not since the height of the financial crisis has there been a string of declines from the retail sector. erika miller reports. >> shoppers didn't just spend less at department stores, auto dealerships, and furniture stores. spending fell in june in almost every category. that's not the only worrisome sign. when retail sales fall three months in a row, it can sometimes signal recession. but that's probably not the case this time. >> the retail sales report was disappointing. it reflects ongoing slowdown in the global economy, ongoing weakness in the u.s. economy. it should come as no surprise when you see businesses not willing to add significant quantities. >> reporter: today's retail data did prompt some economists to downgrade their estimates for 2nd quarter economic growth to close to 1%. that would be roughly half the increase in the first quarter. but, some optimists do see a silver lining that could boost

consumer spending in the months ahead. gasoline prices have fallen nearly 50 cents a gallon since they peaked in april. >> falling gasoline prices will certainly help the u.s. consumer. you couple that with modest improvements in nominal wages and what it points to, quite frankly, is a household standard of living that's improved. >> reporter: shoppertrak is predicting a strong 4% gain in august back-to-school sales. but there are plenty of skeptics who think sales will be flat or even lower, as parents stick to buying necessities. erika miller, "n.b.r.," new york. >> tom: still ahead, doomsday for u.s. i.o.u.s? one of the biggest owners of government bonds warns without a credible, long-term spending plan, interest rates may shoot up in a few years. we talk with vanguard's fixed income chief robert auwaerter. "nightly business report" is brought to you by:

captioning sponsored by wpbt >> tom: the weak retail results combined with worries about the global economic outlook to taket u.s. stocks lower. the dow fell points, the nasdaq lost 11 and the s&p 500 down three. more on those global worries, the international monetary fund today cut its growth outlook for the world economy. the lender of last resort sees the global economy growing at 3.5% this year, down slightly from its earlier view. it sees slower growth in most every major economy and little being done to fix europe's debt crisis or avoid the u.s. fiscal cliff. >> susie: so where do the markets go from here? we have two guests tonight with the outlook on stocks and bonds. we begin with john manley, chief equity strategist at wells fargo advantage funds.

john, you have been saying that the markets go sideways between now and the end of the year. tell us why. >> well, i think it's just too soon for it to go up. nothing is really fixed and it's really too soon for it to go down. things have are very cheap. we know what our problems are. we know what the issues are and if we have any problems we can sort of push them down the road. we are truck in this trading bin and it's very frustrating. >> susie: when do you see us breaking out of this trading band and should investors wait around? >> there is a pot of gold at the end of the rainbow in my opinion, at least. i think it's going to take six to nine months. the markets have become controllers of the decisionmakers. the markets are intolerant of in i excesses built into the system and they're correcting them. they are moving sharply lower when they have to not deeply, but sharply. that has an effect. slowly but surely over the next six to nine months the world's economic miss and the world leaders are putting into place things that can give as you more normal valuation on the market.

s >> susie: as you know, this is a headline driven market and investors are looking for a headline out of the chairman ben bernanke testimony out of the fed. what headline do they need to hear from him? >> some people want signs that he is going to launch a qe3. he acts to control the economy, not help the market. i think he will say that the world's economy is still struggling along. i don't know to put it in those terms. he will make clear that the fed will do whatever is necessary to keep it going. they won't gun it just for the sake of gunning it. they're not here to make stocks go higher in and of themselves. they are here to give stability to the world's economy. the u.s. economy and i think he will say he will do whatever has to be done to do that. sz he has been saying that for quite a while, as you know, john, if it's nothing more than that, what do you think the market reaction will be tomorrow? >> well, i don't know how the market can be pleasantly surprised. i must say, think that first of all, i was surprised today, i think that the few points we

were down was actually quite good considering how much we were up and the numbers were not good number. tomorrow is a tough one to get a positive reaction out of. i don't think he is going to pander to us and i think he's going to reinforce the notion that the world's economies are huffing and puffing along. i don't think it's going to be good news but again more of the sideways mentality. sz what about earnings? a lot of earnings coming out tomorrow. actually, this week. we have got johnson & johnson, it goldman sachs, coca-cola, intel, how are the -- over the next couple of weeks, the bulk of thesen reporting. how are the numbers going to impact trading over the next few weeks? >> i think they're going to have a big impact. the market is searching for the direction of earnings. i think people are skeptical but they wonder if they're skeptical enough. quite honestly, with the world's economy slowing down and the u.s. economy slowing down in the second quarter we're going to get an early test about how well corporations with handle slower top line growth. i think they will pass. the i think the numbers we saw

at the beginning were kind of sloppy but that's not abnormal for the way the carr gets reported. the market tends to save the best for the last. i think the news will be reasonably decent and the standard and the bar is very low at this point in time. sz. all right. we'll see what happens in the next couple of weeks. john, thank you very much. john manly of wells fargo a >> tom: as stocks tread water, the bond market bull market continues. the slower economy has had investors and traders continuing to pile into bonds pushing up prices and pushing down yields. >> more than 650 billion. with us tonight from pennsylvania, bob, do u.s. government bonds tonight present a good value for long term holders. >> not over the long term, over the near term, they're reflecting the premium for uncertainty, the economy hitting potentially hitting another air pocket.

you have the problems in europe, and still the fiscal cliff situation to work out combined with the zero interest rate policy on the part of the federal reserve. so, it's going to keep rates low over the medium term, but not the very long term. >> tom: yeah, so the question is in the long term, how long does the premium that you are talking about, in the short term, how long does that last? >> a lot of that has to do with congress and the administration, whether it's the current obama administration or a new romney administration. we have to get our fiscal house in order, and what that requires is a long term credible plan to cut deficits, the future congresses cannot evade. so, we're going to be coming up to that probably not in the fourth quarter of this year. i think they'll just do a three-month extension, tax cuts and i think in the first quarter of next year, then the shoe is going to kind of hit the road here in terms of what we have to

do to get things fixed. >> tom: well, you're in fact on record saying that you think the market will give the government about another four years to get its fiscal house in order before buyers may evaporate. is that still the time frame that you are looking at. does that mean higher interest rates and how fast? >> well, what i meant by that was that within a fur-year time period if nothing is done we could potentially face interest rates similar to italy and spain are dealing with. we're not going to get there all at once because u.s. treasury market is the most liquid market in the world and this pulls in a lot of buyers. but there's just going to be a point where the market is going to be begin to assess a credit risk premium similar to what it does to other countries that can't get their fiscal house in order. so, i think that byat in the the to five year time range, we cocking loot a preachably higher interest rates in the absence of a deal. >> bo>> tom: bob, you manage

millions of dollars in fiscal assets. what is your maturity. is it a matter of months or years? >> at vanguard, we run, short, ind mediate and long funds we offer our investors a whole range of choice. we don't just have one option. right now, regardless of what the fund is, we're probably close to its benchmark of neutral in a r maturity given the issue going on. >> tom: so noted here. one to watch there. robert auwaerter watching the fixed income in the bond market. thank you, bob. >> susie: the decision between paying with cash or credit may come with a price. an agreement between visa,

mastercard and retailers would allow stores to re-coup their cost of accepting credit cards. sylvia hall takes a look at the settlement and what it means for consumers. >> reporter: after seven years of fighting, the battle between visa, mastercard and the retailers who accept their cards is finally over. the two companies, along with a number of major banks, have agreed to pay over $6 billion to 7 million merchants across the country. they also will reduce fees charged to stores for taking their cards for eight months. the settlement's total value is over $7 billion. but the biggest change of all- businesses will have the option to charge customers more when they pay with plastic. >> consumers will have a choice of paying with a cheaper form of payment, rather than paying with a more expensive credit card. and that is where we're very hopeful that down the road. it won't take effect immediate but down the road. there will be more competition in this industry and ultimately prices will be lowered as a result.

>> reporter: the price he's referring to is what mastercard, visa and their member banks charge stores when shoppers swipe their credit cards instead of paying with cash. those fees could now lead to two prices at the register: one for cash, one for credit. >> it's really important that consumers understand their rights when it comes to these checkout fees. they can't be gauged and they can't be surprised, so those were the important safeguards that were built into this settlement. >> reporter: not everyone is on board with all the provisions. the national association of convenience stores says the settlement doesn't do enough to keep fees down. the group has rejected the agreement claiming it still would allow mastercard and visa to control the market. >> the desired outcome now would be for this agreement to get set aside by the class representatives, and for the case to move forward toward a trial. >> reporter: it could be months before stores may charge more to accept your credit card but investors paid more for the stocks of both visa and mastercard. both rallied as the long- standing lawsuit moves closer to

a final settlement. sylvia hall, "n.b.r.," washington. >> tom: this week on n.b.r., we are looking at immigration and the economy. the agriculture industry relies on immigrant workers to bring in the crop and keep prices down. happy apples grows and packages apples in missouri. more than two dozen workers were arrested there six years ago in a high profile immigration raid. a new documentary from the nine- network in st. louis called "homeland-- immigration in america" examines the difficulty happy apples has had in bringing immigrant workers to the u.s. legally.

♪ >> whether it's fast food, or fresh fruit, americans want it to be abundant and affordable. the question is, do we need immigrant labor to keep it that way? ever since the immigration raid in 2006, happy apples has made sure its apple pickers are legal guest workers with h2a seasonal work visas. but the right way of doing things is not necessarily the easy way. >> tomorrow morning, you're going to go over the i-9s. >> oh, yeah. >> what time is it? midnight. they just showed up. got less than half of the guys we were expecting. we had 5 visas. we couldn't get appointments at consulate in monterrey, so we had to go through the consulate in juarez for 48 of them and unfortunately, only 27 got their

visas in time to leave on the bus to come up. so, we're quite a few short. >> the guest worker program requires employers to provide housing, and transportation to and from the border. the hourly pay, nearly $11 an hour here, is set by federal and state guidelines. the jobs first have to be advertised regionally, but employers say this kind of work has few takers.

these men were among the 60,000 who entered the u.s. that year as legal guest workers. but nationwide, half of the seasonal farm work was still being done by illegal immigrants. one solution, legalize the illegals. give them visas or residency, but the mood in the country currently leans more toward tough enforcement and deportation. >> a lot of people call us, and say we need help. we can't get our fields picked. how do you get the workers that you get. we always say, do it through the h2a mram. program. it's not easy. it is not easy at all. it's a lot of paperwork. and my husband spends countless hours filling out papers and sending in documents and then he gets them back and he has to resubmit them. it's a lot of work. >> the guest worker program is among the most controversial immigration policies, within intense lobbying by pro and anti-immigrant groups, unions and agriculture and business

organizations. in this charged political climate, efforts to make significant changes have failed. >> we have more coverage on immigration and the economy >> tom: tomorrow, we will have more on the economy and immigration from this documentary titled "homeland: immigration in america." produced by the nine network in st. louis, the full series begins airing on pbs stations this friday. >> susie: a new woman at the top for yahoo. the struggling web giant today tapped long-time google executive marissa mayer to be its next c.e.o. she'll be yahoo's fifth chief executive in four years. from google maps to keeping google's iconic homepage, clear and free of clutter, mayer oversaw several design and product functions in her 13 years with the search giant. she also recently joined wal- mart's board of directors. just after she was tped, mayer took to twitter, saying quote, "i'm incredibly excited to start my new role at yahoo tomorrow." and it looks like investors are excited, too.

yahoo shares gained about 2% in after hours trading today rising to $16 a share. >> tom: not a whole lot of excitement in the market focus. it with was the prur sis drop in june retail sales that set the tone for the stock session. the s&p 500 hitting the lowest level. the s&p 500 hit its lowest level of the day less than an hour after the opening bell. the losses were pared back, but not eliminated by the close, ending with a small loss. it's the seventh loss in eight sessions. volume was moderate. 600 million shares on the big board. 1.4 billion on the nasdaq. it was a mixed market without much conviction. the leading stock sector losses were in the industrials and consumer discretionary sectors, down 0.6% consumer staples lost 0.4% big banking stocks were in focus again today thanks to earnings from citigroup. the second quarter was stronger than anticipated with citi earning one dollar per share. 11 cents ahead of estimates. citi is the third largest bank in the u.s. with a sizable presence overseas, but the rising u.s. dollar hurt that foreign business. citi shares moved only a

fraction on these results although volume was heavier than average. similar to other u.s. banks citi's american home mortgage business is booming thanks to record low borrowing rates. j.p. morgan shares saw som profit-taking after friday's rally after its own stronger than expected earnings. today's 2.7% fall was the steepest percentage drop among dow industrial stocks. the slower economic data here and abroad in the past few weeks has brought multi-national industrial and manufacturing companies in focus. these three industrial companies are scheduled to report earnings this week. ingersol-rand reports friday. shares fell 3.2% today, leading the industrial sector lower. on wednesday dover corporation reports earnings. shares fell 2.7%. and general electric turns in its latest financial report card friday. shares were almost 1% lower today. morgan stanley cut its rating to equal-weight for g.e. today, but said it is not in anticipation of friday's results. two deals are cooking in the drug business. the first has glaxo-smithkline

raising its offer from human genome sciences. glaxo increased its bid to $14.25 per share for h.g.s.i. the deal's total value is $3.6 billion. human genome rejected the initial, lower offer. human genome shares up 4.5% to close just before the buyout offer. the pop in april was when glaxo made its first offer. u.s. shares of the buyer glaxo- smithkline moved fractionally higher. g.s.k. gets human genome's lupus treatment and experimental medicines for diabetes and heart disease. the other deal involves generic drug maker par pharmaceutical. private equity firm t.g.p. has offered $50 per share for a total value of $1.9 billion. par can look for a better price for the next six weeks. after the close, the stock continued rallying over the $50 dollar per share buyout offer. all five of the most actively traded exchange traded funds were lower today, the russell 2,000 e.t.f. saw the biggest losses, down 0.4%. and that's tonight's market focus.

>> tom: retail sales continue slowing, job growth has been tepid and earnings season has not been all that spectacular, leading to tonight's word on the street: growth. david peltier is a portfolio manager with thestreet.com. like all investors looking for growth. dave, in this environment is there consistent reliable growth to be found? >> it's tough but it is out there if you want to try to find it, tom. it really is not sector-specific but what we're doing here is we're digging in, and finding

the different companies out there and different sectors that are generating that growth. >>. >> tom: so, generating that growth how? domestically, internationally through top-line growth or savings down the line to fuel earnings? >> it's a little kbit of both. of courses wore' focussing on the topline first and we want to see true sales growth. i think after three or four years off the bottom it's hard to be just cutting costs to get the earnings growth and we're finding the conditions that are growing faster than their peers and i think that the market, when it's more rational, will pay a premium for that. >> tom: one of them is in health care. depo, the ticker symbol for depo-med, a biopharmaceutical company involved with pain management. stock prices are down considerably from where it was a year ago. >> it is. now, this is a stock, again, their key product here, the key asset, is their drug delivery sis tim. the drug delivery system can be used for a bunch of different drugs. the lead drug is in diabetes. they have a pain management drug

like you said. >> tom: mm-hmm. >> the company is on track to post 80% growth in 2013. that's something you're not going to find everywhere in biotech for a profitable company. >> tom: we'll see if we can get it rewarded with a higher stock price. sandridge energy. is the d the ticker that you are looking at is an independent oil and natural gas cop. with gnat gas prices have gone so have gone this stock and that's meant lower. >> absolutely. but i think that the energy "the price is right"ss haves bottom for the time being. but you again it doesn't matter if we are talking about an energy stock or medical stock, if you can grow faster than your peers, when the market becomes a little bit more rational, you will get a premium valuation. so, i think that sandridge currently about $6 or $7 a share can move up towards $8 because they're growing their production 40% per year. that's much better than anybody out there right now. >> tom: what kind of time range do you have on the move? by the end of the year. >> i think they can get $8 by the end of the year. if you see natural gas and oil move up then you can see $10 in

early 2013. >> tom: david, you have positions in the two stocks we mentioned tonight? >> i'm restricted from owning both of these stocks. >> tom: david peltier, portfolio manager with thestreet.com. >> susie: tomorrow on capitol hill, u.s. lawmakers will hold hearings on the growing scandal surrounding the london interbank offered rate, or libor. so far, the british bank, barclays, has admitted to rigging rates and its chairman and ceo have both resigned. tonight's commentator says the scandal is far from over. he's sebastian mallaby, senior economics fellow at the council on foreign relations. >> the libor rate was sometimes so far off the equivalent new york funding rate that it must have been manipulated by more than one bank. so expect more big financial names to have their reputations tarnished before this scandal is over. and then there is the question of the role played by the regulators. in london, barclays bank has alleged that the bank of england knew it was manipulating libor- in fact, it actually encouraged the manipulation. we'll see if that allegation

stands up. but meanwhile in the united states, the congressional hearings are likely to press regulators to say how much they knew about libor manipulation before the scandal broke; and why they did not act to stop it. this debate may get ugly. if regulators knew that the libor rate was dishonest, the public will legitimately ask why failed to clean up the malpractice. and if the answer is that, in the depths of the 2008 crisis, they were just trying to help the banks survive, that will simply be further evidence of the problem of too big to fail banks. to prevent such banks from failing, regulators may have colluded in a lie. if that was the case, then maybe too big to fail banks should be deemed too big to exist? can we tolerate financial institutions that effectively blackmail the government? i'm sebastian mallaby. >> susie: that's "nightly business report" for monday, july 16. have a great evening everyone, and you as well, tom. >> tom: good night, susie and everyone. we'll see you online at nbr.com and back here tomorrow night. "nightly business report" is brought to you by:

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