<Show: NIGHTLY BUSINESS REPORT> <Date: May 7, 2013> <Time: 18:30:00> <Tran: 050701cb.

118> <Type: SHOW> <Head: NIGHTLY BUSINESS REPORT for May 7, 2013, PBS> <Sect: News; Domestic> <Byline: Susie Gharib, Tyler Mathisen, Louisa Bojesen, Courtney Reagan, Jon Fortt, Hampton Pearson, Jane Wells> <Guest: Art Hogan, Steve DelBianco, David Quam> <Spec: Business; Economy; Stock Markets; Wall Street; World Affairs; Microsoft (NASDAQ:MSFT); Windows 8; Computers; Technology; Congress; Internet; Retail Industry; Taxes> <Time: 18:30:00>

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


TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Global market rally, from Japan to Germany to the U.S. What`s powering stocks around the world and can it continue?

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Rebooting Windows 8. Microsoft (NASDAQ:MSFT) does what no company wants to do, admit it needs to fix the latest version of one of its key products.

MATHISEN: And are the days of tax-free shopping, sales tax-free, on the Internet numbered? We`ve got both sides of the debate that`s dividing the retail industry, Congress, and could change the way you shop.

All that and more tonight on NIGHTLY BUSINESS REPORT for Tuesday, May 7th.

And good evening, everyone.

Susie, another historic close on Wall Street today. Stocks sprinted from the open and really never looked back, like one of those horses in the derby Saturday.

GHARIB: Exactly. What a day it was and it was historic, Tyler, on Wall Street.

The Dow closed above 15,000 for the first time ever and the S&P 500 also set a new closing high. So, these milestones are another chapter in a remarkable year for the major stock averages.

Powering stocks higher today -- a batch of better than expected earnings reports, more stimulus from central banks, this time from Australia, and renewed confidence by investors that the U.S. economy is going to be OK.

The U.S. rally came in reaction to strong stock performance in world markets this morning and we`ll have more on that in just a moment.

But, right now, here`s a look at the closing digits on Wall Street.

The Dow rose 87 points, closing at a record 15,056. The NASDAQ added three. The S&P gained eight points to 1,625, its highest close ever.

MATHISEN: And as Susie just mentioned, the historic highs reached in U.S. equities had helped jump-start a global rebound in stocks with bourses from Asia to Europe and beyond making record-setting gains.

Our Louisa Bojesen has more now from London.



It`s pretty amazing what`s going on on global equity markets at the moment. We`re seeing a lot of buying into U.S. stocks, as you know. We are also seeing a lot of buying into Asian stocks.

So, you are looking here at Asian stock markets are very, very green. Especially today, we saw new five-year highs being hit in Japan, on the Nikkei, their main index there. This despite the fact that we`re seeing soft economic data reports.

The Japanese market players also coming back from a four-day weekend. So you have to bring that into account, as well.

Now, looking at the European market, very interesting because when you look at core Europe, we`re still seeing softness again in the economic data. So we are still contracting in that front and some saying we might even have to revisit the recession-type scenario. But nevertheless, Europe`s core economy hitting new all-time highs and levels that we haven`t seen since before the financial crisis started unraveling in 2007.

For NIGHTLY BUSINESS REPORT, I`m Louisa Bojesen in London.


GHARIB: Well, those international markets have been surging in 2013. Japan`s stock market has done the best with the Nikkei index skyrocketing 37 percent year-to-date. The major European markets, in Britain, France and Germany also up sharply.

The one exception, China. Its key index down 1.5 percent this year.

Now, by comparison, the Dow has catapulted almost 15 percent.

For more on the outlook for the U.S. and stocks around the world, Art Hogan joins us now. He`s market strategist at Lazard (NYSE:LAZ) Capital Markets.

You know, Art, it`s a nice round number, 15,000. But tell us what does this really tell us about what`s going on in the markets, this milestone?

ART HOGAN, LAZARD CAPITAL MARKETS MARKET STRATEGIST: Well, Susie, I think it`s a very good question. And it`s interesting. We really pay attention when we knock down these numbers, and when we pass, you know, 1,000-mark, the 15,000-mark, it wakes a lot of people to say, hey, this market continues to do well and there`s several reasons why.

I think we touched on a couple of those. The U.S. economy is not going into a doubledip recession. I think the second earnings have been better than expected in the first quarter earnings reporting season, albeit with lighter revenues than we`d like to see.

But the third thing I think is the most important is, we`ve got a real global, synchronized Central Bank intervention in this economy. We`ve got central bank intervention in this economy. We`ve got central banks around the world pumping liquidity into this marketplace and hoping to stimulate the economy.

And I think that`s helping stocks probably more than anything else.

MATHISEN: You know, Art, we looked at those numbers from Europe and they would indicate that the sort of optimism is at least flickering over there. Is Europe out of the woods?

HOGAN: It`s not out of the woods, but the ECB is finally coming to the rescue. So to the extent that the ECB is probably the last of the central banks to really start doing things, very much like the rest of the global central banks.

And Mario Draghi has been forthwith with commentary, even as early as yesterday, talking about having to be more creative. You know, these would be just cut rates earlier last week and they`ll continue to look at things they can do.

So, they may not be out of the woods, but they`re certainly in a lot better shape they were even than this time last year.

GHARIB: You know, speaking more from the portfolio management aspect, I mean, it`s very hard to find value in these rising markets. And so, you look to Europe, I`m sure there`s lots of value there. But there`s a lot of risk. Everybody is waiting for that other shoe to drop.

So, what are you doing in your climate portfolios, vis-a-vis, Europe versus the U.S. stock market?

HOGAN: Yes. It`s a great question. And it`s interesting, Susie.

You and I have talked for years. And for a lot of those years, we talked about having exposure to Europe, having a portion of your portfolio -- at least having, you know, some exposure to Europe. What we really have done for the last 18 months is having clients look at less European exposure.

And if you look at the earnings reporting season, that certainly played out.

What we`ve seen is those companies, some of those household name that have missed. Europe has been the reason. We don`t think it`s a strong enough economy to make that a core of your investments, and if you want international exposure. We would certainly prefer Asia or Latin America, one of the countries that we point to, Mexico is, you know, doing some very, very good things.

So, I think on the mend, but not yet a core part of our investment portfolios.

MATHISEN: My next question was, of all of the regions in the world where would you be adding money incrementally now assuming that you got what you wanted in terms of portfolio allocation in Europe and in the United States. You just told me.

Make the case for Mexico specifically.

HOGAN: Well, a couple of things. The government did a lot to right this ship here. They`ve got a very strong, robust, banking system. They`ve got a lot of de-levered balance sheets.

And one of the things that they`re doing right, and it`s interesting when we talk about immigration, one of the things you`re to find is, one of the immigration problems that`s fixing itself is the Mexican economy. You`re seeing actually more people want to go back to Mexico because the jobs are plenty, there`s growth, and it`s not totally dependent on either agriculture or commodities.

So, I think it`s -- you know, in terms of developing markets, emerging markets, Mexico is probably one of our favorites right now for 2013.

GHARIB: Lots of interesting information. Thank you so much, Art.

HOGAN: Thank you.

GHARIB: Art Hogan, market strategist at Lazard (NYSE:LAZ) Capital Markets.


MATHISEN: Well, one of the blue chip companies that have helped power the U.S. markets to record highs has been Disney (NYSE:DIS). Shares close at another all time high today. That following a year`s worth of very steady gains at the house of the mouse.

Courtney Reagan joins us with news that should make Disney (NYSE:DIS) investors even happier.

Courtney, some earnings numbers.

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT: That`s right, Tyler. It`s not just the happiest place on earth for kids. But Disney (NYSE:DIS) is also making investors very happy.

The world`s largest entertainment company reported its fiscal second- quarter earnings after the bell today, beating Wall Street`s expectations on both the top and the bottom lines. For the second quarter, Disney (NYSE:DIS) reports earnings of 79 cents per share, 2 cents above Wall Street`s expectations on revenue of $10.55 billion, better than Wall Street analyst forecast of $10.49 billion.


BOB IGER, WALT DISNEY CO., CEO: Our parks and resorts had a great quarter that was helped a lot by some of our new investments, notably in Disneyland and in Florida. But also, our new cruise ships and our investments in Hong Kong. Our cable networks led by ESPN also had an exceptional quarter. And we had improvement in our studio, and the consumer product. So, all in all, a great quarter for the company.


COURTNEY: Disney (NYSE:DIS), of course, also reveling in its early success for "Iron Man 3." It`s making already more than $700 million at the box office worldwide. I haven`t seen it yet though.

GHARIB: We`ll get market reaction tomorrow when investors can react to those great numbers.

Thanks a lot, Courtney.

And a little later in the show, we`ll look at the big business of theme parks and why the stocks from Disney (NYSE:DIS) to Six Flags are riding high.

MATHISEN: Well, a run of earnings reports on that record day and that begins our "Market Focus" tonight.

Let`s begin with Mondelez, maybe you say Mandalays (ph). Mondelez we`ll go with it -reporting sales and profits in line with expectations and a slight boost to its 2013 profit outlook. Mondelez sells Oreos, Cadburys, Halls candy, among other products. Wheat Thins, you know `em.

Shares of Mondelez up most of the day, closing nearly a percent higher at $41.31. They`re adding a bit more in the after-hours earnings report.

JCPenney surprised the market by reporting some numbers after the close a week ahead of schedule. The company expects its fiscal fourth quarter comp sales to drop 16 percent with revenues lower than previously thought. Shares down 3 percent, to close at $16.40 and a gain a little bit after hours.

GHARIB: Also, after the market closed, Whole Foods reported above estimates. The company also raised its profit outlook for the year, reiterated its sales growth target of as much as 11 percent, and approved a two-for-one stock split. So it`s no wonder that investors bought up the shares soaring as much as 10 percent in after hours. They were up a percent in the regular session, closing at $92.80.

Electronic Arts` quarterly profits were shy of estimates, but revenues were in line. Investors liked hearing that pre-orders are high for the popular video game "Battlefield 4", and the company`s forecast for full- year earnings will come in above analyst estimates. As for the stock, up fractionally high tore close at $18.41 before jumping higher in after hours.

MATHISEN: Direct TV said its first quarter results fell because of a currency devaluation charge, but core profits in revenue improved, pushing results above expectations. Direct TV`s key Latin American business added more than a half million subscribers, and that was above estimates. Shares hit a new all time high before closing at $61.95, up almost 7 percent on the day.

And shares of Fossil (NASDAQ:FOSL) popped on a 24 percent gain in profits, and the company raised its full year guidance. Fossil (NASDAQ:FOSL) sells jewelry, handbags, clothing, in its own branded stores, as well as in chains like Nordstrom (NYSE:JWN) and Neiman-Marcus (NYSE:MCS). Shares gained 9 percent on the day to $107.88.

GHARIB: Microsoft (NASDAQ:MSFT) is calling for do-over. That`s after its all new Windows 8 operating system failed to wow P.C. users and sales have been disappointing.

So, the software giant is retooling Windows 8, promising some big changes by the end of this year.

Jon Fortt loins us live from Silicon Valley.

So, Jon, will a revamped operating system make a difference? Will it revive the slumping the sales of personal computers?

Well, Susie, history suggests updates to the operating system don`t have a huge impact on P.C. sales. Last time a new version of Windows really boost (ph) P.C. sales was a couple of decades ago. And the changes coming with this update, code name Windows Blue, they might not be earth- shattering.

But here`s what to expect. It will work on smaller tablet screens, smaller than eight inches. Microsoft (NASDAQ:MSFT) executives also say they have been listening to user feedback so the old desktop and start button may be coming back as prominent options if I can read into that.


RICK SHERLUND, NOMURA SECURITIES ANALYST: I think that the P.C. users would like to just get right to the Windows experience and not have the tablet user interface kind of get in the way. So, they haven`t announced yet exactly what they`re going to do on the usability side. But I would think maybe giving you the ability to go directly into the desktop mode and not having to be distracted with the tablet stuff if that`s not what you want to take advantage of right now.


FORTT: He thinks so, too.

This runs a bit counter to the approach that Microsoft (NASDAQ:MSFT) CEO Steve Ballmer described to me in the fall just before the Windows 8 launch.


STEVE BALLMER, MICROSOFT CEO: So really with one experience for the user, you can span a device that looks like a desktop. You can work on a device that looks like a traditional laptop. You can work on a device that looks like a laptop or the keyboard detaches, or you can work on a device that never came with the keyboard at all and just looks like a tablet.


FORTT: It sounds like some users actually do want slightly different approaches, one more like a traditional P.C., another maybe more like a tablet. We`ll see if the updates make P.C. users and P.C. buyers in general warm to Windows 8. If so, it might at least slow the P.C.`s decline.

GHARIB: Jon, thanks so much, reporting from Silicon Valley.

You know, when Steve Ballmer introduced this product back in October, you remember he said this is a bet the company moment and now to have to rethink it --

MATHISEN: They have to retreat.

GHARIB: Yes, this is a big thing.

MATHISEN: The company that has had a hard time staying out of its own way in many ways.

When we come back, if online sales are taxed, would it change the way you shop? We have both sides of this very hot debate that`s dividing Congress and it could affect you and your money.

But, first, let`s take a look at some of the stocks and there are quite a few that hit all-time highs today.

Tax-free shopping on the Internet moved a step closer to becoming a thing of the past. The Senate easily passed a bill last night that requires out of state-retailers to collect sales tax on anything bought online. Now, the measure heads to the House, but as Hampton Pearson explains, passage there is not a sure thing.


HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): Last year, Internet sales topped $226 billion, up 16 percent from the previous year and states lost an estimated $23 billion because they couldn`t collect the taxes on out of state sales.

That`s according to a study done for the National Conference of State Legislatures.

UNIDENTIFIED MALE: The bill, as amended, is agreed to.

PEARSON: The Senate-passed bill gives states the power to require out-of-state retailers to collect taxes when they sell a product over the Internet, in catalogs, and through radio and TV ads.

Big retailers like Walmart, Best Buy (NYSE:BBY) and Target (NYSE:TGT), with stores all over the country already collect those Internet sales taxes.

But online retailers like Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY) don`t have to collect them in states where they don`t have offices or distribution centers. EBay opposes the bill, Amazon (NASDAQ:AMZN) is on the side of states and their retail allies.

DAVID FRENCH, NATIONAL RETAIL FEDERATION: Retail is retail, a sale is a sale and fair is fair.

PEARSON: Businesses with less than $1 million in growth sales would be exempt. That tax revenue would be sent to the state where the shopper lives. States must provide free computer software to help retailers calculate those sales taxes and states must establish a single entity to receive the revenue to lessen the burden on retailers.

Opponents are not convinced.

STEVE DELBIANCO, CHOICE EXECUTIVE DIRECTOR: This isn`t about simplification anymore. It`s about the big box retailers placing their competitors, smaller competitors, at an advantage.

PEARSON (on camera): Getting the bill through the House will be an uphill battle. House Republicans are wary of anything that looks like a new tax. Critics also predict a tax collection nightmare for small businesses.

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


MATHISEN: And back again to share their opposing views on the topic, David Quam, director of federal relations for the National Governors Association. And Steve DelBianco, whom you just saw in the piece. He`s executive director of Net Choice Coalition, an advocacy group that protects online commerce.

Gentlemen, welcome back. We had you on a couple of weeks ago. You behaved so nicely. We thought we`d invite you back this time.

David, let me begin with you.

And I want to begin by -- we solicited some comments on our Web site and I want to read one of the comments from Taylor Shomaker.

"As an online retailer, I`m extremely concerned about the amount of paperwork this new law may create for business, doing a sales tax return for one state is already a significant amount of work. Multiply that by 50 and it could mark the end of my business` expansion."

Your group favors this, David. Answer that viewer.

DAVID QUAM, DIRECTOR OF FEDERAL RELATIONS: You know, every governor wants to protect its retailers, wants to protect small businesses and this bill does that. Number one, you`ve got the small business exemption, so you have to be doing $1 million of online business before it even applies.

Number, there`s simplifications in here, including the fact that the states are going to pay for and offer software under this bill to make it much easier to do that. No governor wants to impose a big burden. But we need to level the playing field, and make it fair for everybody in that retail space.

GHARIB: Steve, let me turn to you about leveling the playing field. The last time that you were on, you were strongly opposed to this measure. How are you feeling about it today, especially now that the Senate has passed the measure?

DELBIANCO: Yes, thank goodness it`s over to the House. The Senate rammed this through without a hearing, without a markup, and only one amendment by the manager himself. But in the House, the judiciary committee is going to take a hard look at this.

And they`re already telling us they`re going to be sure that they don`t try to impose brand new audit risks, brand new burdens on all of America`s businesses to collect tax, not just for 46 states, but the amendment that was passed last night added 550 Indian reservations who can demand tax payments and audits from every American business as well.

GHARIB: So, are you predicting that this is dead on arrival in the House?

DELBIANCO: Never predict anything is dead on arrival. But they will have to pass scrutiny. They`ll have to run the gauntlet of a Judiciary Committee that held a hearing last week asking very tough questions.

David earlier talked about free software while the legislation he favors requires each state to offer up a single piece of free software for just that state. But America`s businesses will have to pay their own dollars to integrate that software into their ordering fulfillment and accounting systems.


MATHISEN: Let me -- let me pick up with David on that because that was one of the questions that I was going to go to. Even if the states do supply the software that ostensibly will make it easier for companies to comply, many states have different taxes that apply to different items. Food is exempted in some states, clothing in others like in New Jersey, that`s one thing.

But the other thing is who is going to be on the line when the software that the states supply me doesn`t work? Who`s going to help me with that, David?

QUAM: You know, this certified service providers out there now who have been working with 24 states, who have been working on this for 10 years. This is not a new concept. It`s actually a proven concept.

And so, this is not pie in the sky. This is actually something that can be done today. I`ve seen demonstrations of actually free software that works with every single major platform out there that people are using to do e-commerce.

I like Steve to read the billboard carefully. I`m actually very confident that both the House Judiciary Committee and the House itself, when they look at commerce, are going to want to move forward because inaction causes problems in the marketplace. Action actually creates --

MATHISEN: So educate me, if you wouldn`t mind, David, on that question of what happens in those states like California where different municipalities have different taxing rates and in states like Virginia where certain food items are excluded from sales tax, or in New Jersey where most clothing is executed and how does that accounted for?

QAUM: States have the obligation to make sure they are providing good databases to those software companies and to the public. That software -- this is the basic database problem. This is not complicated software, any major piece of software out there is probably more complicated than what you`re going to need to actually get this job done.

So, the idea that this doesn`t exist is just not true.

GHARIB: Let me ask you this, as you know, and we said in the package, that eBay (NASDAQ:EBAY) is trying to raise the small businesses that are exempt from just $1 million in sales to maybe hike it up to $10 million. Would that make you feel any better about this measure knowing that small business would be better protected?

DELBIANCO: No, Susie. Think about it, $1 million of gross retail is really just a one or two-person company. I was in Capitol Hill today visiting offices with catalog companies, catalog companies doing $20 million and $30 million a year in sales with a couple hundred employees. They were the ones who were squeezed in this trap between, say, Walmart, Target (NYSE:TGT) and Amazon (NASDAQ:AMZN) trying to squeeze down on their competitors who will never be able to afford integrating these systems.

David said it`s been proven. All that`s been proven is that it`s phenomenally expensive to take free software and glue it in to all places in my process, on my information systems and make it actually work and to answer to customer questions. How about that incredible audit risk? Forty-six states and 550 Indian tribes can all punch a button, generate a demand letter requiring you to be audited for taxes maybe that you should have collected and didn`t need you needed to.

MATHISEN: All right. David, we have to leave it there. And, Steve, we appreciate you being with us. I have a feeling we`re going to have both of you back in the future as this legislation moves along.

QUAM: Happy to come back.

MATHISEN: Thank you very much, gentlemen.

QUAM: Thank you.

GHARIB: Still ahead on the program, why shares of theme parks may be sending investors on the ultimate thrill ride.

But, first, let`s take a look at how commodities, treasuries and currencies fared today.


MATHISEN: My days of riding roller coasters are over, mercifully, but for a lot of families and thrill-seekers, some remains heading to an amusement park. But a lot of investors are getting their thrills right now, seeing shares of one of the big of the amusement park owners and operators reach new heights.

Jane Wells is live at Universal (NYSE:UVV) City in Hollywood with more.

Hi, Jane.


We`re heading into memorial. It`s the time of year when theme park revenue start to get as exciting as a white knuckler. It turns out they`ve already been pretty thrilling even if it seems that the rest of the economy isn`t.


WELLS (voice-over): The economy has been on a roller coaster, but for theme parks, lately the coaster has just been going up.

Take the Mathia (ph) and Parekh families. They haven`t been to an amusement park in three years.

But this week, they came to Universal (NYSE:UVV) Studios Hollywood owned by Comcast (NASDAQ:CMCSA) (NYSE:CCS).

DHAVAL PAREKH, TOURIST: We are a family that saves our money and we don`t throw it away on big cars and stuff like that, you know? We invest, you know, and then we can enjoy.

WELLS: A lot of Americans are having a whale of a good time. Across country, theme parks are seeing consumers willing to spend hundreds of dollars for a day of fun.

Comcast (NASDAQ:CMCSA) (NYSE:CCS) surprised Wall Street with a 12 percent jump in theme park revenues last quarter. Its shares hit an all- time high Tuesday. Disney (NYSE:DIS) shares hit theirs the day before, and analysts say these two companies have a supply of movies they can turn into attractions.

Disney`s planning a new Avatar (NASDAQ:AVTR) Land for Disneyworld which analyst Matthew Harrigan predicts it will pay off just like Cars Land helped attendance in Disneyland in California.

MATTHEW HARRIGAN, ANALYST: Going to Orlando and doing a facelift in the Magic Kingdom which they haven`t done much with literally in the last four decades.

WELLS: But it`s not just a big conglomerate. Six Flags has emerged from bankruptcy and reported a 32 percent jump in revenue last quarter. Its shares hit an all-time high two weeks ago and so did those the rival Cedar Fair (NYSE:FUN).

What`s amazing is that the companies have shown so much improvement in many what analysts consider a so-so consumer environment. Yet as one park visitor told me, you can`t stop enjoying life.

WELLS (on camera): Do you feel more confident going out?


WELLS: How come? Because the economy is good and I`m having a good job back home. So, yes, we`re good.


WELLS: And this afternoon, CEO Bob Iger of Disney (NYSE:DIS) pointed out that their park revenues really beat expectations and he says, you know, the consumer is improving.

And, Susie, it`s not just the American consumer. We just saw a huge group of Chinese consumers here at Universal (NYSE:UVV) Studios Hollywood. So, maybe everybody is feeling a little better.

Back to you.

GHARIB: Everybody wants to have a good time, Jane. Thank you so much. Jane Wells, reporting from Universal (NYSE:UVV) Studios.

And, finally tonight, if you were wondering where are the world`s millionaires live, we have the answer, thanks to a company that compiles data on high net worth individuals called Wealth Insight.

So, the number one city for millionaires, Tokyo, with nearly half a million of them. Next up, New York City with 389,000, the only American city in the top ten. And rounding out the top five, London, Paris and Frankfurt. And China has three cities on the list. But the number of billionaires most of them, Big Apple (NASDAQ:AAPL).

MATHISEN: I don`t have to worry about ever being on.

GHARIB: That`s NIGHTLY BUSINESS REPORT for tonight. Thanks for watching.

MATHISEN: We`ll see you tomorrow.


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.

<Copy: Content and programming copyright 2013 CNBC, Inc. Copyright 2013 CQ- Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.>