>> this is n.b.r. >> tom: good evening, i'm tom hudson. j.p. morgan's c.e.o. explains, doesn't defend, the bank's multi-billion dollar loss. >> susie: i'm susie gharib. we're half way through 2012; we'll look at the market outlook for the rest of the year. >> tom: then the housing market may still be weak but home renovations are making a comeback. what's driving the re-modeling and can it continue? >> susie: that and more tonight on "n.b.r." >> susie: it was an isolated incident and it won't happen again. that's what jamie dimon told lawmakers on capitol hill today about j.p. morgan's massive trading loss. he said the bank's traders got complacent, but added j.p. morgan would be solidly profitable in the second quarter. darren gersh reports. >> reporter: the high profile

hearing began with protests. >> stop foreclosures now. stop foreclosures now. >> reporter: and then it turned to explanations and apologies. dimon blamed his bank's big trading losses on poor internal oversight and a switch to a new risk management model. >> this portfolio morphed into something that, rather than protect the firm, created new and potentially larger risks. as a result, we have let a lot of people down, and we are sorry for it. >> reporter: dimon is the most vocal critic of the volcker rule limiting risky trading by big banks. but today, he gave a little ground. >> the irony to me is if there was a good volcker rule in place they may not have been able to do this. >> i don't know what the volcker rule is. it hasn't been written yet. it's very complicated. it may very well have stopped parts of what this portfolio morphed into. >> reporter: but later, dimon called the entire dodd-frank financial reform law overly complicated and confusing and he warned the volcker rule could make u.s. banks less competitive. >> we have the widest, deepest

and best capital markets in the world. it would be a shame to shed that out of anger. >> reporter: dimon said j.p. morgan chase was looking to do some of its own regulation, potentially clawing back some compensation from the traders and managers who were responsible for the big trades that went bad. darren gersh, "n.b.r.," washington. >> tom: still ahead, the bank bailout in spain and record low interest rates in america are financial band-aids, not cures. that's the diagnosis from michael farr, tonight's "street critique" guest. "nightly business report" is brought to you by: captioning sponsored by wpbt >> susie: our guest tonight jamie dimon gets high marks for the way he handled

questions about j.p. morgan's big blunder. joininging us now todd hagerman. so how did dimon do what do you think? >> i think he did pretty well, frankly. very relaxed. it was very typical jamie dimon. very are tick nut his answers, didn't seem to get ruffled by any of the questions, and clearly laid out for the committee today, you know, what happened, how they are trying to remedy the situation. and again how they are trying to move forward without this ever happening again. >> susie: you know that everybody was expecting for this to be a tough grilling, a faceoff between lawmakers, and it didn't turn out that way. do you think that's one of the reasons why j.p. morgan's stock was up today? >> yes, absolutely. that's part of it. clearly the way the hearing went and very cordial, a lot

of respect towards mr. dimon himself, is certainly gave a little life to the stock today. but i think there was another element as well in terms of the broker dealer space today, and i think that is the fact that within the testimony today in the line of questioning congress really didn't imply that there would be tougher additional regulations. and i think that's really where the market was coming from, the fact that there wasn't this hard charge or, you know, oversell usness on the part of the senate committee that they were going to look for tougher regulation. i think the market took a sigh of relief from that. >> susie: okay. one thing that dial montalked about was the bank's strong balance sheet, strong profit. he didn't say whether the trading losses might turn out to be more than that $2 billion number everybody has been talking about. if it does turn out to be bigger, what will those losses

mean to j.p. morgan? >> well, again, as mr. dial mon pointed out, -- mr. dimon pointed out, the loss is there, they expect to unwind the trade by the end of the year. current speculation within the marketplace is the loss is upwards of $4 billion. i currently have modeled into my estimates for the quarter approximately 3.8 billion. the point being is he's very close to the vest in terms of revealing a lot of details about where the trading position is today, and where the loss is, for obvious reasons in the sense that he doesn't want to give too much information out to his competitors in terms of taking advantage. >> susie: okay. quickly, jamie dimon over the last couple weeks has take en a real reputation al hit. do you think he'll keep his job as c.e.o.? >> i absolutely think he keeps his job as c.e.o.. you have to give him credit for the track record that he

has established over the last couple years. it's very difficult, regardless of the trading mishap and debacle that, again, it's a blemish on his record undoubtedly and it's going to be a period of time before we resolve it. but he's keeping his job. >> susie: all right. we'll have to leave it there. thanks, todd hagerman of stern agee. >> thank you. >> tom: wall street lost its earlier gains to end lower. the dow closed down 77, the nasdaq was off 24, and the s&p 500 lost nine. we were shopping a little less for the second month in a row. may retail sales dropped 0.2%, driving by a drop in gasoline sales thanks to lower pump prices. that drop in energy prices helped wholesale inflation fall by the biggest amount in almost three years. producer prices dropped 1% in may compared to a year ago.

core prices, striping out energy and food, prices were up 0.2%. >> susie: if you've been counting on a summer rally, you'll be disappointed, so says morgan stanley. the investment firm released today its market and economic forecast for the rest of the months. it expects stocks to stay in a trading range over the next six months, with continued volatility, weak corporate earnings, slow economic growth, and low inflation. i talked today with morgan stanley's chief investment strategist, david darst, and asked him about that cautious outlook. >> slowing growth in china and in the rest of the emerging markets that sell to china, that's number one. china we think will do okay, but not gang busters this year. secondly is these problems in europe. the financial problems, the worries about spain, the worries about greece, right now there's a great amount of uncertainty there. and number three is the deceleration in the rate of jobs growth in the united

states. >> susie: david, you talk about europe being a big worry. how do you think it will all play out and what does it mean for the u.s. markets? >> our base case is that germany will ride to the rescue, they will impose more conditions on doing that. it does germany no good to have the eurozone break up. that having been said, recently we raised the possibility of a messy divorce in europe in which greece leaves and perhaps other countries leave, to, from 25% up to 35%. >> susie: so should investors avoid investing in europe altogether? >> we have a small exposure to europe, selectively, and stick with the defensive sector, susie, that means health care, that means consumer products and that means utilities, and don't get involved right now with the financials, that's our short answer. >> susie: one thing that's interesting in your forecast is your view on bonds. you still very that bonds are a good thing for investors to have in their portfolios. tell us why. >> you want some diversification, in ton likely event, the possible event that

we're in a multi year period of stagnation, and bonds have been a good place to be. our feeling about bonds is you want to be under weight in treasury bonds, because they're very expensive. and you want to be a little overweight in the high quality high grade corporate bonds. and then a little bit of a sprinkling of high yield bonds and emerging market bonds. >> susie: in terms of investing in stocks, you say that investors should put their money into these high quality companies what you call global gorillas, names like coca-cola, apple, johnson and johnson and mcdonald's. what is the unifying them with these? >> they have an international mind set. they have a global presence. they have a good balance sheets, they have outstanding management itself, they have a generous philosophy of sharing their success through dividends and share buybacks. >> susie: so bottom line, what

is your advise to investors? >> take baby steps, do not swing for the fences, don't try to be a hero. secondly is be diversified, that's not just a list of different stocks. it's having things that zig when others zag. and finally be prepared to act when there is dislocation in the market, that's the hardest one for all of us. >> tom: it's no secret the nation's housing market is still suffering. home sales remain weak, and the supply of foreclosed properties is ample. still, home remodeling and renovation activity is building new momentum. that's after the worst downturn ever for home improvement spending.

suzanne pratt has the story. >> i like to re-purpose things. >> reporter: brian lewis knows a lot about new york city apartments. after all, he sells them for a living. and, when it came to his family's home, lewis chose to renovate. he's ambitiously combining two apartments, rather than buying something already done. >> you break through the wall. i'm creating a three bed, three bath, with central air in a beautiful antique 1891 building and creating a very contemporary space. i'm thrilled. >> reporter: lewis's contractor paul barnla specializes in gut renovations like this one, and expects he'll soon be even busier. >> we gauge it by how many bids we're putting out each month. and, the phones are ringing and architects and homeowners are calling, and we're bidding a lot more than we were six to 12 months ago. >> reporter: across the country, even as the real estate market remains in the basement, homeowners are doing more renovations than they have in the last few years.

is it because they're finding themselves stuck in their homes, or are they feeling better about the future? it was oaky, the floor was white, the countertops were green. it was just a real mess of a room. and now i think we really have a beautiful chef's kitchen here. >> reporter: he's been remodeling homes in westchester county, new york for two decades. so far this year, business is up 30%. that's because clients are finally doing upkeep on their homes abandoned in the financial crisis. >> as far as the large scale projects go, which would be over a quarter of a million dollars, those projects are still slow to market a little bit. they're still kind of chugging a long, they're not, people aren't rushing as much. but, the general maintenance is up. when we talk, volume is up. >> reporter: he predicts the pickup in general maintenance will lead to more big jobs like this interior reno, just

completed by his company. and, if you're contemplating a facelift or more for your house, lange says always start with guess where: >> kitchen. that kitchens sell a home. kitchens are where all my clients spend 90% of their time. people like to cook now, people like to congregate in there. >> reporter: who wouldn't want to congregate in this kitchen. suzanne pratt, "n.b.r.," new york. >> tom: kermit baker is the director of the modeling futures program at harvard university. with us tonight from that school. kermit, your index of home improvement activity has been climbing lately, it's been pretty optimistic, in fact it's up to the level that we last saw back this the middle of 2008. 123 billion dollars spent at the end of last year. is this recovery sustainable? >> i think it is, tom. we saw pretty steep decline, as you noted, from mid 2007 up until the middle of the year

in 2010, and it's kind of been hanging around that level, waiting for something to give it a little spark. and looks like we finally got to that point, looks like we're going to have a good year particularly a good second half of 2012 and we expect more growth in the industry as we move into 2013. >> tom: what gives you that optimism considering that we have seen same store sales slow down this spring at home depot and least, a couple of key suppliers when it comes to renovating and home remodeling? >> we had an unusually mild winter in most parts of the country, i think that accelerated some work. i think we're seeing a catchup in the second quarter. so a little bit of a pause, but i do feel once we get into the second half of the year we'll see acceleration again. >> tom: we've also seen existing and new home sales kind of back off the recovery we've seen. how much of the remodeling work is triggered by home purchases? >> well, existing home sales are probably the most critical factor for driving this market, that's just the most popular

time for households undertaking home improvement projects when they purchased a home, particularly an older home that hasn't had much work done. so again we've seen a little pause, but we're up to about 4 million existing home sales at an annualized rate, you know, certainly a lot better than we were at last year, two years ago. and again i think we're going to continue to see that move up again after we get through this little slow period in the spring. >> tom: what about the return on investment for these home improvement projects given the low level that we're seeing home sales at? >> certainly when the market was strong back in 2003 to 2007, a lot of work was under taken because houses were appreciateiating so rapidly, and you were getting very close to 100% of the expense for that project back in increased house prices. we're not seeing that now, we're seeing numbers closer to 07 or 75%. and i think that means that households are undertaking different projects. >> tom: measure twice, cut

once. kermit baker, he measures the remodeling industry from harvard university. >> susie: the fight between traditional cable tv companies and new online video streaming businesses has caught the attention of the justice department. federal prosecutors reportedly are investigating major cable companies, like comcast and time warner, over their internet service businesses. cable providers have seen stepped up competition from online media providers such as netflix. >> susie: speaking of online programming, prime customers of amazon.com will have a few more choices if they want to watch

their favorite shows online. amazon is teaming up with m.g.m. studios to add over 18,000 movies and tv episodes to its streaming platform called prime instant video. movies such as "terminator" and "rain man" will be some of the titles the partnership will use to compete with rival netflix. amazon has been spending heavily to beef up its online video business. the s&p 500 could find a solid direction for much of the session, shrugging off the drop in may retail sales. but at 2:00 pm eastern, the index began sinking, and continued falling with a small bounce at the closing bell. the index finished down 0.7%. volume was lower. 703 million on the big board. just below 1.7 billion shares on the nasdaq. nine of the ten major stock sectors registered losses, led by the 1.5% drop for consumer discretionary and material sectors. the energy sector was off by 1.1%.

among the worries today: a dow jones report that greek banks have seen customer withdrawals rising as sunday's election nears. closer to home, american express said the growth of its customers spending has slowed down. u.s. amex card spending was up 9% in the u.s. this spring, down last year's spending pace. that hit shares of a.x.p. it was the biggest percentage loser among dow jones industrial stocks, falling 2.4%. despite the slower growing spending, fewer american express customers were delinquent with their may bill compared to april. the biggest jump among dow stocks was johnson and johnson. j.n.j. shares popped 2.2%. for the first time in almost four years, the analyst at j.p. morgan upgrade j.n.j., calling it overweight saying the company has survived a number of medicine recalls, and there's optimism about new products. separately, the company expects to finish its $20 billion buyout of medical device maker synthes tomorrow. another stock fighting the weak tape was dell. the computer maker is just the latest high tech company to evolve into a dividend paying stock.

it will began paying an eight cent per share payout. that gives the stock a 2.6% dividend yield after today's 2.5% stock rally. volume was heavier than usual during today's buying. yesterday, before unveiling its new dividend policy, shares hit a 52 week low. the company also announced a program to cut $2 billion of costs over the next three years. the cuts will target dell's supply chain and sales group. the drop in may retail sales certainly didn't help today's market tone, nor retail stocks. athletic apparel maker, and retailer nike fell 5% on heavier than usual volume. this is nike's lowest close since late january. urban outfitters dropped almost 5% and department store giant macy's was down 4.5%. in the high-stakes gain of drug development, one company's encouraging drug experiments can spell trouble for another. that was the case today for regeneron pharmaceuticals. shares fell 12.5% on heavy volume. a privately held biotech firm announced positive results to treat a leading cause of blindness in the elderly.

regeneron recently launched its own treatment for age-related macular de-generation. in our exchange traded fund market flash, losses across the board for the five most actively traded e.t.f.s. the biggest loss was in the fund following the small cap russell 2000 index, down 1.2%. and that's tonight's "market focus." >> tom: band aids, not cure, that's what you're street kre tick calls the debt problems.

michael farr is with us. don't we need financial band aids, aren't we still bleeding? >> tom, a financial band aid will feel good for the short term, but they are not going to address the problem, that means you'll heed another band aid and sooner or later we run out of band aids, that's not good for individual economies, and it's not a big help. this hundred billion dollar help for the banks in spain isn't going to get it done. the only thing good to come out of spain this week was raffaele nadal, we've still got problems. >> tom: you've got some sutures for investor portfolios, one of them is microsoft. nice yield, technology shares. what's the risk? >> i don't see a whole lot of risk, and this is a name i own, i own across a bunch poiles. microsoft has started to move, it's been selling in the high 20s for years, people have forgotten the stock, nine times earnings. growing at 9 or 10% and again

at 2.7% dividend coming out with a new product, i think those earnings continue to increase and i think you'll have a pretty good return for microsoft. i think north of 10% over the next three to five years. >> tom: new product is a with johnson and johnson today by the likes of j.p. morgan, you see this upgrade, the first time in four years j.p. morgan upgraded j and j, calling it overweight, the stock was up 2%, still trading in the mid 60s. what do you anticipate out of this one? >> i'd like jn son and johnson for a while and i've been sitting on money that hasn't been moving a llt. i have been collecting my dividend, which has been much higher than treasury yields, like to get paid while i wait. but johnson and johnson is starting to much. they have an acquisition they made of a device company in europe, it looks like that acquisition will be acreteive now, so we've got more good news, driving, out of j and j, and a 3.9% yield, i think we're going to make money. >> tom: a half minute left, we have a viewer question.

when should you buy i or e savings bonds? i bonds are variable interest rates, e or double e earn a fixed interest rate. what should he consider? >> well, i think one is why do you want them why, do you need them, if you're really using them for savings there might be other better vehicles, certainly first look to your 401 can or retirement plans if there's some match where you can tax defer growth. but an e bond fixed rate, very conservative, you can buy up to 10,000 and they are basically guaranteed to double in about 20 years or so. >> tom: you own the two stocks we mentioned? >> i do indeed, i think i'm going to make a lot men on both of them, crossing by fingers tom. >> tom: street critique with michael farr, finkers and toes crossed. >> susie: as we continue our look at small businesses this week, there are many uncertainties and worries for business owners: the so-called "fiscal cliff", or the expiration of tax cuts and mandatory government spending cuts. also health care, and how the

supreme court will rule on the healthcare reform law. how entrepreneurs approach these uncertainties can have wide- ranging impacts for the economy. we are the engine that generates jobs in the world. we need more access to tools, we need access to government contracts, we need access to things that can make us bigger, and not only businesses like ours creating jobs within the company, we're creating jobs outside. >> there's talk about tax increases for small business owners and all of that, and a lot of people are worried about how they would be affected. we believe that if it is to help bolster the economy and to help in general not only small business owners but all companies in this country, we're more than happy to pay extra. >> i have a plan o and a plan

are there, that's a plan if obama wins and a plan if romney wins. the biggest challenge for entrepreneurs right now is what's going to happen after the election. >> susie: we have more on the challenges and success of starting a business with zumba c.e.o. alberto perlman, go to www.nbr.com to find out what he thinks are the "keys to success. you can find it under the "nbr- u" tab on the homepage. >> tom: tomorrow on "n.b.r.," our small business series is all about joe, a new york city coffee business taking on a goliath. then it's "made in america," how some print businesses are able to survive, in spite of competition from new media and the internet. and former f.d.i.c. chairman sheila bair on a new group to speed up financial reforms. >> susie: awe that coming up tomorrow. until then have a great evening, everyone. >> tom:

we'll see you online at: www.nbr.com and back here tomorrow night.