<Show: NIGHTLY BUSINESS REPORT> <Date: May 10, 2013> <Time: 18:30:00> <Tran: 051001cb.

118> <Type: SHOW> <Head: NIGHTLY BUSINESS REPORT for May 10, 2013, PBS> <Sect: News; Domestic> <Byline: Susie Gharib, Tyler Mathisen, Courtney Reagan, Mary Thompson, Julia Boorstin> <Guest: Paul Christopher, Karen Brenner, Jim Awad> <Spec: Business; Economy; Trade; Policies; Entertainment; Hollywood; Movie Industry> <Time: 18:30:00>

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

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SUSIE GHARIB, NIGHTLY BUSINESS REPORT ANCHOR: Dollar dilemma. The green back is getting stronger. Who benefits? Who gets hurt? And what does it mean for your wallet?

TYLER MATHISEN, NIGHTLY BUSINESS REPORT ANCHOR: Shareholder pressure. Executives are coming under fire for holding the titles of both chairman and CEO. But do investors really benefit if the roles are split?

GHARIB: And "The Great Gatsby" gamble. Will the Hollywood`s big bet on this literary classic pay off?

We have all that and more tonight on NIGHTLY BUSINESS REPORT for Friday, May 10th.

Good evening, everyone.

So, Tyler, this incredible winning streak on Wall Street just continues.

MATHISEN: Another week of records, and more records again today. That wraps up three weeks in a row of gains on Wall Street as that final hour of push helped the Dow and S&P 500 close out the day at fresh all time closing highs yet again with stocks getting help from some solid earnings reports just ahead of the G-7 finance ministers meeting in the U.K. this weekend.

After an up and down session, the Dow ended nearly 36 points higher. It was a last hour round to the finish line. The record close there, 15,118. Technology stocks fueled a 27-point rise in the NASDAQ. And the S&P was up by seven.

GHARIB: The big talk on Wall Street and all across corporate America today, the mighty American dollar. The U.S. dollar has been getting stronger against other currencies, especially the Japanese yen. That`s because Japan`s central bank announced an aggressive plan to stimulate its economy with a flood of money and it`s working.

Just yesterday, the U.S. traded above 100 yen for the first time in four and a half years. And today, it went even higher.

So, who wins and who loses when the dollar gets stronger? And what does all of this mean to you?

Courtney Reagan explains.

(BEGIN VIDEOTAPE)

COURTNEY REAGAN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): For American consumers, a stronger dollar means the prices of goods from foreign countries like electronics, computers, and cars, may be lower if current trends continue. This week, the dollar got more expensive in Japan, topping 100 yen for the first time in four and a half years.

One of the triggers? The central banks in Japan and elsewhere are following the Federal Reserve`s lead. They are spending more money. When the supply of any currency begins to grow as it is in Japan, the price comes down.

When the price drops, you can buy more with the U.S. dollar. That`s why the dollar index, measuring the value of the dollar, has been climbing since early February, up about 4.5 percent.

(on camera): A stronger dollar means Americans traveling overseas this summer will have more buying power than they have in recent years. But that`s a double-edged sword because foreign tourists will find it costs more to visit the United States, which means their purchasing power is lower and they won`t be able to buy as much as they could have before.

The same is true on a big scale for U.S. exports, goods like cars, heaving construction equipment and servers and computing storage are becoming more expensive around the world. U.S. multinationals like Ford, Caterpillar (NYSE:CAT) and Cisco (NASDAQ:CSCO) have billions of dollars in revenues at stake, particularly in Europe.

Already this year, Ford, GM, Caterpillar (NYSE:CAT) and General Electric (NYSE:GE) have all announced plant closings and lay offs in Europe. Smaller European revenues will affect profits, which means forward-looking investors need to consider the effect of a stronger dollar on stock prices.

For NIGHTLY BUSINESS REPORT, I`m Courtney Reagan.

(END VIDEOTAPE)

MATHISEN: Paul Christopher joins us now with more analysis. He`s chief international strategist at Wells Fargo (NYSE:WFC) Advisors.

Mr. Christopher, welcome.

PAUL CHRISTOPHER, CHIEF INTERNATIONAL STRATEGIST, WELLS FARGO ADVISORS: Thank you.

MATHISEN: Is this a case of the dollar actually getting stronger or of other currencies like the yen and the euro getting weaker?

CHRISTOPHER: Well, it`s definitely a case of the yen getting weaker against the dollar. But if you go back to the beginning of the year, the euro was about flat against the dollar and other currencies like the Canadian dollar, the Swiss franc, are also about flat.

This is really a yen depreciation story.

GHARIB: Paul, which is more important for consumers and investors? You heard in our package that the prices of cars like Toyotas or Sonys are going to come down. And then on the other side, the profits of big corporations will be affected by this.

So, which is more important for consumers and investors, these two trends?

CHRISTOPHER: Well, that`s right. Whenever you have an exchange rate changes, basically a price change and some people will be better off or the same people could be better off in one sense and the same people could be worse off in another sense.

So, how do we balance these two, the consumer effect versus the investment effect? I would say there`s a third factor that`s more important than ether of those two. And that is that as the yen depreciates, you`re going to see more and more Japanese investors, as well as investors from other parts of Asia, coming to the U.S. financial markets to buy stocks and bonds. That`s not only going to boost the value of dollar, it`s going to boost the value of U.S. financial assets.

And that`s ultimately where I think U.S. investors and U.S. residents will gain the most.

MATHISEN: So, if I am a U.S. stockholder and my portfolio is mostly U.S. stocks, you see this on balance then as being a positive for me.

CHRISTOPHER: Yes. But, right now, it`s certainly a positive, especially when you consider that those companies are also selling here in the United States and those sales are going to get stronger as the U.S. economy continues to strengthen.

So, it`s not just a question of what happens to the earnings overseas.

GHARIB: I know this sounds a little sophisticated for individual investors, individuals taking advantage of currency markets of all of these changes that are going on. Is there anyway for the individual to do that or is it just too risky?

CHRISTOPHER: Well, there are ways for investors to take positions in foreign currencies, but, frankly, we think it`s very risky, especially for a long term investor who has long term goals in mind. That person should be considering that foreign exchange markets tend to overshoot. That means the prices can move wildly in one direction either up or down before they finally correct. That could give your portfolio quite a wild ride.

We would be more inclined to stay with more conventional stocks and bonds both here in the U.S. and overseas.

MATHISEN: An awful lot of the moves have been driven by the central banks. The Fed here, the bank of Japan in Tokyo, and, of course, the European Central Bank. What happens when those three or one or more of those three back away from what have been sort of unconventional monetary policy flooding the system with cash? What happens then?

CHRISTOPHER: Well, that`s a key question. And investors need to remember that once, let`s say the Fed, if the Fed decides to step away from these unconventional policies, is going to be for a reason. And that reason, according to what the Fed itself has said, will be that the U.S. economy will be strong enough to stand on its own and generate good growth on its own.

So, I think what we can look forward to is once those economies get to that point of being able to manage on their own sustainable growth, then you`ll see quantitative easing and other programs like that from the central banks sort of fall away like crutches when the person doesn`t need them anymore.

MATHISEN: Paul Christopher, thank you very much for your help tonight. Paul Christopher is chief international strategist at Wells Fargo (NYSE:WFC) Advisors.

GHARIB: Bad news for corn traders could be good news for consumers. A Department of Agriculture is now forecasting a record crop of corn this year, along with grain and soybeans as farmers bounced back from the worst drought in decades.

Corn futures fell 2 percent today. Wheat prices fell nearly 3 percent.

MATHISEN: Activist billionaire investor Carl Icahn is raising the stakes in a bid to take over Dell (NASDAQ:DELL) Computer. Along with partner Southeastern Asset Management, Icahn is launching a fresh challenge to Michael Dell`s plan to take the company he founded private for more than $24 billion.

Icahn`s plan would pay shareholders only $12 a share. That`s far less than the Michael Dell (NASDAQ:DELL) plan, but it would allow them to keep some equity stakes in the PC makers. And Icahn didn`t mince words when talking about which offer he thinks is a better deal for shareholders.

(BEGIN AUDIO CLIP)

CARL ICAHN, BILLIONAIRE INVESTOR: You can look at it and almost instinctively know that it`s good and I will tell you. This one is a real good one. You look at it real simplistically and not have to do a hell of a lot of work to know that shares in this case are literally getting screwed.

(END AUDIO CLIP)

MATHISEN: Shares of Dell (NASDAQ:DELL) finished the day higher. They closed at $13.45.

GHARIB: Despite a solid overall earnings season so far, some activist investors and shareholders are still not happy. And some are looking for changes in the highest ranks of

corporate America. Specifically they want to split the tradition of a CEO also being the company`s chairman.

Mary Thompson explains.

(BEGIN VIDEOTAPE)

MARY THOMPSON, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): The very top of the corporate ladder, a shaky place this proxy season. Investors tired of bad headlines and poor performance pushing for change at the highest rungs.

The latest firm to respond? The energy giant, Hess (NYSE:HES). It`s nominating the former head G.E. Energy John Krenicki to be its non- executive chairman.

Some shareholders may want all firms to split the roles of CEO and chairman, but attorney Amy Goodman says it`s better done on a case by case basis.

AMY GOODMAN, GIBSON DUNN PARTNER: That will vary from company to company and it will vary from the situation that a company is in at a particular point in time.

THOMPSON: In Hess` case, serial restructuring and years of underperformance under current chair and CEO John Hess (NYSE:HES) prompting activist investor Elliott Management to mount a proxy site. Elliott wants five new directors on board, not just a new chairman.

This follows the chairman`s departure at Hewlett-Packard (NYSE:HPQ), where a series of missteps prompted 41 percent of shareholders to withhold votes to reelect Ray Lane. He later stepped down.

At Occidental Petroleum (NYSE:OXY), the blow is more stunning. Seventy percent withholding votes for long time chair Ray Irani, frustrated by a fight over his successor and years of high pay.

Later this month, investors vote on whether JPMorgan (NYSE:JPM) chairman and CEO Jimmy Dimon keeps both jobs. Tarnished by a $6 billion trading loss, Dimon`s bank still posted record profits. He`s garnered support from peers like IAC`s Barry Diller.

BARRY DILLER, IAC CHAIRMAN AND SR. EXECUTIVE: I think he is as first rate as it gets.

THOMPSON (on camera): Proponents say splitting the roles of chairman and CEO is good governance. But it seems many investors just want that change because of poor performance.

For NIGHTLY BUSINESS REPORT, I`m Mary Thompson.

(END VIDEOTAPE)

GHARIB: Our next guest says splitting the dual role isn`t always in the best interest of the company. She`s Karen Brenner, clinical professor at New York University`s Stern School of Business.

Karen, thanks for joining us.

You know, most investors think that when you split these two roles, that it`s going to reduce conflict of interest. It`s going to have more of an independent board. You say not necessarily the case. Why?

KAREN BRENNER, CLINICAL PROFESSOR OF BUSINESS: Not necessarily.

Every director gets one vote. So, at the end of the day, splitting the roles does not change the dynamic. And sometimes it`s appropriate to split the roles. If there`s a transition in the CEO role, or if the companies going through a certain event and its life or transition or new leadership, there are specific instances where it could be effective and helpful in arranging or facilitating a transition.

But really, it is not one size fits all. I think one of the good elements of our governance system is that we allow for different cases and different contexts to respond to the needs of the particular situation. And in the case of JPMorgan (NYSE:JPM), the company has performed in a stellar fashion. It`s navigated the vicissitudes of the financial crisis exceedingly well, and while it did have a very unfortunate trading event last year, I mean, the disastrous trading event. The key when a company goes to a crisis is how it responds and how its leadership responds.

And I think it`s generally gotten very good remarks on taking the heat and dealing with the issue internally and externally as a result of that event as well.

MATHISEN: Let me take the question, Karen, and maybe turn it inside out a little bit. It may not -- splitting the roles may not actually cure the ills that the defenders of that plan would suggest. But is splitting of the roles of chairman and CEO, is it ever really harmful?

BRENNER: Well, I think --

MATHISEN: What`s wrong with it? Why isn`t it -- why not just do it?

BRENNER: If a company starting from zero position and there are -- there`s not somebody who`s sitting in that position already as chair and CEO, then it`s very possible that having two separate individuals hold those positions could make sense.

But companies usually have a historical context. People come into these roles with a certain position and they performed well in these roles. And so, the idea to have change for change sake doesn`t necessarily -- is not necessarily fair to the individual involved and it certainly doesn`t necessarily help the dynamic on the board level.

GHARIB: You know, we have seen so many changes out of Washington after the financial crisis that were supposed to help make the board stronger, have better scrutiny. And yet still from individual investors you hear a lot. Oh, these boards, they are so clubby. There`s not enough independent thinking. What is your assessment?

BRENNER: Well, I think there are two points. The latest regulations have been helpful especially in the area of executive sessions. And that`s when the CEO were -- and if the CEO is also chair, leaves the room and the board can have a session. Only the board itself without management present.

And sometimes if you have a very domineering CEO, that change the nature of the discussion and that facilitated also open dialogue. I think it`s always a challenge when you have a group dynamic to maintain independent and diversity of thought. Ad that`s really a challenge, whether you have someone assuming both roles or there`s a split role.

The key is to have a healthy, respectful engagement with independent thinking as part of the dynamic in a board room and joining a role or splitting the role doesn`t necessarily facilitate and (INAUDIBLE).

GHARIB: All right. Many controversial issue for many people here.

Karen, thanks so much for coming on the program. Karen Brenner of New York University Stern School of Business.

BRENNER: Thank you.

MATHISEN: And still ahead, four high quality stocks that could perform well over the next year. Tonight`s market monitor will tell you what they are and why they are buys.

But, first, a look at how the international markets closed today.

(MUSIC)

MATHISEN: Sears (NASDAQ:SHLD) Holding is a big winner today. It gets us started in tonight`s "Market Focus". The company rolling out a lease- to-own program in its stores for customers with credit problems. They`ll be able to lease large appliances, lawn mowers, other products and eventually own them by making monthly payments.

Investors see positives for Sears (NASDAQ:SHLD) Holdings and pushed the shares higher all day. The company closed at $56.85, up more than 7 percent.

GHARIB: Nissan is getting help from the weak Japanese yen that we discussed a little earlier in the program. The automakers said today, earnings surged 46 percent as it converts overseas profits into yen at a more favorable rate.

Nissan CEO Carlos Ghosn expects more benefits from that currency difference. Shares of Nissan are lightly traded here in the U.S. But looking over at Tokyo Stock Market, they were up every day this week for a gain of more than 8.5 percent.

Shares of generic drugmaker Actavis soared today as the company confirmed merger talks with specialty pharma company Warner Chilcott (NASDAQ:WCRX). But shares of both companies were up by double digits. Actavis by more than 12 percent, Warner Chilcott (NASDAQ:WCRX) at 19 percent.

MATHISEN: Universal (NYSE:UVV) Display slumped after releasing first quarter results, roughly in line with expectations. But investors sold off, concern about future profitability.

The company makes elements for LED video screens. Samsung is its key customer. Universal (NYSE:UVV) Display shares lost more than 17.5 percent and they finished the day at $27.50.

GHARIB: Our market monitor guest today says there are for good reasons that stocks will keep going up. He`s Jim Awad, chairman of Plimsoll Mark Capital.

So, Jim, so we are waiting for your top four?

JIM AWAD, PLIMSOLL MARK CAPITAL CHAIRMAN: OK. Well the reasons that the markets going up, all of them remain in place which are that the Fed is supplying this enormous liquidity, which is supportive of both the economy and the financial markets. Second, you have growing corporate profits. Third, you have sensible valuations on equities based on long term valuations.

And, finally, in the type of environment that we`re in, there is no powerful investment alternatives to stocks. Bonds provide low yields. Money markets provide almost nothing. Gold doesn`t compete. Commodities are going down.

And so, you might as well own share of growing profits with good dividends to get a total return in this type of environment. All of those conditions remain in place.

MATHISEN: Do you believe we`re in the middle of a long term secular bull market, a long term secular bull market or in the early innings of one?

AWAD: Well, we have been in one for sometime and the answer to that question, Tyler, depends on the news going forward. The risks that we have to watch are that there is tremendous speculation that has crept into the U.S. credit markets because of the Fed`s easy money policy. They are chasing people to take risks that may or may not end up being prudent.

And I worry about junk bond yields. I worry about covenant life loans. The same thing is going on in Europe. And they don`t have growth and we do. And also, the geopolitical situation around the world, particularly in the Middle East poses risks.

And, finally, while stocks are fairly valued, they are not as cheap as they were. So what I would say is that if none of the triggers are pulled, a credit event in the United States or Europe, or a war, we will end up with stocks ultimately being overvalued and that would be the end of the bull market. But that would give this market some more time to be labeled a true bull market.

GHARIB: All right. Jim, let`s going through some of your stock picks that you think will do well in this environment.

At the top of your list is Johnson & Johnson (NYSE:JNJ). It`s had a nice run so far this year. It`s at $85 today. How much higher do you think it can go? Why do you like it?

AWAD: OK. So, the theme here is you want to stay in because the situation for equities remains good. But there are risks. So you want to minimize your exposure to those risks. So, a stock like Johnson & Johnson (NYSE:JNJ), which is world class in terms of its balance sheet, in terms of its market share, in terms of its dominance in the markets that it participates in, in part of the need of its customers to buy its product, and yet, it sells at only 15 times earnings and has a 3 percent dividend.

So, if the market itself goes from 15 times to 20 times, which could happen. That would be the point at which stocks are overvalued. This could go to 20 times and you could $110 stock and at the same time, you do have protection in case things get a little rough.

MATHISEN: Let`s take your next two -- two stocks Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC) that used to be joined at the hip in a good way. For much of the past decade and a half, they kind of have joined at the hip in a bad way. Why do you like them now?

AWAD: Well, that`s what gives you the opportunity, that both of them have missed the movement from the PC to the handheld and they`re both aggressively trying to remedy that and they do have the market share and the balance sheets to remedy it.

And in the case of Microsoft (NASDAQ:MSFT), you`re selling it basically 10, 11 times earnings. In the case of Intel (NASDAQ:INTC), just a touch higher than that. And they could both go to 13 or 14 times earnings, and Microsoft (NASDAQ:MSFT), you have a yield, a little less than 3 percent. In the case of Intel (NASDAQ:INTC), you have a yield of little less than 4 percent.

So, if the multiples go up two or three points you collect the dividend, you get a good return on the stocks.

GHARIB: All right. Jim, thanks so much. Have a great weekend. Jimmy Awad, chairman of Plimsoll Mark Capital.

MATHISEN: An incredible story of survival after the world`s deadliest garment industry disaster in Bangladesh. After 17 days, buried beneath the rubble of a collapsed clothing factory more than 1,000 workers, a woman was discovered alive by evacuation crews.

The seamstress appeared to be in good health despite the ordeal and told rescuers that she survived by rationing food and water she found in the basement where she hid after fleeing the falling building more than two weeks ago.

GHARIB: Yes, two weeks. That was April 24th, just think of that. And temperatures apparently were in the 90s. Just an amazing story.

MATHISEN: This is now a thousand individuals killed, worst industrial disaster maybe of all time.

GHARIB: Switching gears here. Coming up, Hollywood is making a big bet on a literary classic. But will "The Great Gatsby" reap great rewards for Warner Brothers?

But first, let`s take a look at home some of the widely held stocks perform today.

(MUSIC)

GHARIB: A timeless literary classic gets a modern twist as the latest version of "The Great Gatsby" hits U.S. theaters today. And it doesn`t hurt that Leo DiCaprio heads up an all star cast. Buzz about the movie set in the roaring `20s has spun a pop culture craze over fashions, art decor styling, even faux vintage jewelry from Tiffany`s.

And as Julia Boorstin tells us, for producers of the film, there`s a whole lot riding on the movie itself.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: It`s like an amusement park.

JULIA BOORSTIN, NIGHTLY BUSINESS REPORT CORRESPONDENT (voiceover): Warner Brothers is releasing Baz Luhrmann`s adaptation of the classic, "The Great Gatsby" this weekend. The summer crowded with action and superheroes, the iconic novel may not be a typical 3D affair but it`s already off to a pretty great start, grossing $3.25 million from midnight screenings. That`s more than another hit film targeting female audiences, "Sex in the City."

UNIDENTIFIED MALE: Action.

BOORSTIN: Warner Brothers is setting an iconic title, expensive production and a hip soundtrack with Jay-Z and Beyonce will justify the $110 million budget and tens of millions of dollars of additional marketing spent.

PAUL DERGARABEDIAN, HOLLYWOOD.COM: Everything about this money just exudes money in the way that "The Great Gatsby" did itself in the novel.

BOORSTIN: And the film has millions of dollars of free promotion for licensing deals, with Tiffany (NYSE:TIF), Prada and Brooks Brothers.

(on camera): But it is a big bet. Warner Brothers doubled down on Gatsby last year when it held off on its release date so he could pour money on the re-shoot. Now, it`s betting on a $40 million opening weekend.

DERGARABEDIAN: It`s in a very competitive time frame, but it offers great counter programming to something like an "Iron Man" which will be dominating the multiplex.

BOORSTIN (voice-over): Warner Brothers has a particularly busy summer. Six more films before Labor Day, starting with "The Hangover 3" in two weeks, and then it`s "Man of Steel", the Superman reboot, followed by big budget "Pacific Rim", war film "The Conjuring", the comedy "We`re the Millers", and the thriller, "The Getaway".

Gatsby`s reviews have been mediocre, but that isn`t impacting moviegoers. The audience reaction online has been positive.

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

(END VIDEOTAPE)

GHARIB: Still, Gatsby is expected to have a big opening weekend, but it`s facing stiff competition from "Iron Man 3". Many critics expect it will be a box office winner.

MATHISEN: And, finally, history was made today. The final section of spire was put into place at the top of One World Trade Center in New York City today. Cheers and applause heard from an emotional crowd of construction workers on hand for the final installation.

New York`s newest landmark which used to be known as the Freedom Tower, the tallest building in the western hemisphere. What a beautiful day to do it. It stands now at a symbolic 1,776 feet.

I can`t wait to see it when I drive home tonight. I look across and I can see the skyline. I look forward to seeing that.

GHARIB: Taken so many years, finally. And it opens for business next year. So, there`s still a bit of wait.

MATHISEN: It`s a long time coming, but a beautiful building indeed it is.

GHARIB: Well, that`s NIGHTLY BUSINESS REPORT for tonight. I`m Susie Gharib. Have a great weekend, everyone. And a happy Mother`s Day to all of you out there.

MATHISEN: And a happy Mother`s Day to you, by the way. Have a great weekend.

GHARIB: I hope so.

MATHISEN: I hope everybody takes care of you.

GHARIB: I like that.

MATHISEN: Breakfast in bed.

Happy Mother`s Day, everybody. We`ll see you Monday.

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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