<Show: NIGHTLY BUSINESS REPORT> <Date: April 29, 2013> <Time: 18:30:00> <Tran: 042901cb.

118> <Type: SHOW> <Head: NIGHTLY BUSINESS REPORT for April 29, 2013, PBS> <Sect: News; Domestic> <Byline: Susie Gharib, Tyler Mathisen, Bob Pisani, Hampton Pearson, Andrea Day, Mary Thompson> <Guest: Joe Davis, Jason Toussaint> <Spec: Business; Consumers; Economy; Stock Markets; Gold; Trade; Disasters; New Jersey; Tourism; Sandy> <Time: 18:30:00>

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


SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: The resilient consumer. Americans keep spending. Is the consumer and the economy stronger than

many think?

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Golden opportunity. Is gold still the precious metal to own despite all that recent volatility?

GHARIB: And restore the shores. Six months after superstorm Sandy slammed into the Jersey coasts, will the terror destination be ready for summer?

We have all that and more tonight on NIGHTLY BUSINESS REPORT for Monday, April 29th.

Good evening, everyone.

Well, Tyler, we got a nice start to the week for investors. Stocks opened up and they just kept on going.

MATHISEN: Yes, a little bit of a surprise I suppose in many ways. But it was one of those days. It has been a few weeks indeed since we said this, but it was another record-setting day on Wall Street, with stocks getting a big boost from some strong economic reports.

Pending home sales, contracts that assigned, but not yet closed, rose 1.5 percent in March, just enough to reach a three-year high, despite a dearth of available homes on the market.

And personal income and consumer spending rose two-tenths of 1 percent each in March.

And if you add it all up, the Wall Street liked what it saw. The Dow rose 106 points days. The NASDAQ higher by 27, that was good for a 12 1/2year high. And yes, we do have a new record close for the S&P 500. It closed 11 points higher, ending the session at 1,593.61, tenths of a point above the old record close.

And things may just be warming up. On Wednesday, we`ll get the latest read on how much homes are selling for when we get the Case-Shiller Home Price Index. And Federal Reserve policymakers will wrap up a two-day meeting on interest rates and those billions in monthly asset purchases.

And then on Friday, the big economic report of the week and the month, the April employment report from the Labor Department.

For more on the rise in the markets and what may come next, we get more now from Bob Pisani on the floor of the New York Stock Exchange.


BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Stocks powered again today, with the S&P 500 closing at an historic high.

It`s been quite a run with the S&P posting gains for six straight months, its longest monthly win streak since 2009.

What`s powering stocks? The two pillars of the rally remains. Central banks are back-stopping the world and there is nowhere else to put money that generates significant returns. It certainly isn`t global growth-powering stocks. Europe is still mired in recession. China is fragile. And the U.S., with subpar growth of a little more than 2 percent, is the best of the lot, hardly the stuff of record high stocks.

That anemic global growth is showing up in corporate revenues. While many companies are beating on earnings, more than 40 percent are missing revenue targets. Take Eaton (NYSE:ETN), for example, which makes electrical and automotive components all over the world. Today reported earnings that beat the revenues that were light, with European auto parts a particular drag.

(on camera): Like most industrials, Eaton (NYSE:ETN) reaffirmed their earnings guidance for 2013, but revenue growth will be very hard to come by, perhaps only 2 percent. That 2 percent has become the new normal for both GDP and for revenue growth.

For NIGHTLY BUSINESS REPORT, I`m Bob Pisani on the floor of the New York Stock Exchange.


MATHISEN: As we mentioned a moment ago, stocks got an unexpected lift from consumer spending in March, up two tenths of 1 percent last month, following a jump of seven-tenths of a percent in February.

We get more now on the power and resilience of the U.S. consumer from Hampton Pearson.


HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): Consumers aren`t exactly lining up the cash registers, but predictions, shrinking paychecks, due to higher Social Security taxes at the beginning of the year would curb consumer spending are not backed up by first quarter economic data. It turns out spending in the first quarter was 3.2 percent higher than the fourth quarter of 2012, according to the Commerce Department. And the biggest jump in two years.

People like Ann Knabe who counts herself among those more optimistic about where the economy is heading.

ANN KNABE, SHOPPER: Personally, I think the economy is starting to rebound and I think modest growth and I think there`s a sense of optimism among American citizens.

PEARSON: On the short list of what is improving household balance sheets, higher home prices, less debt, record stock market prices.

And on Main Street, cheaper gasoline prices, all blunting the impact of tax increases.

MARGE LLOYD, SHOPPER: We`re not buying as much, but we are buying -probably a little more than we did last year.

PEARSON: But the jobs picture remains the biggest uncertainty. Only 88,000 new jobs in March after averaging 188,000 the previous six months, leading wealth managers see a resilient but cost conscious consumer.

MICHAEL YOSHIKAMI, DESTINATION WEALTH MGMT: I disagree with those that say the consumer is going away. They`re not going away. They`re here to stay, but they`re going to be more cost conscious when they make purchase decisions.

PEARSON (on camera): Consumer spending in the first quarter may up, but the latest polls on consumer sentiment show it`s at a virtual standstill.

For NIGHTLY BUSINESS REPORT, I`m Hampton Pearson in Washington.


GHARIB: A short while ago, I talked with the chief economist of Vanguard. That`s the giant mutual fund company. Joe Davis says there is a, quote, "striking disconnect" between how the economy is doing and those new record highs in the stock market.


JOE DAVIS, VANGUARD CHIEF ECONOMIST: There is clearly a disconnect between where jobs are today and where the stock market is. And I would ascribe some of that disconnect both to the effectiveness, quite frankly, of monetary policy in helping to estimate investor risk-taking. At the same time, I think there`s also a disconnect that the U.S. economy could be stronger in its recovery, and part of that is due to an uncertainty tax, if you will.

GHARIB: What we saw in the "Wall Street Journal" today, that Vanguard CEO wrote this op-ed piece, with this very provocative headline, saying that uncertainty is the enemy of the recovery.

So, let`s flip it around. If we didn`t have uncertainty, how much growth, how much better off would we be?

DAVIS: Sure, we actually tried to estimate that very question, the

answer to that question, Susie. What we found is that just since the early part of 2011, over the past two years, had policy uncertainty not risen strongly through the debt ceiling crisis as well as through the fiscal cliff concerns, that the U.S. economy would be over $260 billion higher in a GDP perspective.

To put that in every person`s terms, that`s around $800 per person in the United States. So, it`s had a palpable effect. I think the U.S. economy would have grown 3 percent per year over the past two years rather than 2 percent, if the level of policy uncertainty had not been so strong and so high.

GHARIB: You talk about policy uncertainty, and we know that the Federal Reserve is meeting tomorrow, this week. To what extent is the Federal Reserve policy impacting this uncertainty? Is all of the stimulus that they`re putting into the economy helping or holding back growth?

DAVIS: Well, I think it is helping. It`s tough to argue otherwise when you look at the fact that the U.S. economy has expanded at an albeit modest pace, despite the elevated level of policy uncertainty.

So I think the Federal Reserve should receive some credit for trying to stimulate the economy. That said, I think importantly, they are starting to point out that there are costs to their strategy. Savers at home and in very low interest rate paying investments I think are clearly

feeling the negative ramifications of some of the extraordinary stimulus of the Federal Reserve.

GHARIB: One thing that we hear a lot from all the CEOs that we interview is that because of all this uncertainty, they`re holding back on hiring. And we`re going to get more jobs numbers on Friday.

Do you think that we will see any progress on the hiring front?

DAVIS: I think we`ll see modest progress, but I still think we have to brace for some disappointments in economic data through the summer. I mean, the fiscal sequestration, some of those impacts are just starting to hit. By our estimate, job growth should be approximately 45,000 jobs more strong -- stronger per month if we didn`t have this uncertainty tax.

GHARIB: Joe, you come in contact with a lot of individual investors at Vanguard. What`s your read on how they feel about spending money and investing it?

DAVIS: Well, I think broadly speaking, we are seeing investors -- and we do have millions of clients and shareholders, continuing to execute on a long-term plan. Many remain fully vested in the market. That said, there is a level of concern both with respect to the low level of interest rates, as well as open any questions such as, is the recent recovery net market, is this sustainable?

So I think they`re legitimate questions, but at the end of the day, we continue to see very strong demand from investors and they continue to place faith in the financial market.


GHARIB: And there`s more encouraging news about the economy, and something we haven`t seen since President Obama took office -- the U.S. government will pay down debt instead of adding to it. And that`s thanks to higher tax revenues, lower costs and some upbeat economic forecast that the U.S. Treasury announced today, that it plans to pay down $35 billion in debt during the current quarter.

But those good times won`t last for long. For the third quarter of the year, the Treasury`s already predicting it will have to borrow more than $220 billion.

MATHISEN: Gold prices are making a bit of a comeback. The precious metal up nearly $14 a day to $14.67 an ounce. And in that level, it is almost back to where it was before the big sell-off.

Our next guest expects that that upward trend will continue. He`s Jason Toussaint, CEO of World Gold Trust Services.

Mr. Toussaint, welcome.

You know, gold had been on a very powerful bull market run for about a decade, well into 2011. But since then, it has been in -- I think charitably, I would say -- a bit of a bear market.

What do you think will turn that around and get gold moving up again? Why?

JASON TOUSSAINT, WORLD GOLD TRUST SERVICES: Sure. I think there was a little bit of a shift in demand. We look at the first quarter, a lot of investors were caught off-guard with the voracity and upward trend in domestic U.S. stock markets. So there was a bit of a rebalancing going on.

However, what we have seen, as a result of this price pullback, is perhaps surprising to some of -- a voracious appetite for physical gold investors around the world, taking advantage of that and seeing it as a buying opportunity.

So if we look at the reasons why investors here and abroad have turned to gold, as you mentioned, a decade ago, they are as valid today as they were when they put those transactions on back then. So, gold, definitely, has a role in today`s portfolio construction.

MATHISEN: In mid-April, as we mentioned, gold took a very sharp sell-

off, and there was a lot of money throwing out of ETFs, including the one that you`re most associated with, the GLD. Who was doing that selling and why?

TOUSSAINT: We think that the, without having perfect information, the markets are telling us that the selling that went on in the futures markets in the U.S. and some transactions out of the ETFs, including spider gold shares, were more short-term focus, more trading focused, traders in the marketplace, not necessarily long-term investors.

And I think what we`re seeing here is a little bit of a disconnect between what`s happening in the U.S. market, led by as I mentioned, shortterm trading, and the fundamental demand for gold around the world. We always point to India and China. They account for over half of gold demand now, and they are driven by economic expansion, albeit maybe not at the 8 percent, and revised down to 7.7 percent, but the reasons for buying gold are varied around the world. And that, you know, we see as a short-term price pullback.

MATHISEN: The two economies that you just mentioned, China and India; India has the wedding season coming up, I suppose. And so, there will be more buying associated with that. But both of those economies are not as sort of thriving right now as they had been. How important will it be for the price of gold for those economies to get kick-started again and that driving buyers back into the metal?

TOUSSAINT: Sure. I think it`s important to understand that gold purchases in India and China, in addition to the wedding season and festivals, you know, it is a fundamental asset to them. So it`s not necessarily a fashion purchase or a luxury item. It is something that they buy that they understand and have for generations that gold is the foundation of long-term wealth creation.

So, despite the fact that they are slowing down somewhat, we need to understand that there is a long-term wealth creation engine here, which is creating increasing discretionary incomes and frankly, a vastly expanding middle class. They`re affinity for gold, combine with the discretionary income increase means more demand for gold for those two countries going forward.

MATHISEN: Jason, thank you very much for being with us. Jason Toussaint is CEO of World Gold Trust Services.

And to "Market Focus" now, with widespread stock market gains, some new all-time highs were set today, including the Dow component Disney (NYSE:DIS). UBS upgraded Disney (NYSE:DIS) to buy from neutral, saying the parks division should be more profitable than the market expects. UBS boosted its price target for Disney (NYSE:DIS) to 72 a share, after picking early at $63.25 a share. Disney (NYSE:DIS) closed at $63 even, up almost 2 percent.

GHARIB: Shares of both Moody`s Investor Services and McGraw-Hill, parent of Standard & Poor`s, jumped today after the companies announced a settlement late on Friday of lawsuits charging that they had misled investors about the safety of risky debt vehicles. Moody`s led the S&P 500 today, closing more than 8 percent higher, while McGraw-Hill gained almost 3 percent.

Express (NYSE:EXPR) Scripts, the pharmacy benefit manager, reported profits and revenues above expectations and lifted profit guidance for the rest of the year. The stock was up roughly 1 percent of the regular session and then moved higher in after hours trading.

MATHISEN: Live by the wing, die by the wing. Or maybe it`s a wing a prayer. Buffalo Wild Wings (NASDAQ:BWLD) posted profits of 87 cents a share. That was below what Wall Street had looked for. But the company did say full year profits will be higher as costs for chicken wings trend downward.

Sales for the current quarter are up more than 5 percent. Shares, though, of the company were down ahead of the report and then moved a little bit higher after the close.

GHARIB: Also after the market close. Herbalife (NYSE:HLF) reported profits above expectations with revenues in line with its estimates, but it

reduced guidance for the current quarter. The direct marketing nutrition company said that defending its business model from attacks cost it 7 cents a share in profits. Herbalife (NYSE:HLF) was publicly slammed by activist investors earlier this year.

The shares gained more than 1 percent before the close, and then the shares oscillated up and down as investors analyzed the report.

And coming up a little later in the program, a big drug company is accused of using dinners, fishing trips and outings to hooters to influence doctors. We have details coming up.

But, first, a look at how the international market finished today.


MATHISEN: Shares of some big hospital operators got a lifeline today. Take a look at the gains in some of the biggest players in the sector in today`s session.

Tenet Healthcare (NYSE:THC) shares up 6.5 percent. LifePoint Hospitals (NASDAQ:LPNT) and HCA Holdings, both up more than 5 percent. Community Health Systems (NYSE:CYH) up 3.5 percent and Universal (NYSE:UVV) Health Services up 1 percent. That`s after analysts upgraded several hospital operators after the federal government`s projection that in-

patient payment rates looked slightly better than expected for the upcoming fiscal year.

GHARIB: Two pharmaceutical giants are teaming up to take on Type 2 diabetes. Pfizer (NYSE:PFE) and Merck (NYSE:MRK) have joined forces to develop and sell a new experimental drug from Pfizer (NYSE:PFE). That`s expected to move into late stage testing sometime this year. They`ll also study combining that new pill with Merck`s top selling diabetes drug. The two companies will split revenues from the new product.

Pfizer (NYSE:PFE) shares rose more than 1 percent today while Merck (NYSE:MRK) ended a fraction lower.

MATHISEN: Another big pharmaceutical company has apparently teamed up with a very different partner. The Justice Department filed a civil fraud lawsuit against the Swiss drug maker Novartis, accusing it of paying kickbacks and lavishly spending on doctors, including taking some out to hooters in exchange for prescribing its drugs.

Andrea Day joins us now with more on the latest lawsuit.

Andrea, what was this company thinking?

ANDREA DAY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Well, Tyler and Susie, it`s actually been a very tough road for them. Just last week, the

government accused Novartis of giving kickbacks to pharmacies for switching kidney patients over to its drugs. And now, comes this --


DAY (voice-over): We`ve all heard stories like this before: doctors handing out pills and getting major kickbacks from the drug companies. But in this case, Novartis was accused of wining and dining doctors in places like hooters. It is legit for companies to pay doctors to do educational speeches.

But the Justice Department is accusing Novartis of hosting doctors in settings like fishing trips off the coast of Florida, and fancy dinners at sushi hot spots Nobu.

According to a lawsuit filed by the U.S. attorney`s office, it was all to increase sales of the company`s drugs. This is the second wave of charges against Novartis in just one week. Authorities now are saying that for a decade, the Swiss drugmaker paid millions to doctors in exchange for steering patients towards its drugs.

According to prosecutors, not much education was going on.

Here`s what the U.S. attorney has to say about the whole thing: "Novartis corrupted the prescription drug dispensing process with

multimillion dollar incentive programs that targeted doctors who, in exchange for illegal kickbacks, steered patients towards its drugs."

Novartis in its statement disagrees with the way the government has characterized their conduct in both cases and stands behind their compliance programs.


DAY: All right. We should note the discount and rebates by pharmaceutical companies are customary. The question tonight is, what would stop companies from doing this. Well, if being find is the only punishment, not much, because we all know that marketing budgets are very large and these kind of things can make or break moments for drugmakers who are really banking on the success out there.

And, guys, right now we`re just talking about civil charges.

GHARIB: All right. So, taking doctors out to dinner, that seems like pretty innocent and tame. What was wrong here?

DAY: Well, you know, it`s perfectly fine to take doctors out to dinner. But in this case, there are strict guidelines that must be followed. And in this case, the government is saying, look, those weren`t followed. They did things beyond that and you must stick within these


MATHISEN: All right. Andrea Day, thank you very much.

DAY: Sure. Thank you.

MATHISEN: And still ahead, six months after Sandy, will the New Jersey shore be ready for summer?

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


GHARIB: Three Japanese automakers each announcing recalls in the U.S. and Canada today.

Nissan involves the most -- 120,000 brand new Altimas are being recalled to check their spare tires for over or under inflation.

Honda needs to fix a faulty electronic stability control system on 46,000 late model Fit sport cars, saying that the car can tilt too far before it applies the brakes to prevent a crash.

And then, Subaru is calling back 10,000 2014 Forester wagons. The

problem here, the driver side floor mat could interfere with the gas or break pedal.

MATHISEN: It was six months ago today exactly that superstorm Sandy hit, devastating communities all along the Eastern Seaboard. But no place felt the impact of the storm like the Jersey Shore. And even today, residents are struggling to rebuild their homes and businesses and they`re racing now to be open in time for summer, just a few weeks away.

Mary Thompson takes a look now at New Jersey`s $22 billion tourism industry as it pushes to recover from Sandy half a year later.


MARY THOMPSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): From the deck of one of his Seaside Park rentals, Eric Birchler sees Sandy`s lasting impact on the Jersey shore.

ERIC BIRCHLER, BIRCHLR REALTORS OWNERS: Every week you look south, it looks different. There`s another board walk amusement that`s gone.

THOMPSON: The pace of rebuilding the damage varies from town to town, and for rental agents like Birchler, the patchwork recovery hurts business.

BIRCHLER: The demand is down and we`re doing our best to advertise a

little more and try to, you know, spur the demand and get the word out that there`s towns like Seaside Park that are really nice.

THOMPSON: But drive two miles north to Ortley Beach and houses lie in ruins. Only 10 of Birchler`s 100 rentals in the are ready and available for summer.

(on camera): Sandy damaged over 18,000 rental units in the Garden State, thousands of those along the shore. If the rental units, hotels and businesses aren`t set for the summer, that`s the $22 billion the shore contributes to New Jersey`s $38 billion tourism industry at risk.

(voice-over): Uncertain of the state of the shore, vacationers are looking elsewhere. The Web site weneedavacation.com says Cape Cod rentals by New Jersey residents up 6 percent from last year. Inquiries are leading indicator of rentals and reservations at a seven-year high on Martha`s Vineyard. And up in Dewey Beach, Delaware, and Lake George.

So, for die hard shore fans, Seaside Heights` director of community improvement Michael Loundy promises his town will be open for business.

MICHAEL LOUNDY, SEASIDE HEIGHTS DIRECTOR OF COMMUNITY IMPROVEMENT: We`re going to be ready. We`ve really done two years worth of work in about six months.

THOMPSON: Six months of progress after Sandy, but a full recovery still months or maybe years away.

In Seaside Heights, New Jersey, I`m Mary Thompson.


GHARIB: And finally tonight, billionaire Richard Branson`s Virgin Galactic craft designed to carry tourists to the final frontier made its first rocket powered flight today, moving one step closer to commercial flights into space.

Spaceship 2 rocketed a pair of test pilots over California`s Mojave Desert, sending them nine miles above the earth, faster than the speed of sound, and into the edge of space. Five hundred would-be space travelers who would pay $200,000 each are waiting for a ride.

More test flights are expected. And Branson is hoping for the initial flight next year.

MATHISEN: I`m a big fan of the Jersey shore, to go back to Mary`s story there. And I`m looking forward to going down there this year. It was such a capricious storm, because there were parts of Long Beach Island, which is the area that I go to, that were really badly hit and other parts just blocks away up that got through it mostly unscathed.

GHARIB: Looking at some of those pictures, Tyler, it looks like the storm happened yesterday.

MATHISEN: It certainly does.

GHARIB: There`s a lot of people who are still homeless.

MATHISEN: There`s a lot of work still to do, but they`ll get it done.

GHARIB: Yes, they will.

MATHISEN: Looking forward to this summer.

All right. That`ll do it for tonight`s edition of NIGHTLY BUSINESS REPORT. I`m Tyler Mathisen. Thanks for watching.

GHARIB: And I`m Susie Gharib. Have a great evening, everyone. Tyler and I will see you right back here tomorrow.


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