goes back five or six years. Most people think they`re going after Steve Cohen personally. The firm has sort of distance itself from most of the nine people in total who have been implicated, current and former employees of SAC who have been implicated.

But in this case, they`ve essentially said Michael Steinberg is a highly ethical guy. We stand by him. His lawyer has pled not guilty.

MATHISEN: And yet, he`s been on company leave since last September.

KELLY: That`s right. Now, he`s on a paid company leave. And

apparently, if you read the tea leaves here, a paid company leave indicates the company is supportive of him. They don`t want him to suffer economically while he`s under scrutiny.

But at the same time, they can`t have him in the office when it`s possible that he`s going to be charged as he was with criminal wrongdoing.

GHARIB: Tell us about Steve Cohen himself. I mean, there`s been so many insider trading cases, but he is a big fish, a gazillionaire. I mean, could he possibly be implicated here and what would that mean?

KELLY: Susie, this is definitely be the burning question on people`s minds, will the feds actually be able to charge Steve Cohen? It appears they have been trying to for quite a long time.

GHARIB: Right.

KELLY: And you`re right. He`s worth $10 billion or $11 billion. He personally and others who are high up in the firm have $9 billion in this firm. That`s $9 billion out of a total of $15 billion.

So if Steve is charged I think it`s probably curtains for SAC. I mean, there is no obvious number two who can lead the firm after he were to depart.

And, again, most of the capital involved is his. So if he were or the charged, it would be very damaging for them and a thousand people potentially out of jobs.

MATHISEN: He`s been a fair -- he`s been acting like a fairly confident man, buying a $600 million property and $155 million painting.

KELLY: That`s absolutely right. He`s been very active in terms of art and real estate of late. He`s also made a significant financial contribution to help veterans suffering from post-traumatic stress disorder.

MATHISEN: Kate Kelly, thanks very much.

GHARIB: Fascinating (ph) story, keep us posted on that one.

Well, turning to the "Market Focus", commodity and equipment stocks were in the spotlight in today`s trading. That disappointing factory report that we told you about at the top of the program, as well as weak manufacturing data from China, pressured the sector.

Alcoa (NYSE:AA), Caterpillar (NYSE:CAT), each down more than 1.5 percent. U.S. Steel losing 4 percent. And Joy Global (NASDAQ:JOYG), which makes mining equipment, fell almost 3 percent.

AT&T (NYSE:T) led the Dow gainers today. The company will start selling Amazon`s newest Kindle Fire beginning on Friday. This is the HD kindle version. Buyers choosing a two-year AT&T (NYSE:T) data plan will get a $150 discount.

AT&T (NYSE:T) shares rose to $35.25.

MATHISEN: And that little company called Wal-Mart (NYSE:WMT) was up as the giant retailer announced 15 cents a gallon gas discounts at 2,100 locations for holders of its credit and debit cards, pretty nice deal there.

Wal-Mart (NYSE:WMT) shares are up today, by 60 cents at $75.43. That`s a little less than 1 percent.

And NASDAQ is acquiring the eSpeed platform entering the U.S. Treasury`s trading business. CEO Bob Greifeld said eSpeed is a major player in the U.S. Treasury market, expects volumes now over $500 billion daily to increase.

GHARIB: Well, we have been telling you that the markets have been rallying this year. But most individual investors have been watching, not participating. They have been afraid to put their money in stocks. But that could be changing.

As Jane Wells reports, investment clubs are making the comeback.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: We see a lot of sideways action here.

JANE WELLS, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): From an office outside of Chicago to the hills north of L.A. --

UNIDENTIFIED FEMALE: We`re definitely in a transition.

WELLS: Americans are investing through clubs, though not like they used to.

UNIDENTIFIED FEMALE: I`m collecting money now.

WELLS: This was the scene in 2000 with pooling funds and researching stocks was the way average folks made fast money.

UNIDENTIFIED FEMALE: Ka-ching, ka-ching, ka-ching.

WELLS: By one count there were 400,000 investment clubs at the peak, a number that`s collapsed, but not completely.

UNIDENTIFIED MALE: It`s got a good trend on the weekly.

WELLS: In Arlington Heights, Illinois, Nick Fosco started this club after his 401(k) was destroyed in 2008, to take matters into his own hands.

NICK FOSCO, CHICAGO-NW BURBS TRADING CLUB FOUNDER: We only knew how to buy stocks, so then we learned how to sell stocks and then we learned how to do options around stocks. Then we learned how to do to option strategies, all the straddles and the spreads.

WELLS: Members do not pool their money, but manage their own portfolio.

GEORGE CHAN, CLUB MEMBER: I wish I had known this club right now, five or 10 years ago. It would have saved me a lot of money, a lot of headaches.

WELLS: In Ojai, California, an all-woman investment club has survived since 1997.

(on camera): Why all women?

HARRIETT ERICKSON: I don`t know, it`s just easier.

WELLS (voice-over): Over the years, the women invested in things like Pfizer (NYSE:PFE), after learning about a new drug called Viagra. They met

Warren Buffett at the annual Berkshire Hathaway (NYSE:BRK.A) meeting. But after buying Lehman Brothers in the summer of `08 and losing big, they made some changes.

ERICKSON: We have put in stop loss orders.

WELLS: These days, no stock has them as divided as Apple (NASDAQ:AAPL).

UNIDENTIFIED FEMALE: I`m bearish on buying more Apple (NASDAQ:AAPL).

UNIDENTIFIED FEMALE: I feel like sometimes we sell too soon.

UNIDENTIFIED FEMALE: Keep it. And buy more.

WELLS: Now, as the markets hit new highs, many clubs are trying to figure out what strategy to use. The women in Ojai believe the market is due for a correction. The club in Chicago agrees.

FOSCO: The market is extremely overbought right now, it`s priced to perfection.

WELLS: When even investment clubs think the market is tough --

UNIDENTIFIED MALE: It`s going to be unsustainable. It`s going

parabolic.

WELLS: -- you have to wonder.

For NIGHTLY BUSINESS REPORT, Jane Wells, Los Angeles.

(END VIDEOTAPE)

MATHISEN: And coming up, it`s no longer "take me out to the ball game". Now, you can take the ball game with you, wherever you go. It`s a major business for Major League Baseball.

But, first, let`s look at the commodities, currencies, and the treasuries traded today.

(MUSIC)

MATHISEN: Though the sport revels in its past like baseball, now Major League Baseball is finding real money, its real moneymaker is in its future. And as Brian Shactman tells us, the future is now.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Throw that pitch.

(CHEERS)

BRIAN SHACTMAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): Opening day at MLB Advance Media. The vibe here is more tech start-up than office and there`s a reason. The old school game of baseball dominates new media.

BOB BOWMAN, MLBAM: Wherever you open up your mobile device, a phone or a tablet. You get up to date. You can see a highlight. You can see live video if you have that service.

SHACTMAN: Bob Bowman is president and CEO of what many call MLBAM. Forbes says it`s worth $6 billion. Much of the value has to do with MLB At Bat, the most successful app in the world, downloaded 7 million times last year.

MICHAEL OZANIAN, FORBES MEDIA EXEC. DIRECTOR: It`s been growing at better than 20 percent a year and I think the revenues will continue to grow at a double digit rate because of the demand for the products and the increase in the uses in the way people can use their products.

SHACTMAN (on camera): Along with MLB.tv, users can watch out of market games in any place, on any device, at any time.

Here at MLB Advance Media headquarters in Lower Manhattan, they edit

and publish 25,000 video clips a day during the season.

BOWMAN: It`s as reliable as rain. And we don`t want any rain today, we want sunny days here for sure. But what we know is you turn it on, it`s going to work.

SHACTMAN: Reliability and mobility is part of the reason baseball dominates mobile, but it`s also volume, 30 teams and 162 games each.

BOWMAN: Baseball is ideally suited for the digital media. We play 162 times a year, you never know who`s going to win. You`re watch happy to watch the seventh inning, the ninth inning, the first inning. You just want to see your time play.

SHACTMAN: America`s national pastime goes all access for all fans everywhere.

For NIGHTLY BUSINESS REPORT, Brian Shactman, New York.

(END VIDEOTAPE)

GHARIB: Nothing like going to a real game though. And today was beautiful for opening day. Not good for Yankee fans, they lost. But for Met fans including our producer, it was a good day. They won.

MATHISEN: The Mets won big time. I think they scored all the runs for the month of April today, the Mets did.

Anyhow, thank you so much for being with us on NIGHTLY BUSINESS REPORT. I`m Tyler Mathisen.

GHARIB: And I`m Susie Gharib. Have a great evening, everyone. And we hope to see you right back here tomorrow 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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