>> this is n.b.r. >> susie: good evening, i'm susie gharib. federal reserve policymakers are split on how to fix the economy. take action now, or wait? >> tom: i'm tom hudson. china's red hot economy is cooling, we look at what the slowdown means for u.s. corporate earnings, and the global economy. >> susie: and one company is making a big push into china, marriott international, a look at its latest earnings and strategy. >> tom: that and more tonight on "n.b.r.!" >> tom: markets were clearly disappointed today the federal reserve does not seem ready to act right away to boost the economy. minutes from the fed's june meeting show only a few policy makers wanted to expand a bond buying program known as quantitative easing to lower interest rates and boost the economy. but as darren gersh reports this

is now really a question of timing. >> reporter: the fed was not willing to give markets an immediate monetary fix, but the latest readings from its policy making committee show a couple more lukewarm reports on the labor market might change that. >> and if these employment reports are still weak like this last one, i think a strong case could be made for the fed to expand its balance sheet and try to support the economy more. so, at that point it will be clear that the recovery has stalled like they said in the minutes would be a condition for them to do more. >> reporter: minutes from the fed's june meeting show only a few policy makers wanted to act quickly to boost the economy. several others wanted to expand the fed's efforts to bring down interest rates, but only if the recovery were about to lose momentum. at least one fed policy maker indicated another round of quantitative easing wouldn't help much, a view some economists share. >> it's small. it's in the right direction. it's not hurting anything. but it's not the basis for an economic recovery.

>> reporter: which may explain why several policy makers now think it's a good time to explore new tools to boost the economy. there was no hint in the minutes released today of what those tools might be, though ben bernanke will have a chance to provide some when he testifies before congress next week. darren gersh, "n.b.r.," washington. >> susie: still ahead on the program, the interest rate rigging scandal that cost british bank barclay's millions. what did the u.s. federal reserve know about it? "nightly business report" is brought to you by: captioning sponsored by wpbt >> susie: on wall street another day in the red for stocks. major averages closed lower after those minutes for the fed came out showing no clear plan

on how to boost the economy. the dow lost almost 50 points, bringing its losing streak to five straight sessions, the nasdaq fell 14, and the s&p 500 closed off a fraction. some mixed news on the economic front. the u.s. trade gap narrowed for the second straight month in may, on a big drop in prices for oil imports. the deficit narrowed almost 4% as exports increased and purchases from abroad fell. u.s. exports to europe rose nearly 3%, despite the ongoing euro-zone debt crisis. but the u.s. deficit with china widened by over 6%. >> tom: those rising chinese exports are a key reason that country's economy expanded rapidly the past decade, but now china's growth is slowing. and that's starting to take a toll on earnings of u.s. firms doing business there. erika miller takes a closer look at which firms are likely to get hit hardest. >> reporter: china's economic growth is the weakest since the financial crisis of 2008.

and the slowdown is likely to get worse. the world bank and the international monetary fund, predict chinese growth will be about 8% this year, down from 9% last year, and 10% the year before. the decline in chinese growth hardly qualifies as a hard landing, but it is still significant. >> i think it's important. it really is the difference between the global economy working on four engines. or having one-and-a-half of those engines drop off. because the incremental demand is coming from china. >> reporter: it's clear that certain industry groups will be affected more than others. today, luxury goods maker burberry reported a decline in first quarter sales growth due, in large part, to slowing chinese demand. and it's not just luxury brands that are getting hit hard. nike, procter and gamble, best buy, and others have also reported slowing sales in china. u.s. firms selling commodities and machinery are also likely to feel the impact.

>> i think those companies will be most affected. i think you will also see technology be affected. china tends to be a pretty big consumer of electronics. >> reporter: but it's important to keep perspective. asia represents only about 7% of s&p 500 sales, and only a portion of that is china. europe and the u.s. are far more important markets. in addition, there are plenty of companies that are pretty much immune to what happens outside the u.s. >> utilities, telecom services really don't have demand coming from other parts of the world. it's just about demand here in the good ole u-s of a. >> reporter: the slowing chinese economy may even have some upside for american consumers and businesses. the weakening demand from china is a key reason gasoline prices are falling, and that means extra money to spend in u.s. retail stores, restaurants and other places. erika miller, "n.b.r.," new york. >> susie: the slowing chinese economy is just one of many risks for investors and businesses. as we continue our series on the

outlook for the second half of 2012, we check in with david gordan for his forecast. he's the head of research at the eurasia group. >> david, let's just pick up on the whole china story. what is your take on the china impact on the u.s. over the next six months? >> i agree with the report that i think that china impact is not going to be that bigot u.s. economy. china is slowing, but it's not slowing very fast, and it's not that much of the u.s. external picture. i think from a u.s. perspective, the real challenge externally is europe. that's one we're going to have a pay a lot of attention to. it could have a much more serious negative impact. >> susie: tell us about the negative impact. you said it's one of the top risks over the next six months. >> i think the euro crisis --

the euro zone crisis sent going to get resolved quickly. i think over the rest of this year, there's still going to be a lot of squabbling in europe about just how to save the banking system in spain. what the nature of a new package for greece is going to look like, and thinking longer term, there's no agreement between the new socialist government in france, and the conservative government in germany. so none of those issues are going to be resolved. growth is going to weaken. that's going to have a much bigger impact back on the u.s. than the weakness in china. >> and you say there's very low chance that is despite all of this squabbling that the euro zone will break up, while many people predicting the opposite. you say not so. tell us why. >> i don't think the euro zone is going to break up. basically all of the leaders in europe are thoroughly committed to the euro zone. they don't agree on how to fix

it, but they all agree that fundamental breakdown would be a disaster for everybody. so this is going to hobble on for white a while, and the hobbling on and going to be a real downward force in the >> turn to the u.s. you talked about the impact of europe and china on the u.s. what is your outlook for the u.s. economy for six months and what it means to the job market and growth. >> i think the external pressures are mostly negative, although there are some positives. >> we're looking at lower gasoline prices. the u.s. is seen as a safe haven. money is flowing in. there's no chance of a rising interest rate. all of that will mitigate. but i think the recovery is just not gabing any momentum here, and so i think from the perspective of job creation,

the numbers are likely to look pretty weak, and i think that's going to be the big thing shaping the presidential race. >> susie: you're not in the camp of recession? >> no. no recession, and i don't think we see qe 3 before the election. >> susie: david gordon of the eurasia group. >> tom: another california city is expected to file for bankruptcy protection; san bernadino would be the third city in the golden state to do so in as many weeks. its city council voted for the filing last night, but we're told it could take as long as a month to file. san bernadino is 65 miles east of los angeles. it's home to 210,000 people, and a $46 million budget gap. if it files for bankruptcy, it would join the california cities of stockton and mammoth lakes in bankruptcy court.

>> tom: the brewing scandal over banking interest rates in the united kingdom has caught the attention of state prosecutors in america. it's the latest group looking into the libor scandal. >> reporter: libor is the london interbank overnight rate, an interest rate that banks charge each other for short term loans. it's an average of borrowing costs reported by banks. barclays has admitted to trying to manipulate the rate, agreeing to pay a $450 million fine. c.e.o. bob diamond resigned under-pressure. libor interest rates are used to price many mortgages and trillions of dollars of other loans. the federal reserve bank of new york has acknowledged hearing, "anecdotal reports of problems

with the libor rate, as far back as late 2007." rebel cole has worked at the federal reserve monitoring banks. he's now a finance professor at depaul university. he joins us from chicago. >> does the federal reserve here in the states have a role regulating libor? >> i don't real have a role of regulating libor, but the banks involved, and as many as 15 additional banks may be involved in the libor scandal, including the largest u.s. bank, j.p. morgan chase. >> the u.s. federal reserve acknowledged it heard anecdoteal evidence and suggested reforms from regulators in the uk. is it appropriate for the federal reserve to essentially pass the buck to the british colleagues? >> they can pass the buck to the british colleagues, but they're responsible for regulating the u.s. banks. we don't know for certain u.s. banks were complicit. but it's a team sport.

one bank can't manipulate. 16 banks were involved. >> tom: you have to know how libor is put together. it's a dalele survey of banks themselves and how much their borrowing costs are, and it's reported by the banks themselves in london. so the federal reserve can say it's an issue in london. there's trillions of dollars typed to t but it's industry practice. what's at stake here is the practice in london. >> the u.s. boofrngs have entered into hundreds of trillions dollars of contracts. if they're conspiring to fix libor rates which is what is alleged and what barclays admilted to, they've defrauded customers and there's going to be massive litigation in the united states which could potentially bring down some of the big banks. >> i have to ask you about anop ed piece in the "wall street journal" which trieped

to cool the flames of controversy. this opinion piece said in parted, this is a lesser scandal than the outrage would suggest. clearly you don't agree. why not? >> they talk in the oped about a few basis points. on the $800 trillion derivative market, a few basis points and a hundred billion dollars. if the "wall street journal" doesn't think a hundred billion dollars is a big deal, they're going to have a rude awakening when it gets to litigation. because the plaintiffs have deep pockets. these are institutional investors going after big banks. >> tom: what if the few hundred billion dollars was to the benefit -- in other words, the bankers were pushing down the interest rates? >> it's good for the homeowneders which is a $10 trillion market, but there were a lot of people, such as municipalities, such as baltimore, that were pushing down the rate they were

receiving. so the losers are going to sue. the winners are going to take their gains and keep quiet. >> tom: certainly this controversy isn't going to be quiet with the opinion board at the "wall street journal". they may want us to believe. zoo-our guest. from the depaul university. >> susie: customers of p.f.g. best are wondering if they'll get any money back after the futures brokerage filed for bankruptcy liquidation late yesterday. the filing came one day after regulators froze the company's assets for allegedly filing false bank statements and misappropriating customer funds. on monday the national futures association found a $200 million shortfall in p.f.g.'s customer accounts. that was the same day c.e.o. russell wasendorf senior, seen here in a previous interview, attempted suicide at the firm's cedar falls, iowa headquarters. sources think wasendorf had been mis-using customer funds for at least two years and doctoring bank statements to regulators.

>> tom: j.p. morgan may get back millions of dollars of stock awarded to executives involved in the bank's multi-billion dollar trading blunder. when the bank reports second quarter results on friday, it is expected also to disclose it's clawback efforts, going after millions of dollars in stock grants made to key people involved in those bad bets. j.p. morgan shares were up 1.1% today. since the company disclosed the trading loss, shares of the banking giant have lost $23 billion in market value. >> susie: many direct-tv users couldn't watch m.t.v. today or

some of their other favorite shows. viacom channels went dark overnight for subscribers of the satellite tv service, after the companies failed to reach a deal on programming fees. viacom is demanding more money for its channels, an extra billion dollars. that works out to a 30% jump in carriage fees. direct-tv says viacom's sagging ratings, don't justify the rate increase. the companies are expected to resume negotiations. both companies in trading, and down over one percent. >> see if the audience puts a little pressure on the two companys to come to an agreement. >> and not a lot of buying pressure today. >> tom: the major stock indices finished mixed, paring back earlier losses as the markets sorted through the latest tea leaves from the federal reserve. the s&p 500 had hovered around the unchanged line until the release of the minutes from the

last federal reserve meeting. share prices sank initially with no strong sign the central bank was ready to provide new help for the sputtering economy, but within the same hour, the index recovered and finished the session almost where it began the day. volume; 765 million shares on the big board. 1.6 billion on the nasdaq. the energy sector, up 1.4%. the financial and utility sectors were the second and third strongest, up just 0.8% and 0.6% respectively. one energy stock to watch tomorrow may be chevron. after the close tonight, the company updated its second quarter forecast, predicting stronger results in its down- stream business, that's the part of chevron that distributes oil and natural gas products. chevron shares were up about 1% ahead of the outlook. fellow oil giant exxon mobil gained 1.5% today. chevron's production was up in the first two months of the second quarter, led by an increase in production from its gulf of mexico wells. speaking of oil drilling, it was drilling stocks that led the overall energy sector higher today. diamond offshore was up 3.9% to a six week high. rowan gained 3.6% and noble was

up 3.5%. meantime, oil prices shot up, rising more than 2%, settling just below $86 per barrel. a report about u.s. oil supply showed a bigger than expected drop in the past week. oil gained even though the u.s. dollar did as well. a stronger dollar can put pressure on commodity prices since they're priced in a dollars. a stronger dollar takes fewer of them to buy. but as european anxieties continue, the u.s. dollar has been finding buyers. the u.s. dollar index is a basket of six international currencies, and the dollar continues its rally, moving up close to a two year high. the euro is at a two year low against the dollar. speaking of european worries, online group coupon company groupon has sank to a new low. about a quarter of the company's revenue comes from europe. shares fell 6.5% on heavy volume. the company came public at $20 per share in november. concerns have picked up this week on an report from marketing

firm com-score finding groupon online visits falling sharply this summer. beleaguered tech company hewlett packard was bouncing off its lowest share price in seven and a half years today. hewlett has suffered from management troubles, pressure on its traditional computer business, and strategy questions. the stock was up 3% today. volume was heavy after sinking to its lowest price 2005 yesterday. late today, technology research firm gartner reported h.p. continues to have the biggest personal computer market share, at just under 15%, followed closely by lenovo. dell captured just under 11 % market share. others made up the other almost 60%. a mixed finished for the five most actively traded exchange traded funds. the losers were the nasdaq 100 and russell 2000 e.t.f.'s. and that's tonight's "market focus."

>> if you're trying to squeeze reservation, hotel rates have been heating up along with the weather. and among the hotels raising prices successfully, marriott. spring time for the marriott coming in as expected. late today the company reported a profit of 42 cents a share. room rates up as it saw sprengt i in the spring time, especially from business travelers. >> marriott also slightly raising forecast for the rest of the year, a pretty bullish outlook or as expected, chad?

>> i think it's very much in line quarter with our expectations, and the street expectations. as you mentioned, they are successfully raising rates. the reason why they're able to too that is because the supply, and the growth of the number of hotels in the u.s. is growing at less than one percent a year. so you have very low supply growth and paperable environment. >> and business travelers were back in the second quarter. that bodes well. let's face it, we've seen the economy slow down over the past couple of weeks, at least the data has. >> yeah. i mean, you see the economy slow down, and i think what you have to watch out for in the stock -- if you go back to 2008, all the hotel ceos were saying things were great, really up until october of 2008 travel was booked well in advance, and so you aren't

going to see the performance hurt until after a major economic slowdown. so we're pretty cautious on pairiot right now and the sector as a whole. marriott stock is up 40% since october, and we think it's a stock you're too late to get into it. >> with that in mind, the room rates, is it sustainable at a 4% increase? >> we don't think it is. the last two recoveries lasted five years, and then 9 years, and we're three years into this recovery, and we think this is a different type of recovery, a much slower recovery. so maybe we can squeeze out a couple more years. in terms of the recovery, but we don't think you're going to see a nine year run. we think the market is really pricing in a very long term recovery right now. >> watching out for hotel stocks. our guest is chad from morning

star. >> susie: there are different reasons many of the nation's of a layoff, for others it's frustration with corporate america. tonight's "money file" has some guidelines for boomers on the small business track. here's money magazine's donna rosato. >> reporter: when you think of entrepreneurs, young hot-shots like facebook's mark zuckerberg or google's larry page are probably the faces that come to mind. but actually, its baby boomers who are striking out on their own at the fastest clip of any generation. of course, starting a business is tough at any age but there are particular obstacles to navigate when you're a later in life entrepreneur. here's how to overcome them. first, start by making sure you're cut out for the entrepreneur life. at this stage in your career, are you prepared to work long hours, market yourself and be a jack-of-all-trades to get your business off the ground? you're more likely cut out for the entrepreneur life if you enjoy making decisions and are quick to adapt. you have more business experience when you're in your

50s and 60s. but you also have less time to recover from a financial failure. limit the fall-out by focusing on businesses that don't require a lot of start up capital such as consulting. you can also get to profit quicker if you take over an existing business. finally, you can reduce your risks by taking on a partner. you'll benefit from pooling start up costs and sharing the stresses of working for yourself. i'm donna rosato. >> reporter: coming up tomorrow well take a look at why local businesses like this community bookstore in arlington, virginia are getting behind legislation that's working its way through congress. >> tom: also tomorrow, we'll look at the "big" cost of outfitting your "little" slugger. >> susie: shrek, kung fu panda and the animals from madagascar are heading to new jersey. dreamworks today announced plans for an indoor theme park there. it'll feature characters from its popular animated movies, and rides based on those films. it's being built as part of a new mega-mall in the new jersey

meadowlands, just miles from new york city. doors are scheduled to open in 2014. >> susie: and tom, dreamworks says the park isn't just for kids, it's also targeting teens and adults. >> susie: that's nightly business report for wednesday, july 11. have a great evening everyone, you too tom. >> tom: good night susie and everyone. we'll see you online at: www.nbr.com and back here tomorrow night. "nightly business report" is brought to you by: captioning sponsored by wpbt

captioned by media access group at wgbh access.wgbh.org >> join us anytime at nbr.com. there, you'll find full episodes of the program, complete show transcripts and all the market stats. also follows us on our facebook page at bizrpt. and on twitter @bizrpt.