<Show: NIGHTLY BUSINESS REPORT> <Date: May 9, 2013> <Time: 18:30:00> <Tran: 050901cb.

118> <Type: SHOW> <Head: NIGHTLY BUSINESS REPORT for May 9, 2013, PBS> <Sect: News; Domestic> <Byline: Susie Gharib, Tyler Mathisen, Mary Thompson, Courtney Reagan, Diana Olick, Scott Cohn, Phil LeBeau> <Guest: Uri Landesman> <Spec: Business; Economy; Stock Markets; Wall Street; Labor; Retail Industry; Trade; World Affairs; Aviation; Consumers; Policies; Transportation> <Time: 18:30:00>

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

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TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Teflon strong? Yes, stocks were down today, but the S&P hasn`t had a losing month since October. The Dow is

up 20 percent since November, despite some soft economic data. Can anything stick to or crack this market?

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Worker safety. From Walmart to Nike (NYSE:NKE), what major U.S. retailers are doing when disaster strikes their factory operations overseas?

MATHISEN: And frequent flyer frustrations. You rack up thousand of miles. So, why is it so hard to use them?

All that and more tonight on NIGHTLY BUSINESS REPORT for Thursday, May 9th.

And good evening, everyone.

Susie, well, investors kind of took a little bit of a breath in today, but stocks have come a long way in a hurry.

GHARIB: You know, Tyler, a lot of people are calling this the Teflon market. And here`s why: the major stock averages keep stacking up new milestones, it seems nothing can stick to them and stop the steady climb higher.

Stocks were down a bit today as Tyler said, but the Dow still closed above the 15,000 level and the S&P is still solidly in record territory. The Dow fell 22 points, the NASDAQ slipped by four, and the S&P lost six points.

Investors reacted early on to news that first time jobless claims fell to a five-year low last week. The U.S. dollar gained strength, topping 100 Japanese yen for the first time in four years, which likely triggered a lot of programmed orders to sell. But investors still seem to be in the mood to buy, and the major stock averages up double digits this year.

And most Wall Street pros are feeling bullish about the outlook.

MATHISEN: But not our guest tonight, he is predicting a stock sell- off starting by the end of this month. He`s Uri Landesman, president of Platinum Partners.

Mr. Landesman, welcome to NBR. Glad to have you with us.

You think that equities could begin to slide, maybe we start to see a little bit of it today that could take 15 percent off the value of the S&P between Memorial Day and Labor Day. If your prediction is true, how can I protect what profits I`ve made and still leave room for more as a kind of hedge?

URI LANDESMAN, PLATINUM PARTNERS PRESIDENT: I think what you need to do is sell out your beta risk. Meaning, things that are correlated with the market you want to sell, like your long S&P positions, your long ETF positions and only be long on individual equities, sectors or subsectors where you have particular conviction that they can succeed even in a major correction in the overall market.

GHARIB: Uri, I want to hear what your bear case is, because what we hear from so many of the Wall Street money managers and fund managers on our program, saying, where else are you going to put your money? Stocks are the place to be. You know, bonds, you get almost no return. You look at some of the international markets, they`re not doing as well as the U.S. market.

So, what do you say to those people?

LANDESMAN: What I say to those people is that at the end of the day, always, all securities will eventually trade at your intrinsic value, and the fact that what else are you going to own, that to me is a very, very bearish sign. If that`s the only reason you`re buying stocks, you are basically admitting that they are expensive and overvalued. But they`re less ugly than the next one.

I mean, trust me, when people get scared, they`re going to liquidate all of their holdings and take their cash and put it in the mattress, whatever else they want. They don`t have to be in stocks just because they look better than bonds or than foreign stocks.

MATHISEN: Do you think that stocks measured by the S&P have hit their highs for the year? And if you do, are there certain sectors that you`d actually believe will hold their value or may go even higher? Or are there areas of the market that you like?

LANDESMAN: Yes, I think we`re at or near the year high, I always thought it would come in this period of time, it`s gone a little past what my target was, which was 1,620. But I think that`s why I`m so -- I have such conviction that I think it`s going to turn around shortly.

I do like certain sectors of the energy segment, particularly natural gas. I still think there are opportunities in biotech that aren`t going to necessarily trade correlated with the market. There are selected things in technology that I think are still very reasonably priced.

But you have to be very, very careful in terms of where to go right now.

GHARIB: You said that you are a (inaudible) when it comes to the financials. You don`t have any financials in your portfolio. What is your recommendation for people who own some of the -- you know, the biggest banks in the country, whether it`s JPMorgan (NYSE:JPM) or Bank of America (NYSE:BAC) or any of the regionals? They should bail out of them?

LANDESMAN: What I`m telling you is, what I`m seeing from these banks right now is behavior that is very akin to 2007. And see what`s going on in the junk bond market right now, there are junk bond yields at 5 percent. I mean, it`s insane, and the -- the exposure that financials have to some of these are massive.

I don`t think that they`ve learned anything since 2007. I don`t think they have control over what their risks or any idea of what their risks are. I would be very, very nervous about holding, especially the major financials.

MATHISEN: Let`s say I have some of those individual equities that I really believe in Uri. Is there a way quickly that I can use options, like puts, to protect my portfolio or hedge it?

LANDESMAN: Well, I think you could essentially go short the S&P, either by buying puts or selling calls. It`s not the cleanest hedge in the world versus individual names, something you might want to do is to short the ETF of that sector, where you like a name that would be a cleaner hedge.

MATHISEN: Interesting. Uri Landesman, thank you very much, president at Platinum Partners.

GHARIB: Well, as we`ve been reporting, it has been a red hot rally for the blue chip Dow. Since November, it has soared more than 20 percent. But it might surprise investors to see how some former Dow components have fared in the same period of time.

Mary Thompson has more.

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MARY THOMPSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): Both the rejects and replacements recently outperforming the Dow, though the rejects gain succeed those of the replacements.

Here is how they stack up. From its recent low on November 15th, the Dow is up 20.4 percent. The average return for the 12 stocks pulled from the blue chip average since 1999, 30.2 percent, while their replacement`s average gain is 24.3 percent since mid-November.

The rejects recent gains belie from longstanding troubles as all are well off their heyday highs.

Take Navistar, the truck and engine maker rumored to be close to bankruptcy last year and newly designed diesel engine sparking a recent run in its stock.

Owens-Illinois (NYSE:OI), the world`s largest maker of glass bottle, benefiting from the recent restructuring that`s offsetting weak sales in Europe.

As for AIG and Citi, they continue to recover from near-death experiences during the financial crisis, and International Paper (NYSE:IP) strength reflects an extreme makeover that`s left it focused on producing packaging and printing paper.

Not all rejects returning gains during the record run, though.

Former blue chipper Sears (NASDAQ:SHLD) and U.S. Steel both down since November 15th.

As for long-term investors, while rejecting the rejections may have paid off. Only two of the 12, Honeywell and Altria outperforming the Dow since 1999.

For NIGHTLY BUSINESS REPORT, I`m Mary Thompson.

(END VIDEOTAPE)

MATHISEN: Americans spent a bit more money at some big name stores last month, getting a boost from fallen gasoline prices. Gains in the labor market and the rally on Wall Street. Chains like Gap (NYSE:GPS), Victoria`s Secret, Ross Stores (NASDAQ:ROST), Costco (NASDAQ:COST) reported overall sales, rose 4.7 percent in April compared with the same month last year.

GHARIB: Now, many of those same retailers have their apparel made overseas where a key concern is worker safety. One of the major focal points right now for safer working conditions is Bangladesh, where multiple tragedies have befallen factory workers. The latest one was just last night.

So, how do consumers and companies react when disaster strikes at suppliers overseas?

Courtney Reagan has more.

(BEGIN VIDEOTAPE)

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): Yet another tragedy strikes in Bangladesh`s garment industry. Eight people died when fire spread through a Bangladesh clothing factory, adding to the tragic loss of life from a building collapse two weeks ago.

At least 900 Bangladeshi garment workers perished in that collapse, which is now the deadliest industrial disaster in world history.

But it`s not the first. In November, a fire in a Bangladesh factory producing clothing for Walmart killed 112 workers. The magnitude is impossible to ignore for many U.S. retailers like Walmart, JCPenney, Gap (NYSE:GPS), Nike (NYSE:NKE), and Target (NYSE:TGT), who have apparel manufactured overseas. Retailers are feeling a new degree of pressure to reassess global sourcing strategies at a time in which many consumers are becoming less tolerant of irresponsible and potentially dangerous manufacturing practices.

SCOTT NOVA, WORKERS RIGHTS CONSORTIUM EXEC. DIRECTOR: Ultimately, consumers will turn against big brands and retailers that refuse to take the minimal steps necessary to protect the safety and the lives of the workers in their factories globally, in particular in Bangladesh.

REAGAN: But pulling out of Bangladesh is not a truly viable option for either side of the deal. Retailers like Walmart, H&M, and Gap (NYSE:GPS) have made substantial investments in factories in the country. While no nation wants workers in unsafe conditions, losing contracts with major retailers is financially devastating.

Bangladesh`s garment industry makes up 80 percent of the poverty stricken export.

(on camera): While end consumer does benefit by paying lower prices on items like these are made in Bangladesh, some say the cost of improving conditions is minimal.

NOVA: For less than 10 cents a garment, the brands and retailers could undertake the factory repairs and renovations necessary to protect the lives and safety of workers making this clothing. The impact for consumers would be negligible.

REAGAN (voice-over): Last week, Joe Mimran, the founder of retailer Joe Fresh pledged compensation for victims and families.

In March, Walt Disney (NYSE:DIS) decided it would no longer source from five countries that do not meet certain safety standards, including Bangladesh.

High end department store Nordstrom (NYSE:JWN) says customers are starting to ask questions about sourcing and that it`s looking for news to provide relevant information to shoppers.

Following the Rana Plaza building collapse, the Bangladesh government says 18 garment factories were shut down for safety reasons, though six of them were cleared to reopen Thursday.

For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan.

(END VIDEOTAPE)

GHARIB: Now, in recent years, labor advocacy groups and consumers have banded together to force retailers to adopt new code of contact related to labor rights. Last week, Adidas agreed to pay legally mandated severance pay to Indonesian factory workers who lost their jobs back in 2011.

MATHISEN: Also more good news in housing. Foreclosures fell to a six-year low last morning, dipping to levels not seen since before the housing bubble burst. RealtyTrac says home repossessions fell 21 percent in April from the month prior, and are now down 32 percent from a year ago. Also, foreclosure starts at the first step in the takeover process, dipped 4 percent last month.

GHARIB: And some surprising news from Fannie Mae today. It made money and a lot of it. The government run mortgage giant earned $58 billion last quarter, its largest profit effort. Fannie plans to use all of that to pay back Uncle Sam. The U.S. Treasury, as you`ll recall, bails out Fannie Mae in 2008, during the financial crisis. Fannie also said today it expects to stay profitable for, quote, "the foreseeable future."

MATHISEN: A dire warning from a government consumer watchdog about the impact of the more than $1 trillion in student loan debt. The Consumer Financial Protection Bureau says much outstanding debt could have a devastating, domino affect on the economy, depleting savings, limiting spending on new cars and putting off retirement savings indefinitely.

And as Diana Olick tells us, the student debt crisis could also have a serious impact on the housing market.

(BEGIN VIDEOTAPE)

DIANA OLICK, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over):

Sophia Chaale wanted to buy a home two years ago, but her student loans stood in the way.

SOPHIA CHAALE, HOME BUYER WITH STUDENT DEBT: It definitely took a long longer than I anticipated.

OLICK: Faced with $60,000 in debt from graduate and undergraduate schools, Chaale moved back in with her parents. It was the only way she could save aggressively while at the same time paying down her debt.

CHAALE: I consider myself lucky that I had a place I could save. But people who aren`t originally from the area who have to pay an extra $1,500 a month just in renting, that rent money is not going to savings. Well, how are they going to be able to afford to save up or to even make that transition from renting to owning? In addition to all of the student loan debt?

OLICK: The answer is, they`re not. Total student loan balances tripled between 2004 and 2012, to a debt burden of about $1 trillion according to a new survey from Federal Reserve Bank of New York.

In fact, student debt is now second only to mortgage debt and in turn has a direct effect on getting a mortgage.

BRIAN COESTER, COESTER VALUATION MANAGEMENT SERVICE: If you look at the average student loan balance, it`s about $30,000, $35,000 per person, per student. So if you take a family of two, that`s $60,000 to $70,000. I mean, in certain markets, that`s almost a mortgage payment. That`s almost as much as a house.

OLICK: That is partially why first-time home buyers are being squeezed out of the market. This vital cohort usually makes up 40 percent of home purchases, but these buyers are now barely one-third of the market.

(on camera): And adding to the burden, nearly one-third of borrowers are delinquent on their student loans, which will keep them out of the mortgage market for many years to come.

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

(END VIDEOTAPE)

GHARIB: Tyler, we talk so much about consumer spending. These are the consumers that you want to target. And if they are sitting on $60,000, $70,000 of debt, they`re not going to be buying a car, a computer, or as Diana said, a house.

MATHISEN: A house. They`re not going to be able to get a credit to do it. It`s really a crushing weight on their backs.

GHARIB: Still ahead on the program, a 21st century bank heist. Instead of guns and masks, today`s criminals are hackers using laptops and local ATMs. We`ll have details on today`s bank heist bust.

But, first, a look at some stocks that hit one-year highs.

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GHARIB: It may be the biggest bank robbery ever, and the thieves didn`t even have to enter a branch. Federal prosecutors in New York City today charged a gang of eight cyber thieves for stealing $45 million in just hours by hacking into a database of prepaid debit cards and empty ATMs in New York City and later around the world using fake magnetic swipe cards.

(BEGIN VIDEO CLIP)

LORETTA LYNCH, U.S. ATTORNEY: This was indeed the largest theft of this type that we have yet seen. This was a 21st century bank heist that reached through the Internet to span the globe. But instead of guns and masks, this cyber crime organization used laptops and malware.

(END VIDEO CLIP)

GHARIB: Scott Cohn is here with details. This is such a fascinating story.

SCOTT COHN, NIGHTLY BUSINESS REPORT CORRESPONDENT: Fascinating and more than a little bit scary. The gun and mask, you know, are so 20th century. Police say this was a worldwide crime ring, extremely well- organized.

First, the hackers would get into the system of big banks and credit card processors around the world, primarily in the Middle East, targeting prepaid debit card data.

They would raise the balance on the accounts, remove the daily withdrawal limits, change the pin code and while they were still in the system, still hacking the computers, they would send a new pin codes to their street crews who would fan out on cue, withdrawing money from automatic teller machines around the world.

In one 10-hour period in New York City, they got $2.8 million. Not bad for a day`s work. The total haul on that day in February around the world, $45 million.

Eight people indicted in New York as you heard. They are alleged to be the main players in the New York cell of this worldwide operation, seven of those people are in custody. One is believed to have been murdered last month in the Dominican Republic, and this investigation is continuing.

MATHISEN: It looks like they came down Broadway and Seventh Avenue, it looks exactly like they came down the "A" line, whatever the line is, the Broadway, the one line down there.

You think -- we think is organized out of the Middle East?

COHN: Well, the banks that they targeted were in the Middle East, but this was literally around the world. There was very -- they had help from authorities in Japan and Romania and literally everywhere. The main banks that they targeted were Middle Eastern banks, but still not clear where this was based.

GHARIB: You really make a case that this was a very bold move. We have been covering a lot of stories -- you have in particular -- on hacking. But this one just seems like there`s no way you can safeguard yourself. It`s way beyond your control. You are very vulnerable.

COHN: Well, it`s the size of it and the way they were so organized. It seems like from what we were able to read, that the hackers got into these systems the way hackers get into any system, with attachments and e- mails, people let down their guard a little bit and they can get in, do their deeds, and that`s the problem. It`s -- there are so many people involved, and the issue now is -- are there others like this gang, or this gang itself, that are targeting other financial institutions, maybe for more than just $45 million.

GHARIB: So scary.

MATHISEN: All right. Scott Cohn, thank you very much. Appreciate it.

All right. To the "Market Focus" now and we begin with Priceline.com. It reported after the bell profits and revenues, above estimates on the quarter on improved hotel and car rental bookings. But the online travel company`s profit estimates for the current quarter were below what Wall Street expected and shares gained a fraction during the main trading section. But then they fell off more than 2 percent on that earnings guidance.

Google`s YouTube service unveiled paid prescription channels today, adding a potential revenue stream and opening another front in the content wars. The first round of content

providers on these channels include Sesame Street, National Geographic and Ultimate Fighting Channel among others.

Google (NASDAQ:GOOG) shares touching a new all time high at $879.66, before trailing off to close down a quarter percent.

GHARIB: Barnes & Noble (NYSE:NE) (NYSE:BKS) shares soared on reports that Microsoft (NASDAQ:MSFT) is considering a bid of $1 billion for its Nook e-reader business. Microsoft (NASDAQ:MSFT) already holds a 17 percent stake in Nook media. Barnes & Noble (NYSE:NE) (NYSE:BKS) and Microsoft (NASDAQ:MSFT) declined to comment on the report.

Shares of Barnes & Noble (NYSE:NE) (NYSE:BKS) soared 24 percent, to $22. And you can see there, the stock is up 45 percent year-to-date.

Solid earnings and revenues from Precision Castparts (NYSE:PCP). Now, this is a company that makes air frame elements and other metal castings. It said quarterly profits jump 23 percent. And get this -- sales grew 25 percent, helped by an acquisition earlier this year. The stock was the biggest gainer in the S&P 500 today, up more than 7.5 percent and reaching a new high before closing at $206 and change.

MATHISEN: Another earnings monster, "The Walking Dead", powered AMC networks to a profit increase of 43 percent, beating estimates on the top and bottom lines. AMC network`s original programming helped life shares following its spinoff last year, and the stock touched a new high today before falling back to close at $66.41, up 34 percent for the year thus far.

GHARIB: And in health care news today, for the first time in at least 55 years, U.S. consumer spending on prescription drugs fell from the prior year. The main reason? Cheaper generics.

Last year, patents on top selling drugs like Lipitor and Plavix expired, allowing Americans access to less expensive generic alternatives.

The firm that released the study, this is the IMF Institute of Healthcare, says we should expect a slow every rate of spending on prescription drugs compared to overall health care cost over the next few years.

MATHISEN: Meantime, shares of the biotechnology drugmaker Dendreon (NASDAQ:DNDN) plunged today, falling 15 percent. That`s after reporting the loss of $72 million last quarter on disappointing sales for its best known drug. It`s prostate cancer prevention drug, Provenge.

And coming up, are the odds stacked against you when you try to book a ticket using your frequent flier miles?

Before that, take a look at how commodities, treasuries and currencies fared today.

(MUSIC)

GHARIB: Tesla is all revved up. After 10 years in business, the California based electric carmaker recorded its first ever quarterly profit and says global demand for its car could exceed 30,000 units a year. Then, "Consumer Reports" magazine gave Tesla`s Model S electric sports sedan its highest rating ever, a nearly perfect score of 99 out of 100 points in its review of the car. Only one other vehicle has ever gotten the same score, an older Lexus model.

Following some analyst upgrades, you can see there, shares of Tesla skyrocketed today, racing ahead by 24 percent.

MATHISEN: Well, if you racked up a lot of airline frequent flier miles and hope you can redeem them for a discounted flight, you may be in for a bit of a disappointment.

As Phil LeBeau tells us, even for people who have amassed a million miles or more, getting a good seat is getting a lot tougher.

(BEGIN VIDEOTAPE)

PHIL LEBEAU, NIGHTLY BUSINESS REPORT CORRESPONDENT (voice-over): It`s become a frustrating game for travelers. You may have plenty of miles for a free ticket, but using them for the flight you want at the time you want is a tall order.

RANDALL DARLAK, TRAVELER: They made it difficult for me to fly with my family and purchase tickets for my family with me trying to book a flight using my miles.

LEBEAU: The annual switch flight survey of reward seat availability checked summer schedules for 22 airlines around the world. Value airlines led by Southwest and AirTran, almost always had seats open to be booked with miles or points. By comparison, your odds of finding rewards seats with larger, legacy airlines is much lower. Delta and U.S. Airways had open seats just 36 percent of the time in the survey.

Why the difference? Blame it on airlines merging and creating huge frequent flier programs.

JAY SORENSEN: There is a lot of miles chasing each reward seat and I think the lower cost carriers don`t have that I guess you could say baggage associated with them. So, they have fewer miles or points chasing rewards.

LEBEAU: Southwest, with fewer frequent miles than many legacy airlines has become a favorite for those looking for a free light.

ROBERT ROSEN, TRAVELER: It`s great. I love Southwest. Until you get status, it can be kind of hard, because you have to fight for the seats. But once you have status, you choose your own seat and your miles add up really quickly. Get flights very quickly.

LEBEAU (on camera): Overall, using frequent flier miles is getting tougher, especially for an upgrade on a particular flight. It`s all part of the new reality, where an estimated 8 trillion frequent flier miles have been racked up and are waiting to be used.

Phil LeBeau, NIGHTLY BUSINESS REPORT, Chicago.

(END VIDEOTAPE)

GHARIB: And we end tonight on a sad note. Alan Abelson passed away today. For many investors over many years, the weekend wasn`t complete until they read his column "Up and Down Wall Street" in "Barron`s" magazine. Abelson began writing that column back in 1966.

Ed Finn, the editor and president of "Barron`s", said Abelson`s knowledge of Wall Street was matched by his love of artful writing.

Alan Abelson was 87. And he was a very witty person. He wrote with a beautiful touch, very irreverent as well.

MATHISEN: He was a guy who could make you laugh at business copy and let me tell you -- that`s not always easy. He was right up there with Louis Rukeyser in terms of his --

GHARIB: He`s very good comparison.

MATHISEN: To write gorgeous, stylish pros about business topics. He will certainly be missed.

GHARIB: Yes, we will miss him.

Well, that`s it for us tonight, NIGHTLY BUSINESS REPORT. I`m Susie Gharib.

MATHISEN: And I`m Tyler Mathisen. Thank you very much for joining us. Have a great evening, everybody. And we hope to see you back here tomorrow night.

END

Nightly Business Report transcripts and video are available on-line post broadcast at http://nbr.com. The program is transcribed by CQRC Transcriptions, LLC. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Nightly Business Report, or CNBC, Inc. Information presented on Nightly Business Report is not and should not be considered as investment advice. (c) 2013 CNBC, Inc.

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