<Show: NIGHTLY BUSINESS REPORT> <Date: August 7, 2013> <Time: 18:30:00> <Tran: 080701cb.

118> <Type: SHOW> <Head: NIGHTLY BUSINESS REPORT for August 7, 2013, PBS> <Sect: News; Domestic> <Byline: Susie Gharib, Tyler Mathisen, Jackie DeAngelis, Hampton Pearson, Mary Thompson, Jane Wells > <Guest: Andres Garcia-Amaya> <Spec: Business; Economy; Stock Markets; Energy; Consumers; Products; Retail Industry> <Time: 18:30>

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


SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Mid-summer strategy. August, historically, one of the worst months for stocks. But is there a smart way for you to invest during the dog days of summer as others head to the beach?

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Power players. In a huge switch, the U.S. has become a refiner to the world, and a handful of companies are helping lead the charge.

GHARIB: Shopping spree. We all like the idea of buying American products. But finding them is a different story. So, we hit the mall to see for ourselves in our special series, "Made in America."

We have all that and more tonight on NIGHTLY BUSINESS REPORT for Wednesday, August 7th.

MATHISEN: Good evening, everyone. And welcome.

Call it the summer stumble. It doesn`t qualify as a swoon. It`s certainly not full-fledged sale off yet, but for the third day in the row, U.S. stocks fell, dropping like dominos after overseas markets sold off. Japan notably declined 4 percent as the yen rose against the dollar.

Here in the U.S., investors seemed unsettled by reoccurring Fed chatter, indicating the central bank may scale back its stimulus program as soon as September or not. And if not, maybe the end of the year. Either way, investors didn`t like it.

The Dow dropped 48 points to 15,470, the NASDAQ dipped 11 3/4 to 3,654, and the S&P 500 closed down 6.4 points at 1,690 and change.

GHARIB: And there`s also this other bit of Wall Street history. Since 1987, August has been the worst month for stocks. So what should investors do?

Joining us with his thoughts: Andres Garcia-Amaya. He`s global market strategist at JPMorgan (NYSE:JPM) Funds.

So, Andres, this goes with the calendar. There is a summer lull. What`s the smart thing for investors to do? Do you buy, do you sale, do you just sit tight?

ANDRES GARCIA-AMAYA, JPMORGAN FUNDS GLOBAL MARKET STRATEGIST: You know, I think for the active investor, short-term investment horizon, no one wants to be a hero especially this August, considering how strong the markets rallied. Having said that, if you`re a long-term investor, I think months like this opens some opportunities, for instance, if you look at Europe, European equities, we do think that they under performed the U.S. equity market and their economies are not in good shape, but they`re going from really bad to just bad and that type of momentum is what you look for to try to generate some outside returns in the years to come.

MATHISEN: How much of a typical investor, and I realize there is no such thing as a typical investor. But how much of a typical investor`s portfolio ought to be in U.S. securities versus those overseas securities that you just referenced?

GARCIA-AMAYA: Yes, I think that`s a great question. I think it matters what your risk aversion is. What I mean by that is European equities are going to be more volatile. There is more uncertainty, not only about their economy but about their earnings. That`s one of the reasons that I think there will be a higher expected return.

Having said that, if you look at the U.S., earnings are not growing very rapidly, but there is more certainty about them. There`s a little bit more visibility. Therefore, volatility we don`t expect to be as high as European equities. So, it depends who the investor is.

Having said that, between those two I think at this point, European equities do offer a little bit more opportunity on the upside.

GHARIB: You know, the last time you were on, we were talking about emerging markets and you were kind of cool to the countries like Brazil and Russia, India, China. How about now? We heard in this latest earning season, some mixed reports from CEOs talking specifically about growth opportunities or the slowdown in China.

Is this an investor opportunity, or is it too soon?

GARCIA-AMAYA: I think, unlike August here in the United States where it is a bit of just a soft patch when it comes to everyone at the beach, in China, the cool off could last not just for the summer but it could really go well into next year.

So I don`t see it just quite yet the opportunity there, although valuations have come down. I think we`re not quite at a place I feel comfortable becoming an overweight in China.

MATHISEN: What do you make of this little stumble that we`ve had it for three -- believe it or not -- three days in a row --


MATHISEN: -- of U.S. equities sliding just a bit? I gather your view, you know, medium and long-term on the U.S. economy is pretty good and hence, for U.S. stocks, as well.

GARCIA-AMAYA: Sure, I think the catalyst for the recent run up to really last week had been earnings. Earnings have not only met expectations but really beat them and that catalyst is drawing to a close. We`re almost done with earnings season. And I think at this point, I wouldn`t read too much into the daily volatility of the market because volume is very low. Come September, I think everyone will come back to play and that`s really going to dictate where the rest of the year goes for equities.

GHARIB: There is something about September. There is mentality of getting serious again, back to school, whatever. I mean, the theme so far this year for most investors is, buy now and sell higher later.

Do you see that theme changing come September?

GARCIA-AMAYA: Yes, I think that if you have to take a step back and say if I have a new dollar, where do I think there is the best place to put it? We still think equities offer value than fix income no matter if it`s August of September. That`s still our thesis and that this is a thesis we think is going to go on for years, not just months.

GHARIB: Very quickly, you talked about maybe dabbling into European stocks. I think most individual investors wouldn`t know how to pick a U.S. stock -- certainly, I wouldn`t -- let alone European. Is it best to go through a fund or an ETF?

GARCIA-AMAYA: I think you have to be very selective especially in Europe. For instance, we might like German autos but we don`t like German banks right now. So, within those sectors, you might want a specific stock over another.

So, active management is very important. I think you need professional help to your point. It is very volatile and you better have some handholding along the way to make sure you pick the right company.

GHARIB: Thanks for handholding tonight, Andres. We really appreciate it.

Andres Garcia-Amaya, at JPMorgan (NYSE:JPM) Funds.

MATHISEN: Well, consumers are borrowing more, especially for cars and to attend school, according to the Federal Reserve. Borrowing rose more than $13 billion in June from May. The report also showed that many Americans aren`t using their credit cards as much, shying away from taking on high interest debt.

GHARIB: Oil prices have risen more than 10 percent this year, closing above $104 a barrel today. But those prices are pinching refiners. Now, the big names are looking for new ways to make money and producing more of what the world wants, a lot more. And it`s working.

Jackie DeAngelis looks at how the U.S. became the world`s refiner.


JACKIE DEANGELIS, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): Just two years ago, the United States reached a milestone. The company began exporting more petroleum products than it imported. Now, the U.S. leads the world and the pace is astonishing. It`s estimated that U.S. oil exports have doubled in the last five years.

Driving the export boom: shipments of diesel overseas to feed growth and emerging markets. U.S. refineries shipping diesel and other diesoline, like jet fuel, to places like Mexico City and Santiago, Chile.

ERIC LEE, CITIGROUP COMMODITIES: Part of it is the environment side of things, but a lot of it is to do with diesel and gas oil is more than gasoline. So, not only use in transport it`s also used in industry. It`s also used in power generation even.

DEANGELIS: An increase in diesel production and exports coming at a time when gas demand is faltering.

LEE: Gasoline demand is in our view in a structural long-term certainly (ph) decline. And one has been a few years of high prices. And another one, of course, has been, still the hangover from the economic recession, but there are two other big factors. One is fuel efficiency. The CAFE standers are having a real effect and have been extended forward by the president. And the other big one is actually de demographic change.

DEANGELIS: Diesel demand currently growing at twice the rate of gas.

And that trend is proving to be profitable. Gulf Coast refiner Valero saying it makes twice as much on a barrel of diesel as it does on gas. That`s why Gulf Coast refiners are doing everything they can to shift production and capture the difference.

(on camera): Companies like Shell, Marathon Petroleum and Valero racing to raise diesel capacity. Valero, the world`s largest independent refiner, is making significant investments in diesel production, looking to produce as much diesel as gas by the end of 2015.

(voice-over): And Gulf Coast refiners are benefitting from this trend more than their East Coast counterparts, that`s because domestic shipping costs are prohibiting the East refiners from tapping into U.S. oil supplies and those refiners have to rely more on international oil, which makes them less competitive.



MATHISEN: Freddie Mac, the taxpayer controlled company, President Obama and several others would like to unwind, just posted its second largest quarterly profit in the company`s history. The mortgage finance firm earned $5 billion helped by rising home prices, following mortgage delinquencies and by higher loan fees. The company will make a dividend payment to the U.S. Treasury of more than $4 billion. The results mark, of course, a huge turnaround from the heavy losses suffered during the financial crisis, which led to that taxpayer takeover.

GHARIB: JPMorgan (NYSE:JPM) and Glencore are the latest companies to be accused of artificially inflating aluminum prices. It`s the second legal challenge in a week related to metal warehousing. The lawsuit was filed on behalf of master screens, a direct purchaser and an individual who is described as a buyer of beverages sold in aluminum cans.

MATHISEN: Some positive news on a costly public health issue. According to a report yesterday from the Centers for Disease Control, the obesity rate among low-income preschoolers is falling in many states for the first time in decades. The CDC says

annual health care costs of obesity in America have risen from $74 billion in 1998 to $147 billion in 2008. Those are the most recent figures available.

So, as Hampton Pearson reports, this study could have important economic implications.


HAMPTON PEARSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): The Centers for Disease Control tracked the height and weight of nearly 12 million low income 2 to 4-year-olds. Between 2008 and 2011, obesity rates stayed the same or decreased in 40 states and territories and only went up slightly in three.

For weight management experts like Dr. Scott Kahan, it is good news. Kahan struggled with weight as a child. He was 25 pounds over eight at age 11.

DR. SCOTT KAHAN, NATIONAL CENTER FOR WEIGHT & WELLNESS: Anything we can do to push forward on addressing obesity and related chronic diseases is going to be not only a health triumph but also have large economic benefits to society.

PEARSON (on camera): Despite these encouraging results, that same CDC study says obese children are much more likely to become obese adults. And the cost of both the economy and society continues to increase.

(voice-over): A hundred ninety billion in annual medical costs, double previous estimates. A Mayo Clinic study of its own employees found it`s spending $1,850 more a year on medical costs for an overweight person versus a healthy weight employee. $5,530 per year on medical cost for a Mayo worker with a body mass index above 40, the threshold of being classified as morbidly obese.

LINDY FENLASON, MD, VANDERBILT UNIVERSITY, ASST. PROFESSOR OF PEDIATRICS: Obesity is a disease and it puts us at higher risk for other chronic diseases such as diabetes and high blood pressure and heart disease.

BIG BIRD: I`m getting moving right now by jogging.

PEARSON: Researchers say kid friendly health messages like First Lady Michelle Obama`s Let`s Move (NASDAQ:MOVE) campaign are contributing to the drop, changes to the government food assistance program for young children. Emphasizing the importance of fruits and vegetables also helped.

Obesity remains an epidemic, but the CDC says, for the first time in a generation, the tide is beginning to turn.

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


GHARIB: Still ahead, how the relatively new and fast growing 3D printing industry is changing the mold of manufacturing and creating opportunities for investors.

But, first, let`s take a look at how the international markets closed today.


MATHISEN: Yahoo (NASDAQ:YHOO) is getting a make over. The company is changing its logo for the first time in nearly two decades and will unveil the redesign next month. For the next 30 days, the company will showcase 30 different logos on its home page. There you see some of them.

The company says the new logo will be modern but fear not that exclamation point that is part of the name is staying.

Now to the ongoing CBS (NYSE:CBS) Time Warner (NYSE:TWX) Cable battle where politicians are demanding an end to the blackout. New Senator Ed Markey of Massachusetts is asking the Federal Communications Commission to step in and restart negotiations. He says, quote, "I believe the public interest would be served best if carriage is restored by the parties at the earliest possible time, so that consumers are not long caught in the middle."

More than 3 million Time Warner (NYSE:TWX) Cable customers have been without CBS (NYSE:CBS) since Friday and CBS (NYSE:CBS) carries lots of New England Patriots games.

GHARIB: We begin our "Market Focus" tonight with earnings from Time Warner (NYSE:TWX). Profits surged 25 percent as hit movies like "The Great Gatsby" and "Man of Steele" lifted revenue in its film unit, while stronger cable advertising helped its television business. Time Warner (NYSE:TWX) raised its earnings forecast for the year and says it will spin off it`s Time Inc. magazine unit in early 2014.

Shares were off a fraction, closing at $63.84, but they are up 34 percent so far this year.

AOL (NYSE:AOL) also reported earnings and revenue that beat analyst estimates but it wasn`t just the better than expected numbers that grabbed investor attention. The online company also announced it bought video advertising firm Adap.tv for $405 million. AOL (NYSE:AOL) said the acquisition will help it integrate advertising with video content.


TIM ARMSTRONG, AOL (NYSE:AOL) CHAIRMAN AND CEO: Advertising the last 100 years has been bought in bulk. We believe the future of advertising is going to be bought more like e-commerce where you understand the individual asset you`re buying and you`re able to plan, target, measure and do deep data analytics around advertising.


GHARIB: Investors like that news and shares rose almost 1 1/2 percent to $36.69.

MATHISEN: Shares of Ralph Lauren hit hard today after the upscale retailer issues a sales outlook duller (ph) than a pair of old chinos. The company whose brands include Polo and Club Monaco says it sees a low single-digit rise while expectations around 7 percent. Lauren shares, one of the worst performers on the S&P today, down more than 8.5 percent to $173.13.

Well, people were driving home with new Teslas it seems and it showed in its quarterly earnings report out today. The luxury electric carmaker easily beat Wall Street expectations and said it delivered more vehicles than expected during the quarter.

Tesla said on track now to deliver 21,000 vehicles worldwide this year. The stock closing today at $134.20. That`s down by 5 percent, but it popped after hours and is up nearly 350 percent this year.

And a busy end to the day for the snack company Mondelez International after the close. The Kraft (NYSE:KFT) Food spinoff posting a better than expected quarterly earnings, hiking its dividend to 8 percent and significantly raising its stock buyback to $6 billion and that is a lot of cookies.

Mondelez fell nearly 2 percent to $31.26 in the regular session but got it all back and then some after-hours.

GHARIB: Here is a new trend investors are talking about, 3D printing. It`s a small but growing force in manufacturing. The technology can be used to produce almost anything by anyone -- from shoes to car parts to medical devices, from just about anywhere.

It sounds futuristic but it`s now a reality, creating opportunities for businesses and investors.

Mary Thompson reports.


MARY THOMPSON, NIGHTLY BUSINESS REPORT CORRESPONDENT: 3D printing is breaking the manufacturing mold. Parts are built in a single-step and some of the needed printers and software are so affordable, consumers are getting in the game, making their own toys and Tchotchkes.

AVI REICHENTAL, 3D SYSTSEMS CEO: With 3D printing, craftsmanship is democratized. I think its` liberating and an impactful idea.

THOMPSON: Avi Reichental is CEO of 3D Systems (NASDAQ:TDSC). His company makes 3D printers ranging from the cube for consumers to bigger models used by manufacturers that sell for close to $1 million. Rapid growth in the consumers space feeling a rapid rise in 3D stock and that of rival Stratasys (NASDAQ:SSYS).

Some say a bubble forming but Reichental counters the industry has been 30 years in the making, with a long runway ahead.

REICHENTAL: It`s going to become more sustainable because you`ll make what you need when you need it and as you need it as close to the point of consumption as possible.

THOMPSON: 3D printers built by additive rather than subtractive process, guided by design software, metal, plastic or other materials are layered to create finished products using lasers, electron beams and other technologies.

(on camera): The appeal to manufacturers, designs and prototypes that can be changed quickly, eliminating waste and compressing the time between computer screen and final product.

(voice-over): For G.E., which is using 3D-produced parts in its soon to be tested LEAP jet engine, it means big savings. Here is LEAP director Gareth Richards.

GARETH RICHARDS, LEAP DIRECTOR: We`re saving probably on the order of 50 percent to 75 percent in total cost. That can be both material cost. It can be labor. It can be the design time. The cycle time savings are measured in weeks and months.

THOMPSON: A $2.2 billion industry grow over 24 percent in each of the last three years. And while 3D printing`s market is prototyping or model making for the auto and medical industries, its near-term growth lies in low volume production of complex parts for the aerospace industry, prosthetics and replacement parts in medical, and the consumer space. 3D printing turning manufacturing on its head, building from the inside-out and the bottom-up.

In Rock Hill, South Carolina, I`m Mary Thompson, NIGHTLY BUSINESS REPORT.


MATHISEN: And coming up, a growing number of retailers and manufacturers want you to buy products made in the U.S. It`s part of our special series. We decided to go inside some of the most recognizable stores in the country to see how many products are actually made in America.

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


GHARIB: Some positive news for the Detroit area tonight. Chrysler announced plans to spend $52 million on two plants located south of the city. The investment will add an assembly line to build four-cylinder engines in anticipation of rising demand. And the automaker will also be hiring, nearly 300 jobs.

MATHISEN: Well, there is a renewed push in this country from big retailers to small manufacturers to buy products made here in the U.S. But it may be easier said than done.

In our special series "Made in America", Jane Wells goes on a shopping spree to see just how hard it is to buy American.



JANE WELLS, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): Shopping these days is like going to the United Nations, the whole world is in your cart.

(on camera): Pakistan, China, USA.

(voice-over): Do we care where most things come from?

(on camera): Made in America. Made in Thailand. Made in Canada.

(voice-over): Nearly half of Americans say they would be more likely to buy a product if stamped "Made in the USA", according to the YouGov Omnibus survey. Sixty percent tell "Consumers Reports" they`d be willing to pay an extra 10 percent for American made.

UNIDENTIFIED MALE: I don`t pay attention to where it was created.

UNIDENTIFIED MALE: Sometimes I do, sometimes I don`t.

UNIDENTIFIED MALE: I would like to see more products made in the U.S. but at the same time, I know there is a reason.

UNIDENTIFIED MALE: If there is a choice, I`d prefer it, yes.

THOMPSON (on camera): Made in the USA.

(voice-over): It`s not clear, though, how often we put our money where our mouths are.

(on camera): Honduras. Made in Indonesia.

(voice-over): Do we even know what comes from the U.S. and what doesn`t. Home Depot (NYSE:HD) gave us free rein to check.

(on camera): What may surprise you is a lot of the non-sexy stuff, that stuff that goes inside your walls or under your floor, the raw materials, that`s the stuff that`s usually made in the USA, like lumber, concrete, drywall.

On the other hand, almost all the light mixtures are made outside of the country. This is China, China, China and China.

Black and Decker, an American company, made in China. DeWalt, made in Mexico. Milwaukee made in China.

Toilet made in China. Toilet seat made in America.

(voice-over): Over at Target (NYSE:TGT) -- China, how cute is this?

The chain says sourcing practices are always changing to balance quality with price.

(on camera): So, this is interesting. Elmer`s Glue, the glue is made in the USA. The glue stick is made in China.

Lashes made in the Indonesia, Sri Lanka, or China, made in the USA, and somehow that comforts me.

Out of curiosity, these are made in the USA, too.

And Barbie, the all American girl, is actually made in China.

(voice-over): Barbie may come from China, but one thing in both stores does not, the American flag still occasionally made in the USA.



MATHISEN: Our "Made in America" series continues tomorrow with a look at why some small businesses say buying imports, not American, is the best way to boost the economy.

GHARIB: And finally tonight, lottery fever is here and spreading. The Powerball jackpot now stands at $425 million, the fourth largest payout ever. The winner could get a lump sum of $244 million. The odds of winning are 1 in 175 million. But that`s not stopping people from lining up for a chance to strike it rich.

Now, if no one wins tonight, the jackpot -- if no one wins tonight, the jackpot could soar to record territory. The all time record $656 million Megamillions jackpot was split between three ticketholders in March of 2012.

MATHISEN: And we want to hear from you whether you`re a Megamillions winner or not. Send us the one stock you would like the market monitor guest to discuss on Friday. Log on our Web site, NBR.com. You`ll see the link right there, click on it, submit your question, and don`t forget to include, please, where you are from.

GHARIB: So are you going to buy a ticket?

MATHISEN: Oh, yes, of course. Of course, I would donate the proceeds to NBR.

GHARIB: Yes, you said that last time.

MATHISEN: Underwrite NBR.

GHARIB: Yes, you didn`t win.

That`s NIGHTLY BUSINESS REPORT for tonight. Thanks so much for watching. And please remember, support your public television station.

MATHISEN: And on behalf of your public television station, thank you so much for your support and your lottery winnings.

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


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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