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<Show: NIGHTLY BUSINESS REPORT> <Date: June 4, 2013> <Time: 18:30:00> <Tran: 060401cb.

118> <Type: SHOW> <Head: NIGHTLY BUSINESS REPORT for June 4, 2013, PBS> <Sect: News; International> <Byline: Susie Gharib, Tyler Mathisen, Bob Pisani, Kayla Tausche, Diana Olick, Julia Boorstin, Michelle Caruso-Cabrera> <Guest: Sam Stovall, Mark Orwoll> <Spec: Business; Economy; Stock Markets; Trade; Banking; Bank of America (NYSE:BAC); Policies; Elderly; Financial Services; Housing> <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: Streak snapped. The Dow`s record Tuesday run is over. And volatility is back. But this Friday

could be the day to watch.

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Haunted by the past. What`s at stake for Bank of America (NYSE:BAC) shareholders as the firm heads to court and tries to chip away at past mistakes.

GHARIB: And reverse mortgages. Why these loans are hurting some American seniors, the very group they were designed to help.

We have all that and more tonight on NIGHTLY BUSINESS REPORT for Tuesday, June 4th.

MATHISEN: Good evening, everyone.

Tuesdays may never be the same on Wall Street after a record 20 Tuesdays in a row of gains for the Dow Jones Industrial Average, those blue chip stocks fell today as concern grows about the Federal Reserve`s plans to trim the size of its asset-buying stimulus program.

The markets moved up and down and up again. But not enough to keep that streak alive. There were losses across the board. And here they are: the Dow down 76 points, the NASDAQ lower by 20, and the S&P 500 was off by nine.

Bob Pisani tracked all the action today from the New York Stock



BOB PISANI, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Another day, another 204 point swing in the Dow. Stocks were flat through the morning but weakened midday, with the Dow down 154 points before regaining half of its losses in the last hour.

Though the Dow was down fractionally, they were larger losses elsewhere, with former market leaders like home builders, biotech, and emerging markets down again. Interest rate sensitive sectors like real estate investment trusts or REITs also had no bounce.

In the middle of the day, the head of the Kansas City Fed, Esther George, was the latest to weigh in on whether the Fed should continue to buy bonds. She said that the U.S. economy has continued to heal and that she supported slowing the pace of asset purchases as an appropriate next step for monetary policy.

(on camera): It has been two weeks since the Federal Reserve minutes came out, revealing a lively debate on when to taper its purchases of bonds. Since then, stocks and bonds have been much more volatile. The S&P hit a historic high that morning that was May 22nd and since then, it`s off about 3 percent.

Now, it`s too early to say if this is a long-term inflection point in the market, or just some kind of blip, but short-term, it has certainly accomplished the Fed`s goal of getting everyone used to the idea that the end is indeed somewhere down the road on bond purchases.

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


GHARIB: Our market guest tonight says the stock market is, quote, "vulnerable" and he expects it to reset as much as 10 percent. He`s Sam Stovall, chief equity strategist at S&P Capital IQ.

Sam, let me ask you this. First of all, what happened today and do you notice some kind of change in investor sentiment?

SAM STOVALL, S&P CAPITAL IQ CHIEF EQUITY STRATEGIST: I think what we are doing is really going through a digestion phase. The S&P is moving back down to about the 1,595 to 1,600 level, because let`s face it, we just entered into a new all-time high period. And so, I think what investors are doing are just taking some short-term profits.

MATHISEN: So, what should they do with their money if they haven`t

made a move? Is it best to just hang in there? Or is it best to trim some areas where you have made some profits?

STOVALL: I think it`s best to just hang in there, mainly because who knows how deeply we`re going to decline, with so many investors claiming that they wise they had more of their portfolio exposed to equities, maybe we end up having an even shallower decline that I expect. Plus, even if we have a decline of 5 percent to 10 percent, it usually takes about two months on average to get back to break even. So, you`ll probably miss it.

GHARIB: What`s going to happen on Friday? We have that important jobs report coming out. If it`s a robust number showing that American business has hired a lot of people, could all of these worries about the stock market go away? Or if it`s a weak number, what is going to be the market reaction? What is your prediction, Sam?

STOVALL: Very interesting dilemma that we have to face on Friday. Right now, Wall Street is looking for 165,000 new jobs. Our estimate is in that area as well, I think that if we end up with slightly less than that, then Wall Street may breathe a sigh of relief that we will not have an acceleration of the tapering of the Fed`s bond-buying program, therefore the cause for this most recent decline could end up being pushed out a little bit further.

If we end up with a substantial stronger employment number than again,

we might have a bit of a concern, because then it increases the likelihood that the Fed will take their foot off the gas.

MATHISEN: Sam, let me turn your attention to the 20 Tuesday win streak that was snapped today and get you to talk about market anomalies. We tend to make a lot of patterns, like 20 straight Tuesday with gains in the S&P 500, but that may be terribly naive, and maybe sort of journalist looking for something to talk about. But when do those patterns make sense and when are they just random noise?

I mean, we hear about "sell in May and go away", for example.

STOVALL: Well, that`s a good question. When I think about the -- the number of Tuesdays in which the market has advanced, I sort of equate them to interesting cloud patterns that might hang around for a little while but then end up dissipating over time, I would tend to say however that old adages like "sell in May and go away" are seasonal in nature, they do have some reason behind them.

And if you look over the longer term, they do have repeat abilities. Sell in May and go away. The market is up an average of 7 percent from November through April, but only 1.2 percent from May through October.

GHARIB: So, Sam, is there a way that investors should use this information? Can you use it to your advantage if you study all of these

Wall Street sayings?

STOVALL: There are two ways that I think you could benefit from this. First off, if history says that volatility is approaching, then pretend you are listening to a pilot who says, fasten your safety belt. They`re not saying don your parachute and assemble by the door -- so just -- so you don`t become your portfolio`s worst enemy.

However, with "sell in May and go where?" -- I recommend that investors gravitate toward the more defensive areas of health care and consumer staples since 1990 by embracing the semiannual approach. They would have added close up to 400 basis points, or 4 percent points per year to your portfolio`s return while reducing volatility.

GHARIB: Sam, this is why we love you, you have all this trivial information that pays off for you big time, perhaps.

Thank you so much, Sam. Sam Stovall, chief equity strategist at S&P Capital IQ.

MATHISEN: Well, five years after the financial crisis that led to the market bottom, battles continue over what went wrong and which banks are to blame for selling risky securities that went bad. Bank of America (NYSE:BAC) is one of the banks. And even though it settled claims with burned investors back in 2011, it is now back in court.

Kayla Tausche looks at what this means for B of A and its shareholders.


KAYLA TAUSCHE, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): Bank of America (NYSE:BAC) is the latest in a line of fire. This week, investors led by Bank of New York Mellon (NYSE:BK) will try to convince a judge that a 2011 settlement totaling $8.5 billion to cover lawsuits from bad mortgage-backed securities is fair, and should be binding for all investors.

The problem: after the deal was inked two years ago, some 65 investors have come out of the woodwork to challenge it, claiming it`s far from enough. One of the challengers, AIG, has said it alone deserves an additional $10.5 billion for losses it sustained.

In New York state Supreme Court Tuesday, lawyers argued over how to calculate the settlement and whether BNY did it fairly.

Such issues are hardly new for the Charlotte-based bank. For CEO Brian Moynihan, cleaning up these fast mistakes has been top of mine for years. Here`s Moynihan in early 2012.

BRIAN MOYNIHAN, BANK OF AMERICA CEO: There`s no way that if you know what we knew now, that you would have taken that much housing risks when it was taken. The question is, what did people know? We spent $2 billion a quarter just to operationally work on these loans. And so, that`s upside from here.

TAUSCHE: In all, Bank of America (NYSE:BAC) has paid out nearly $50 billion in settlements, while the payouts mean the bank`s bottom line could suffer in the near term, a clean slate is worth real money, paying $1.6 is billion to resolve a thorny lawsuit with bond insurer MBIA (NYSE:MBI) at a nearly $7 billion in market cap for Bank of America (NYSE:BAC) in one day. Cleaning up this current lawsuit seen as the last big one on the horizon could do the same.

MATT O`CONNOR, DEUTSCHE BANK U.S. BANKS EQUITY RESEARCH: Looking past the legacy issues of Bank of America (NYSE:BAC), the earning power of this company should be in the $1.50 range, and, of course, if the macro environment, whether it`s interest rates, loan growth, or capital markets, if those accelerate up, there could be up side to the $1.50.

TAUSCHE: For shareholders and Dow component Bank of America (NYSE:BAC), relief won`t come overnight. This hearing will take two weeks at least, a ruling several months.



GHARIB: Another bank in trouble, HSBC. New York`s attorney general is suing the giant British bank, saying it ignored a state law designed to keep struggling homeowners from falling into foreclosure without allowing them a chance to renegotiate their mortgage. No comment from HSBC.

MATHISEN: Meantime, there was good news about home prices in April. More of it. Core Logic reports that prices of homes sold that month rose more than 12 percent from the same month in 2012. The largest one month increase in prices since the go-go real estate days of 2006.

GHARIB: Now, many American seniors have relied on their homes and reverse mortgages to finance their retirement, but now, those loans are under criticism. Despite a steady stream of TV commercials making the pitch for them. Regulators are looking into the new rules to protect consumers.

Diana Olick has details.


DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): It used to be that a home was like a savings account, gaining value as you

slowly paid down the mortgage. You could sell it to fund your retirement or take out a reverse mortgage, which the pitch men make sound so easy.

UNIDENTIFIED MALE: Have the money to pay some bills or simply enjoy your retirement more.

OLICK: The product was introduced about 25 years ago for those at least 62 years old.

PETER BELL, CEO, NATIONAL REVERSE MORTGAGE LENDERS: The reverse mortgage provides patient money. It`s money that waited to get paid back until you permanently leave the home.

OLICK: There are no monthly payments other than taxes and insurance. Interest and fees are piled into the mortgage itself. Upon the homeowner`s death, the home is sold with the proceeds going to the lender.

ROBERT BENNETT, REVERSE MORTGAGE RECIPIENT: It sounds good that you could live here without -- would have to make anymore mortgage payments.

OLICK: Robert Bennett and his wife Ophelia took out a reverse mortgage at the end of 2008, to pay off their current mortgage and relieve them of monthly payments. Ophelia, who was 10 years older than Robert, died shortly thereafter. Hers was the only name on the mortgage.

BELL: In the case of some couples, they make a decision up front to remove one member of the couple from the title in order to get more money or in order to qualify for the mortgage.

OLICK: Bennett says the lender told him he could be added to the mortgage after his wife`s death, but that was not the case. In order to stay, he would have to pay $300,000 to the lender, but the home is now worth half that.

BENNETT: They put it foreclosure.

OLICK: But experts say retirees like the Bennetts never should have been in reverse mortgage in the first place.

DAVID CERTNER, LEGISLATIVE COUNSEL, AARP: This was originally was contemplated as something that you can draw money over a long period of time, as a way of supplementing your income or providing income t where you had no other. Now, I think people are looking to reverse mortgage as a quick fix.

OLICK (on camera): The trouble today is more seniors are entering retirement with less savings, less home equity and more debt, exactly the wrong combination for a reserve mortgage.

CERTNER: If the reverse mortgage is a quick fix, it may not be the

thing you are looking for.

OLICK (voice-over): Bennett is fighting the foreclosure but knows he could lose his home.

BENNETT: It`s like a foundation for the family.

OLICK: The reverse of what he was trying to do when he agreed to the mortgage.

For NIGHTLY BUSINESS REPORT, I`m Diana Olick in Annapolis, Maryland.


MATHISEN: Still ahead, do you like ordering room service at your hotel? One big New York City hotel is dropping it. Will others follow suit?

First, though, let`s take a look at how the international markets fared today.


GHARIB: We begin our "Market Focus" tonight with Monster beverage. It led the S&P 500 gainers tonight.

The energy drink company said that sales jumped 8 percent in April and May. (INAUDIBLE) analyst called that encouraging in light of recent negative publicity on energy drinks. Shares gained more than 10 percent to $59.60 and trading was three times normal volume.

Shares up tumbled almost 8 percent after announcing it will buy Exact Target (NYSE:TGT), a Cloud marketing firm. Salesforce says the combined firm will create a platform across email, social, mobile and the Web, but investors sold the stock on concerns that how the deal would impact profits.

But Exact Target (NYSE:TGT), look at this, zoomed up 52 percent to $33 and change, on almost 100 times normal volume.

MATHISEN: Dollar General (NYSE:DG) reported profits in line with investor expectations and revenues as well, but it trimmed its full year guidance, the discount retailer said that the payroll tax is still weighing on its customers. Investors sold off on that revised forecast, and sales dropped more than 9 percent to finish at $48.64.

And JCPenney gained on a JPMorgan (NYSE:JPM) analyst note saying July sales may compare favorably with last year`s turnover. He is expecting single digit in the mid-single digit range of sales growth for the third quarter overall and JCPenney gained more than a percent to close at $17.96.

GHARIB: What your children are watching in your living room has become the latest battle in the streaming TV service wars. And Amazon (NASDAQ:AMZN).com`s deal with one of the nation`s biggest content provider may be a game changer, for locking in those young viewers.

Julia Boorstin explains.


JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): For parents looking to entertain their kids, Amazon (NASDAQ:AMZN) Prime just became a lot more appealing. Getting a new advantage over Netflix (NASDAQ:NFLX) has kids programming becoming the new battleground for the future of television.

Amazon (NASDAQ:AMZN) and Viacom (NYSE:VIA) announced a multi-year video licensing agreement, giving subscriber`s to Amazon`s $80 a year prime plan unlimited streaming access to Nickelodeon kids shows, and exclusive access to many hits like "Dora the Explorer". Though Amazon (NASDAQ:AMZN) has out-bid Netflix (NASDAQ:NFLX) for the likes of "Downton Abbey" and CBS (NYSE:CBS) TV shows, this is its highest profile deal yet, as it spends big to take on Netflix (NASDAQ:NFLX) and drive viewers.

AARON KESSLER, RAYMOND JAMES SENIOR ANALYST: Amazon (NASDAQ:AMZN) is similar to Wal-Mart (NYSE:WMT). It really is a volume game. And so, the more volume Amazon (NASDAQ:AMZN) can pass through its system, the more profitability Amazon (NASDAQ:AMZN) should enjoy longer term.

BOORSTIN (on camera): This comes just a few weeks after Netflix`s contract with Viacom (NYSE:VIA) expired. Instead of renewing, Netflix (NASDAQ:NFLX) added for more Disney (NYSE:DIS) shows.

Last week, I asked Netflix (NASDAQ:NFLX) CEO Reed Hastings if failing to secure Viacom`s kids show would pose a problem.

REED HASTINGS, NETFLIX CEO: You know, we have shows that come in on the network, and come out on Netflix (NASDAQ:NFLX). And if you`re a parent and your child is looking for "Blue`s Clues", you know, that is definitely a problem. But there are so many, we`ve got a ton of great shows from Disney (NYSE:DIS).

BOORSTIN (voice-over): As Netflix (NASDAQ:NFLX) focuses on trading to differentiate its context from Amazon (NASDAQ:AMZN), we`ll see if either of the companies invest to create original kids` shows.

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


MATHISEN: From one game changer to another possible game changer. Starting in August, the New York Hilton, one of New York City`s biggest hotels will no longer offer room service. In its place will be a new self service eatery in the lobby with grab and go snacks.

So, will other hotels start to do the same?

Joining us now to ponder that is Mark Orwoll. He is the international editor at "Travel and Leisure" magazine.

Mark, nice to see you again.


MATHISEN: Don`t they run a risk here in the Hilton of New York City of really antagonizing travelers who come in, arrive late, and want a hamburger and a beer before they go to bed?

ORWOLL: Or the people who have to get up at 4:30, 5:00 in the morning to catch an early flight and the restaurant is not open yet. You know, I got to tell you, the grab and go concept, little shop down in the lobby sounds about as appealing to a business traveler as a 7-Eleven starting to have hotel rooms. This is not a good idea for business travelers.

But the point is, as the CEO of Hilton just said, they are not making money on it, and the majority of their guests don`t use the room service.

GHARIB: Mark, do you think that other hotels will starts to do the same, even though the points that you make are well-taken, that this is just going to become a trend in travel?

ORWOLL: Well, I hope that`s not the case, but we have been seeing that -- I`m noticing there`s a greater divergence between those hotels that offer fewer services and then the luxury hotels. My fear is that we`re going to see fewer of the middle ground hotels. Hotels like the Hilton Midtown which have, you know, pretty decent good rates for a big city like New York and offer all the services that a traveler and a business traveler in particular could need.

MATHISEN: So, I was very curious, Mark, it stuns me to learn that they can`t make money on a $20 hamburger, or a $25 omelet or whatever it is.

ORWOLL: How can -- yes, how can that be?

MATHISEN: Why does it so -- I mean, I get that there are a lot of people, it has to be cooked, it has to be delivered. It may be around the clock room service. But, gosh --


ORWOLL: It`s a personnel intensive service that they offer. And after breakfast, where the big rush is in room service, there are fewer and fewer calls for room service, but you still have to be staffed as if you are going to be getting a lot of calls.

So -- but I think you are right, there`s ways around this. For example, having limited hours, or maybe just from, you know, 8:00 until midnight instead of 24 hours, that sort of thing.

I hope that they won`t, anybody will see this as a trend.

GHARIB: You know, traveling is not fun anymore.

ORWOLL: I know.

GHARIB: You know, we used to say the same thing about the airlines, we were all so shocked when they were going to charge for your luggage, and now everybody does it and the airlines are making money on it. But, meanwhile, do you think that a hotel like the New York Hilton will lose business because of this ending the room service?

ORWOLL: Well, there have been people interviewed, guests of the hotel

who have said, that they wouldn`t consider staying at a hotel that didn`t have room service. And I would say that, generally speaking, most of the people who care about room service the most would be the business travelers and they are the ones who have the money to spend. Why antagonize a group of high paying clients that need that service. I -- I`m at a loss to explain it.

MATHISEN: Very quickly, do they or others who may follow suit, risk losing the three or four-star or five-star ratings that they get?

ORWOLL: Yes, the ratings groups out there look at all the amenities that hotels offer, and if they feel that the lack of room service detracts from the overall quality, they could knock that down from a four or fivestar hotel, to a three-star hotel. And that means even more potential for losing money by that hotel.

MATHISEN: All right. Mark, thank you very much. Great to see you.

Mark is international editor for "Travel and Leisure".

GHARIB: And coming up in the program, the rivalry between Coke and Pepsi is expanding to a new battleground, in a market not often talked about.

First, let`s take a look at how commodities, treasuries and currencies

fared today.


MATHISEN: U.S. investors will be keeping a close eye on Japan tomorrow, that`s when Prime Minister Shinzo Abe plans to unveil a new round of reforms aimed at reviving Japan`s economy. Among the expected moves are an increase in targeted stock purchases by its national pension plan, the easing of rules governing Internet businesses, and the creation of special economic growth zones throughout the country.

GHARIB: You may not have heard much lately about the cola wars here in the U.S. But they are revving up in emerging markets. There was a new evidence of that today when Coca-Cola (NYSE:KO) opened a plant in the country of Myanmar.

Michelle Caruso-Cabrera has more.


MICHELLE CARUSO-CABRERA, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): Coca-Cola (NYSE:KO) CEO Muhtar Kent was on hand for the grand opening of the new bottling plant in Myanmar. The beverage giant plans to invest $200 million in the Southeast Asian country over the next five years.

MUHTAR KENT, COCA-COLA CEO: Producing locally, selling locally, distributing locally.

CARUSO-CABRERA: Although Myanmar`s population is poor and the infrastructure lacking, Coke and other consumer companies want to be there early, knowing there soon will be another 60 million consumers as the economy grows.

KENT: It`s a wonderful opportunity for my company, our brands, and it`s a wonderful opportunity I think for the people of Myanmar who are going to join the world community and it will be -- Myanmar will also contribute to the creation of the middle class for the next decade.

CARUSO-CABRERA: The U.S. began easing sanctions on Myanmar in 2011, as the country moved from a military dictatorship to a civilian-led government. Automaker Ford, credit card company Visa (NYSE:V) and Coke are three companies attempting to get in on the ground early.

And Myanmar`s neighbor China is even more active, helping to construct in oil and gas pipeline nearly 500 miles long, which reached full production just last week.

But the road to democracy can be bumpy, highlighted by recent riots between Buddhists and Muslims, long simmering tensions kept at bay under

military rule. But while there are still maybe risks, companies like Coke think the rewards will be high.

For NIGHTLY BUSINESS REPORT, Michelle Caruso-Cabrera.


GHARIB: With the opening of this plant in Myanmar, there are only two countries in the world where Coke is not sold: North Korea, and Cuba, which is pretty amazing in itself, and only two countries.

You know, Tyler we always talk about consumer spending, helping the economy grow and here you`ve got hundreds of thousands of consumers in these emerging markets happy to buy these American products.

MATHISEN: And these are affordable luxuries. I have a feeling you can get a rum and Coke somewhere in Cuba if I had to guess.

GHARIB: I think you`re right about that.

That`s NIGHTLY BUSINESS REPORT for tonight, thanks so much for watching. And remember, this is the time of year your public television station asks for your support.

MATHISEN: And on behalf of your public television station, thank you

very much for giving that support.

Good night, everybody. We hope to see you back here tomorrow evening.


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