Full Episode Transcript – Thursday Mar 15, 2012

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as a quick fix when it comes to high gas prices. There’s no silver bullet.

the U.S. and Britain have no plans to tap strategic oil reserves to drive
down sky-high gas prices.Meanwhile, Apple (NASDAQ:AAPL) takes flight, touching $600 a share.
And with lines already forming for the new iPad, some analysts think $700 a
share is not far off. It’s NIGHTLY BUSINESS REPORT for Thursday, March
15th. Good evening, everyone. My colleague, Tom Hudson, is off tonight.

The Obama Administration Denies Plans to Tap Strategic Oil Reserve

SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Well, it was talk, not a deal to tap into emergency oil reserves. So says the White House. The Obama administration denied reports that it had
reached an agreement with Britain to join forces, tapping into government-
controlled strategic petroleum reserves. The talk triggered a drop in oil prices. In New York trading, they tumbled almost $2 to the $104-a-barrel level, but then recovered by the end
of the day, closing at $105. But President Obama today addressed worries
about high oil and gasoline prices. Speaking in Maryland, he laid out his plans for alternative energy. Sylvia Hall reports.

wants to change the way America powers up.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: So we can’t have an energy strategy for the last century that traps us in the past; we need an energy strategy for the future, an all-of-
the above strategy for the 21st Century that develops every source of
American-made energy.

HALL: As it turns out, between wind, solar, and other resources, the
country has its pick of ways to generate energy. The Department of Energy
says renewables make up around 10 percent of electricity production, and by
2035, their market share is expected to grow to 16 percent. But which ones are most promising? Last year, solar panel installation doubled, and wind energy production increased by 27 percent.
Both depend heavily on government subsidies, and in a time of tight
budgets, that support could dim.

source has enjoyed subsidies in its development period. That was true of
coal, true of oil, true of nuclear, and its now true of renewable energy.
The question is, how quickly can you phase out that subsidy?

HALL: While the cost of solar and wind energy has been dropping
steadily, they can’t compete with plummeting natural gas prices.

BUSINESS, U.C. BERKELEY: So, while they have — the renewables have gotten
somewhat more cost-effective, the bar that they’re trying to chase has also
gotten a lot harder to reach.

HALL: Over the long term, experts say its imperative that renewables
take a much bigger place in the energy market. But to do so will take a
lot more investment and a lot more research. Sylvia Hall, NIGHTLY BUSINESS REPORT, Washington.

Again Capital’s John Kilduff’s Outlook on Oil & Gas Prices

SUSIE GHARIB: Joining us now with more on energy prices, John Kilduff.
He’s founding partner at Again Capital. Hi, John.


GHARIB: So despite all the denials from the White House, are we in an
emergency situation when it comes to energy? And does it make economic
sense to tap into those strategic reserves?

KILDUFF: Well, I think it’s certainly right and I’m heartened it see
that it is on the table, clearly that it is being discussed. For starters,
you don’t want to snuff out this nascent recovery that we’re all enjoying
right now because of $4, $5 a gallon gasoline. But secondarily, this won’t just be the U.S. and the U.K., this will be a coordinated global release of strategic petroleum reserves like we saw
last year during the Libyan crisis that will put much-needed oil on the
market. It’s needed. It’s necessary. And it will help.

GHARIB: And, yes, talk a little bit about would it help. I mean,
would those extra oil supplies really stabilize prices?

KILDUFF: They would. It will fill the gap. Saudi Arabia has stepped
up and said that they will make up any shortfall from Iranian oil being
embargoed, whether the Europeans don’t buy it or whether the Iranians
themselves take it off the market. But they’re going to be — it’s going to be tight. So what these SPR barrels will do, what they did with the Libyan situation, is fill that gap,
say, a million to 2 million barrels a day, which can be sustained for
really several months if not a year or longer, if necessary. We have upwards of a billion barrels of oil in our Strategic Petroleum Reserve here in the United States. So that can go a long way.

GHARIB: Well, in this geopolitical environment, what is your outlook
for oil prices, gasoline prices over the next couple of months?

KILDUFF: Well, on the pure supply and demand numbers, I’m in the camp
that thinks these prices should be much lower and would be going much lower
if it wasn’t for the situation around Iran. And that’s because it doesn’t get any more serious than this situation. The big problem you have obviously is not just the Iranian
production, but if they block off the Strait of Hormuz, you lose about 30
percent of the world’s oil including most of the Saudi Arabian oil.
And there will be no one, no other country, no other place to replace
that oil. So that’s why the stakes here are so huge. But we’re seeing
China slow, in particular, the other emerging economies who are the most
energy intensive, slow. That should at least stabilize oil prices and get
them lower.

GHARIB: Well, give us number some numbers. Without the Iranian
situation, where would oil prices be? And if that intensifies in the
Middle East, where do you see oil prices going?

KILDUFF: I think to the upside, for starters, we installed a high
recently of about $110 a barrel. If we get through that, then the high
from just last year, during the height of the Libyan crisis, $115 a barrel.
That would translate solidly into a national gasoline average of about
$4.25 a gallon if we were to hit the 115 level. But if there can be a diplomatic breakthrough here on the Iranian situation, and there are negotiations that have begun, although this is
going to be the last shot at it, I believe, prices could quickly fall back
below $100 a barrel and really should trade in the low 90s if not upper
80s. We were just at $75 a barrel in October. And then the economy started
to clearly improve and prices rallied a bit from there. So I think
somewhere in that $85 to $95 a barrel range is really fair value at this

GHARIB: Yes. Hard to believe that we were at 75 just a few months
ago. John, thanks so much for coming on the program.

KILDUFF: Thank you.

GHARIB: And we’ve been speaking with John Kilduff of Again Capital.

in New York, at one of the 21,000 schools that participates in Junior
Achievement. The program is almost 100 years old. I’ll show you how it’s
changing with the times.

SUSIE GHARIB: It’s now seven straight up days for the Dow, the first time
the blue chip index has had such a winning streak in more than a year. A
bigger-than-expected drop in jobless claims helped spread good cheer on
Wall Street today. The Labor Department said new claims fell by 14,000
last week to 351,000.

The Dow added 53 points to close at 13,253. That’s its highest level
since December of 2007. The NASDAQ is still above 3,000, gaining almost 16
points. And the S&P 500 topped 1,400 for the first time in nearly four

Well, the NASDAQ and S&P got no help today from Apple (NASDAQ:AAPL),
although the stock did trade above $600 a share for the first time today.
But by the end of trading, Apple (NASDAQ:AAPL) lost $4 to close at $585 a
share. Now Apple (NASDAQ:AAPL) stock crossed the $500 mark for the first
time on February 13th, and has surged 45 percent this year.

Apple Shares Touch $600 Before Falling Back to Less Lofty Levels

SUSIE GHARIB: It’s now seven straight up days for the Dow, the first time
the blue chip index has had such a winning streak in more than a year. A
bigger-than-expected drop in jobless claims helped spread good cheer on
Wall Street today. The Labor Department said new claims fell by 14,000
last week to 351,000.

The Dow added 53 points to close at 13,253. That’s its highest level
since December of 2007. The NASDAQ is still above 3,000, gaining almost 16
points. And the S&P 500 topped 1,400 for the first time in nearly four

Well, the NASDAQ and S&P got no help today from Apple (NASDAQ:AAPL),
although the stock did trade above $600 a share for the first time today.
But by the end of trading, Apple (NASDAQ:AAPL) lost $4 to close at $585 a
share. Now Apple (NASDAQ:AAPL) stock crossed the $500 mark for the first
time on February 13th, and has surged 45 percent this year.

The latest rally comes as the company’s new iPad goes on sale
tomorrow, and fans are already lining up to buy them. Joining us now to
talk more about Apple’s future, Joe Magyer. He is equities analyst at The
Motley Fool. Hi, Joe.


GHARIB: Well, this momentum on Apple (NASDAQ:AAPL) stock has been
just amazing. And, you know, investors just can’t seem to get enough of
it. And I know are you not as enthusiastic as most investors. Tell us

MAGYER: Right, well, I love Apple (NASDAQ:AAPL) products, so do
consumers. But I don’t love the stock. And part of the reason is that
everyone loves the stock right now. Its market cap is equal to Microsoft
(NASDAQ:MSFT) plus IBM. And only two out of 57 analysts who follow it rate
it a sell. And usually when everyone can agree on the stock market that something
is a sure thing, that’s usually when the total opposite happens. So I
still think Apple (NASDAQ:AAPL) has a lot going for it and the new iPad is
going to be a huge hit, I just think investors might be getting a little
ahead of them themselves.

GHARIB: But, you know, we heard that so many times, so many experts
have come on and said Apple (NASDAQ:AAPL) stock is so overpriced.

MAGYER: It’s true.

GHARIB: And if you really listened to them, investors would have
missed out on the nice upside rise. What do you say to that?

MAGYER: Well, I would say, we said similar things in 1999 about tech
stocks all the way up. I mean, right now we are all saying that these guys
just can’t do anything wrong. And that’s ultimately the point where
usually something does go wrong.

GHARIB: Let’s talk a little bit about the new iPad. The early
reviews have been pretty fantastic. I mean, to what extent do you think
that sales of the new iPad will propel Apple (NASDAQ:AAPL) stock and sales?

MAGYER: Well, I think it’s already baked a lot into the stock price.
But I do think it’s going to be really big for Apple (NASDAQ:AAPL). The
big challenge is getting people who already have iPads to upgrade.

Unlike the iPhone, where you have a refresh cycle of, say, every two
years with your phone carrier, you have to pay full price for an iPad. And
they are not low ticket items. They are really expensive.

So making the jump from iPad 2 to the new iPad is a pretty expensive
proposition. Now that said, I think they are going to sell a ton of them.
And their tablet, the iPad, is so far out in front, not just in terms of
cost but in quality and the overall value that you get, than all their

So I do think the iPad is going to be the clear winner for tablets for
the next couple of years at least.

GHARIB: And the more that Apple (NASDAQ:AAPL) does these sales and
piles up more cash, investors are counting on a dividend from Apple
(NASDAQ:AAPL). When do you think CEO Tim Cook will finally go for that?

MAGYER: I think next quarter, probably about a month from now, when
you get the next batch of results. Tim Cook is getting a lot of pressure.
And the reality is they just can’t invest that much money. They have $100
billion worth of cash. They don’t want to make a big splashy acquisition
and there is no reason to sit on it with interest rates this low.

So I think the smartest thing they can do is just get some of that
cash back to shareholders and they would be very happy.

GHARIB: All right. Good stuff, Joe. Any disclosures to make? Do
you own the stock?

MAGYER: I do not.

GHARIB: OK. Thanks so much, Joe, we appreciate it.

MAGYER: Thank you.

GHARIB: We’ve been speaking with Joe Magyer of The Motley Fool.

Market Focus with Tom Hudson-Thursday Mar 15, 2012

SUSIE GHARIB: Broad-based buying meant lots of green here today, just two days before St. Patrick’s Day. So let’s take a look now in tonight’s “Market Focus.”

The S&P 500 was big news here at the Big Board. The index of large
U.S. companies closed above the 1,400 milestone for the first time since
the financial crisis in 2008. The S&P 500 is now up 11 percent this year.
And those 500 firms are paying a record amount of cash in dividends to
shareholders. Dividend increases this week by banks such as JPMorgan
(NYSE:JPM) helped push the payouts to a new high.

And S&P’s Howard Silverblatt predicts 60 percent of S&P 500 firms will
up their dividends this year as the economy improves.

Now financials were one of the hottest sectors in the S&P today.
Those Fed stress test results that we’ve been reporting about continue to
breath new life into the group. Bank of America (NYSE:BAC) gained 4.5
percent. It was the Dow’s best performer today. Citi and JPMorgan
(NYSE:JPM) both added about 3 percent. And Wells Fargo (NYSE:WFC) up 2

Now another sector also attracting big buying today, out-of-favor coal
mining stocks. One analyst said the group may have finally bottomed and
offers good value for investors. So Arch Coal (NYSE:ACI), Alpha Natural
Resources (NYSE:ANR), and Peabody Energy (NYSE:BTU) each rose more than 5

In merger news, Cisco (NASDAQ:CSCO) Systems announced a $5 billion
deal to buy video software maker NDS Group from News Corp (NASDAQ:NWS).
News Corp (NASDAQ:NWS)., you know, owns FOX News and The Wall Street
Journal. Shares of News Corp (NASDAQ:NWS). rose $0.15 to close at $20.43,
while Cisco (NASDAQ:CSCO) lost $0.29. But it is the biggest deal for Cisco
(NASDAQ:CSCO) in two years, and a reflection of its focus on video.

Now in other big deals, General Electric (NYSE:GE) is taking a 30
percent stake in Howard Energy Partners (NYSE:EPL). Howard is a natural
gas pipeline operator in the booming Eagle Ford Shale Fields of South
Texas. The price tag was not disclosed, but the deal is expected to close
next month.

And other investors include CrossTex Energy and Quanta Services
(NYSE:PWR). Each saw modest gains, while GE rose nearly 2 percent.

Allison Transmission IPO

SUSIE GHARIB: Now another economic bellwether got a fresh start today as an IPO.
We’re talking here about Allison Transmission, ticker symbol A-L-S-N, began
trading here at the Big Board.

It’s a new chapter for the company that was once a division of General
Motors (NYSE:GM). It was bought five years ago by two private equity
firms. The 100-year-old company makes automatic transmissions for heavy-
duty trucks and buses. Allison shares rose more than 1 percent today from
their opening price of $23 a share. It’s the largest IPO so far this year.
When I met with CEO Lawrence Dewey, he talked about what will drive
Allison’s growth.

improving economy here in North America is going to give us a lift. And
then also we’re working to gain new customers outside of North America.
We’re only 5 percent of the commercial vehicles, of the types we sell into,
have automatic. So very low penetration. We think that represents a great
opportunity for Allison to increase our share in those markets.

GHARIB: Larry, I know you are moving into markets like India and
China. What kind of growth you can expect from those countries?

DEWEY: It’s going to be, we think, a solid growth story over a period
of time. We have got feet on the street and we’ve got people calling on
customers. So we would say certainly double-digit growth. Mid-teens is
what we target, and we would like to even do better than that in terms of
some those developing countries.

GHARIB: Now you make transmissions for things like school buses and
sanitation trucks. How are those businesses doing given that you are
working with states and municipalities that are drastically cutting their

DEWEY: We’re starting to see municipalities, those that have seen
their tax receipts come up, those that have maybe a little stronger
financial house in order, if you will, are starting to come back into the
market. One the other late cycle plays will be construction which, as you
know, is certainly still depressed and we see that as runway ahead of us as

GHARIB: Well, you know Wall Street is looking at the Allison IPO as a
sign of the U.S. recovery, a resurgence of American industry. From your
perspective, is the economy really getting better? Is it getting stronger?

DEWEY: It is improving. However it is uneven. And so for us we
focus on the various sectors. And some are coming along now. And others
we expect in the next six to 12 months to see some level of improvement.

GHARIB: Are you going to be doing more hiring, are you going to be
adding jobs?

DEWEY: We’ve been adding jobs for about the past year in our
factories as well as our offices. So as we have grown the business, we’ve
been able to add people and offer them well-paying jobs.

GHARIB: What about oil and fuel prices? How big a factor is this in
your business?

DEWEY: Well, it doesn’t affect Allison so much as it does some of our
customers because that’s a significant part of their ongoing expenses. So
it might cause them to think about the timing of their vehicle purchases.
At Allison, we’re developing new technologies, whether it’s controls,
electronic controls for the existing products, or new hybrid products, to
go with the hybrid transit propulsion systems that we currently market, to
give our customers the option of significant fuel savings, 25 to 35

GHARIB: Looking at your stock, tell us why investors should consider
investing into Allison, an old economy company, as opposed to another IPO
that came here today, Demandware, which is technology and innovation?

DEWEY: Well, actually there is a lot of technology at Allison. We do
a lot of electronic controls that go along with the hardware of our
products. You know, Allison is a solid financial company. We’re
profitable. We generate good cash flow, continue to pay down debt, which
is accretive to the shareholders. And then a focus with our announced
dividend on return of capital to our shareholders.

GHARIB: When are you going to have a dividend?

DEWEY: Well, actually, we start second quarter of this year.

GHARIB: All right.

DEWEY: So it was announced.

GHARIB: Thank you so much. Good luck to you, congratulations.

DEWEY: Thank you. Thanks a lot. Appreciate it. Thanks, Susie.

IMF Gives Greece Another Bailout

SUSIE GHARIB: The International Monetary Fund has approved a $36 billion
loan for Greece, but with a warning, the money will be doled out over four
years, and future payments will depend on whether Greece lives up to the
reforms it has agreed to make. A crucial test will come next month when Greeks vote to select a new government. Right now, polls show the two major parties that agreed to the bailout are extremely unpopular.

INTERNATIONAL ECONOMICS: So, you could have a government in Greece that
were dependent on various types of, you know, extremist — whatever you
want to call them, populist parties. And such a government, I think, would
have extreme difficulties in implementing what remains a very tough
economic reform program.

GHARIB: Concerns about Greece`s ability to implement those reforms
were a big factor in approving today`s loan package. And tonight`s
commentator echoes those concerns. Here`s Simon Constable. He`s columnist
at The Wall Street Journal.

got a big nod for its latest bailout. The International Monetary Fund
approved its part of a 130 billion euro loan, the bulk of which is coming
from the European Union. So is Greece out of the woods? And can we rest easy that the crisis
won`t return to give the markets the jitters again? Well, in a word, no.
Even the IMF says so. There is no wiggle room on the Greek economic plan,
IMF staff warn. What that means in English is that Greece is still broke and its
government is going to have to really knuckle down and implement its
spending cuts. Add to that social problems we keep seeing across the
Adriatic country, and it`s not difficult to envision the crisis returning
in short order, and with it, a possible scary ride for the U.S. stock

That`s what most observers are saying. But I`d go further and say
there is still a big chance Greece leaves the euro, the single European
currency. And believe me, when that happens, investors will have few
places to hide. I`m Simon Constable for The Wall Street Journal.

Junior Achievement Helps Kids Learn Money Management

SUSIE GHARIB: It`s not easy teaching kids about money.
But one organization is devoted to helping millions of kids learn how to
manage money wisely. In fact, you probably know Junior Achievement from
when you were a kid. Erika Miller visited one New York City classroom to see what the organization is teaching students today.

someone who owns a business. And entrepreneurship is you have the right to
own your business through what system?

MILLER: It`s 2:00 at this Manhattan public school, and these fourth-
graders are learning how to build a business, including capital resource
allocation. They are participating in Junior Achievement, the organization
that has been teaching students smart money skills for generations. CEO Jack Kosakoski is a J.A. grad himself.

poor family, blue collar background, and I thought things that happened to
me, as opposed I could make things happen, that I could control my life.
And that`s what I gained through Junior Achievement.

MILLER: Ten million kids in grades K through 12 participate in J.A.
every year. It started in 1919, and one of its founders was Theodore Vail,
a former AT&T (NYSE:T) president.

Many of you may remember Junior Achievement from when you were in
school. But the program has changed with the times. Yes, students still
learn money management and entrepreneurial skills, but they also learn how
to get a job after graduation.

It`s understandable many students are concerned about making money and
getting a good job. But a recent J.A. survey found some depressing
results: less than half of teens nationwide are “very confident” they will
someday have their dream job. More troubling, 71 percent would give up
that dream job to make more money.

KOSAKOWSKI: As a parent, that`s troubling to me that there`s that
focus on the financial aspect of it.

MILLER: Whatever the student`s career goal, Junior Achievement still
relies on legions of volunteers to teach in classrooms. But it has had a
tough time finding enough of them to meet demand. So now J.A. has started
recruiting high school students who have been through the program.

GATLIN: I`m a strong believer that if you can explain something else
to a student in a cohesive and a coherent manner that I think anybody can
teach, and that`s why I wanted to give back and teach other students what I

this, I really feel like I guide the students, especially in finance. And
I`m really interested in finance and pursing that in my future.

MILLER: If your school does not offer J.A., you may want to check out
the video games on the organization`s Web site. Many of the games teach
real life lessons that are relevant to kids and adults alike.

UNIDENTIFIED MALE: What is the first step you are going to take to
learn more about income expectations and opportunities?


GHARIB: And that is NIGHTLY BUSINESS REPORT for this Thursday, March
15th. And we want to remind you this is the time of year your public
television station seeks your support, and it`s support that makes programs
like NIGHTLY BUSINESS REPORT possible. So thanks for joining us. I`m Susie Have a great evening. We`ll see all of you again tomorrow night.

Copyright 2012 NBR Worldwide Inc.

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