>> tom: with businesses afraid to hire, workers afraid to spend, and interest rates at historic lows, what can the federal reserve do to get the u.s. economy moving again? >> suzanne: we look at what's left in the fed's arsenal, and whether it will pull the trigger at tomorrow's policy meeting. you're watching "nightly business report" for monday, august 9. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> tom: good evening, and thanks for joining us. susie gharib is off tonight; i'm joined by suzanne pratt. stocks posted modest gains today, but trading volume was light. in fact, this will most likely be one of the lowest volume days of the year. tom, traders said they didn't want to buy or sell until they see what the federal reserve does tomorrow. that's when policymakers will meet to review the state of the economy. >> tom: with few new jobs being created and credit still tight, scott gurvey reports there are many opinions, but little agreement, on what the fed will or won't do. >> reporter: what's a fed to do?

from wall street... to main street... we are looking to the central bank to get us out of the worst recession since the great depression. but, having pushed short-term interest rates down to almost nothing, the fed has exhausted the best weapon in its arsenal. traders today moved to the sidelines in anticipation of tomorrow's fed meeting, but drew matus of u.b.s. says they may not get what they want. >> i think this is setting up to be a case where, despite all the speculation, the fed basically leaves the statement basically unchanged. they don't commit themselves. they don't hint at new policies, because frankly they don't want to show their cards to the market. so i think everyone's expecting them to do something, or a lot of people are expecting them to do something, and they may be disappointed this time around. >> reporter: also disappointed will be those job seekers coast to coast who want their government to do something, anything, to help get them hired. economist dean maki says the fed doesn't work like that. >> the fed's view is, these things work with lags. the fed's policies are bringing the unemployment rate gradually

down. it will continue to fall. whereas the public just sees the unemployment rate as very high, which it is. so in a way it's the difference between the trend in the unemployment rate and its still- high level. >> reporter: there are calls for the fed to lower the interest rate it pays banks on their deposits, or to buy more treasury bonds on the open market. both moves should increase the amount of cash banks have available to lend; that could stimulate growth. but many economists believe lower bank rates would only have a small impact on lending, while more asset purchases would greatly inflate the fed's already bulging balance sheet. >> we believe that, if there is something to be done, the fed really wants the treasury to take the lead, so be it tax cuts or be it further stimulus spending, the fed is really hoping the u.s. treasury is going to step forward and do what needs to be done, if something needs to be done. >> reporter: tax cuts or more stimulus spending? both have their supporters and detractors, and in the current politically charged climate there is no agreement on what should be done next.

scott gurvey, "nightly business report," new york. >> suzanne: here are the stories in tonight's n.b.r. newswheel: stocks rose ahead of tomorrow's fed meeting, the dow added 45 points, the nasdaq was up 17 and the s&p 500 gained six points. as we mentioned, trading volume started the week off light-- really light-- with 789 million shares moving on the big board and 1.6 billion on the nasdaq. b.p. today made its first payment into a $20 billion spill recovery fund. it plans another-- $2 billion-- during the fourth quarter. separately, the texas attorney general is suing b.p. for a leak of a different sort. the state alleges the oil giant illegally dumped nearly half a billion pounds of pollutants into the air at its texas city refinery earlier this year. skype global hopes to connect with u.s. investors, the luxembourg-based web video calling service today filed plans to go public. skype wants to list on the

nasdaq and sell $100 million of american depositary receipts. russia warned today its ban on grain exports could last into next year as it grapples with the worst drought on record. the world's third largest wheat exporter also cut production estimates by nearly a third, to about 44 million tons. >> tom: still ahead, would you believe that high-risk investors may have something in common with murderers? in tonight's "your mind and your money," a look at how your d.n.a. may impact your investing. >> suzanne: shares of hewlett packard lost 8% today, or almost $4, following friday's abrupt resignation of c.e.o. mark hurd. the stock had more than doubled during hurd's five years at the company, and now investors are questioning what his unexpected departure will mean for h.p. joining us now with his thoughts on that topic: michael holt, senior analyst at morningstar. michael, welcome. >> thanks for having me.

>> so let's start there. what do you think it's going to mean for hp stock, his depar ture. >> well, certainly it spooked investors off the bat. but the bottom line is the fundamentals are strong and solid for the company. and the strategy that herb put in place are still there and will survive his depar ture. >> do you see this as a buying opportunity, the flip that we've seen or the hit that the stock has taken? >> definitely. the short term turmoil will blow over. our fair value estimates remains at $55. this looks like a nice opportunity to get in on a high quality name. >> so what about likely candidates to replace him who have you heard who have do you think will be a good fit? >> there has been some speculation of internal candidates and then externally everybody from people at ibm, cisco and even e m.c.. but to me the most important thing is that they find a lead their has a track record of really driving operational excellence. and not only identifying acquisition candidates but the ability to integrate

them successfully. so that casts a wide net, even wider than the technology area. >> what do you think about the importance of having an internal candidate in terms of an easy transition, do you think that should be a priority or does it not matter at all? >> i don't think that's the most important thing. i think in some ways keeping the continuity at the next level down as the new c.e.o. comes in could be more important. additionally some of the longest tenured play erred at hp were already passed over when he was brought in so they may have that strike against them. >> now clearly the company has got to have a pretty significant morale problem following this. this is a significant surprise. what is the next c.e.o. have to do, do you think? >> well, the interim c.e.o. needs to calm everybody down. that's the most important thing. the next c.e.o. comes in and leads with a strong vision, lets everybody know what they are going to do. strong communication, strong personality is really important for the next person. >> uh-huh. now do you think that this is a tainted stock? clearly it has a storyed

history of rather add problems. we had corporate es meanage and now we have at bankrupt depar ture of another c.e.o.. is this a stock that you would really want to touch do you think as an investor? >> i think the history certainly does raise an eyebrow for investors. however the board handled things appropriately there was really zero tolerance because of the history so they had to act swiftly and decisively. they did that to alleviate those fears for investors and i think they proceeded in doing that and i'm comfortable with the direction they're headed. >> do you think it's important that they be swift and inn replacing the c.e.o.? is that important? >> it's important that they bring in the right candidate. it was important to be swift and decisive with the depar ture and also establishing the interim. i think the sooner the better for the next candidate but the most important thing we are going to be looking at are the qualities and track record of that candidate. >> okay, michael, i think we have to leave it there. quickly any disclosures?

>> no. >> thank you for joining us. >> thanks for having me. >> speaking with michael holt of morningstar. >> americans spend more than $2 trillion on health care each year. 20 billion of that is thanks to medical mistakes according to a new study out tonight. it's estimated medical errors cost the u.s. economy almost $20 billion. and with the million and a half mistakes, that works

out to a cost of about $13,000 each. jim tool is the managing director of mba actuaries and insurance consulting firm. he joins us from our washington d.c. bureau, welcome to nightly business report. >> pleasure, thank you, tom. >> what is haved-- considered a medical error in this $20 billion cost estimate? >> well, a medical error is a preventable injury caused by a medical procedure that's not caused by the progress of the disease itself. >> okay. and so with that $20 billion, 19.5 billion figure, who pays for? who writes those checks? >> unfortunately, tom, that's you and me. it comes through in our insurance premiums. it comes through in our medicare costs. so it affects all of us. >> it's a cost clearly that's passed around. and as your study finds, much of these cost mistakes are directly related to health care. about 87%. but clearly not all of them. you have 7% with indirect costs and 6% have just lost

productivity of the folks recovering from those medical errors. so as you look at that big top line number, almost $20 billion what are the options of the payors, insurance companies and ultimately you and i, the patient approximates? >> well, insurance companies have not been focusing on this in the past. and that's why the costs are passed through to the consumers. but i think going forward they're going to be taking the q from-- cue from the federal government which has made certain types of errors, what they term never events. and for a never event such as operating on the wrong site, the government will no longer be paying for those expenses through medicare. insurance companies could do the same thing. >> what about the transparency of these costs of getting your rundown of what was done to you if are you in a hospital and figuring out what you want to pay and what quite frankly you shouldn't pay because it was a mistake but yet are you being charged for it? >> that's an interesting question.

but again, that is up, if you are insured, your insurance company will be picking up and paying for those costs but it is up to the insurance company to decide if they want to take a stand for a certain types of errors and no longer pay for them. >> you mentioned the federal government may be setting the tone here when it comes to how it pays for medicare, mistakes that are made with medicare. how does the health reform law that is beginning to go into place address some of these mistakes? >> well, i wish they were taking a stronger stance on this issue. the institute of medicine report in 2000 convened a several committees and groups. and they said that one of the most important things that could be done is to create a center for patients safety. at a national level. sort of like the national transportation board does to make sure that our highways are safe. unfortunately that's not part of the reform bill and

i certainly hope that that will be taken into account in the future. >> jim, certainly the headline number here, 19.5 billion in medical errors is a big number. we appreciate you sharing it with us and the insights, jim tool with us, managing director of mba actuaries, an insurance consulting firm. >> thank you. >> hey, tom, a very quiet et monday in august, investors thinking about the fed, hp and the beach and maybe not necessarily in that order. >> maybe not. kind of a lull to sleep overall for the market. but there were some pockets of big volume. let's get everybody caught up in tonight's market focus. >> tom: with the bulk of earnings season over, investors were marking time ahead of tomorrow's federal reserve announcement on interest rates. technology stocks book-ended the dow industrials performance-- both the best and worst performing components today. cisco systems led the way up.

its quarterly results are due wednesday, and the firm is expected to show strong demand for its products. tonight's close is cisco's highest stock price since mid- may. hewlett packard shares saw huge volume and continued to drop on the heels of the c.e.o. scandal and resignation. today's 8% drop made h.p. the worst-performing dow component. tonight's close is a 17-month low. the golden arches saw its customers appetites return last month, reporting its best monthly same-store sales jump in more than a year. global sales were up 7% at mcdonald's that have been open for more than a year. u.s. sales rebounded up almost 6%, and business outside of the u.s. and europe saw a double- digit jump. it wasn't big macs or salads that get the credit. mcdonald's sales of new beverages like smoothies, along with its value menu, boosted sales. it certainly boosted shares of m-c-d. they're at a new all-time high tonight. in the past year, the stock is up 32%.

on a different end of the food business, chicken and pork company tyson saw a big jump in profits. its numbers beat the street with a record profit and wider margins, but there are some worries about too much chicken hurting its future business. the stock was down almost 5%. tonight's close matches its july low. j.p. morgan's analyst thinks the company didn't address a pick-up in chicken supply, and possibly higher feed costs. a small cap in the food industry, american dairy, saw a quarter of its market value disappear today on almost ten times its usual volume. despite its name, this company distributes baby formula in china. its quarterly results and outlook were disappointing. the strongest sector in today's trade was telecom, with the big carriers leading the way. sprint rallied close to 3%, but on only half its usual volume. at&t closed at a seven-month high, and verizon is at a four- month high.

verizon and google, meantime, are teaming up to push for a law they say would prevent internet providers from playing favorites by speeding up or slowing down certain online content-- so- called "net neutrality." the two companies want lawmakers to allow the f.c.c. to enforce a neutral internet that has been brought into question with a recent federal court ruling. they want companies that violate that neutrality to be fined up to $2 million, but the proposal also is limited to wireline internet access, not wireless. and that's tonight's "market focus."

>> suzanne: here's something to think about: behavioral research has found a similarity between high-risk investors and murderers. specifically, studies claim both murderers and high-risk investors may have preprogrammed tendencies, carried in their genes. in tonight's "your mind and your money" segment, dan grech looks at whether behaviors may be inherited, and he begins with a history lesson. >> reporter: remember lizzie borden? she was the central figure in one of the most sensational murder cases in american history-- the hacking deaths of her father and stepmother in 1892. lizzie went on trial for those crimes, the jury found her not guilty. but what if it could be shown that lizzie borden was part of a long line of murderers? one of her 21st century relatives is neuroscientist jim fallon. he did some research and he

found murderers on many branches of their family tree. >> our direct great, great-- eight times-- grandfather apparently killed his mother. but it didn't stop there, because from that person on-- that direct line of cornells-- we had seven other murderers. >> reporter: about five years ago, fallon examined brain scans of his immediate family, and he noticed an abnormality in his own brain. it was a pattern that he'd seen before-- in the brains of psychopathic killers. >> and this whole area of orbital cortex ventral media cortex was just shut off-- just like these killers. and i held up some of the slides id been using of all these different killers that we have this information on, and i looked exactly like them. >> fallon suspects he may have inherited genes associated with a tendency to commit murder. he thinks that's just one of many human behaviors built into a person's genetic profile. professors amir barnea and henrik cronqvist have a similar theory. >> what you do and how you invest your money-- that in part

is determined by your genes. >> reporter: they think inheriting certain genes can lead an investor to tolerate a certain level of risk. >> what we are saying is that genetic variation across people can explain how much risk appetite they have. so those that are born with more appetite for risk, they end up also with portfolios that have more equity exposure and more risk and more volatility. >> reporter: barnea and cronqvist studied the records of nearly 35,000 swedish twins. they found amazing similarities in the investment styles of identical twins, even those who were raised apart. >> what you see in this graph is three different investment behaviors: stock market participation, the share or percentage of one's portfolio invested in risky assets, and the third one is the volatility of one's portfolio.

and the green column is the one that shows the correlation amongst identical twins. you can clearly see from the graphs that the correlation between the identical twins is much larger than that of fraternal twins. >> reporter: barnea and cronqvist believe that genetics account for between a third and almost half of a person's investment temperament, which raises the question: if you're preprogrammed to act in a certain way, can you overcome your natural tendencies? perhaps. jim fallon notes that even though he shares genetic traits with murderers, he hasn't killed anyone. he says that could reflect nurturing factors like a good childhood, or just his own personality. >> i think there may be coping mechanisms that are there. it wasn't like i was trying to build them, but i think they happened naturally so i wouldn't blow up. >> reporter: so if you're guilty of bad investment practices, don't automatically blame your parents. experts say by being aware of the right-- and wrong-- way to manage your money, you may be

able to keep your "evil" investment impulses locked up. dan grech, "nightly business report," miami. >> tom: here's what we're watching for tomorrow: quarterly results from walt disney, and the house of representatives votes on a $26 billion state aid bill. also, with the federal reserve expected to keep interest rates low, our "word on the street" asks: should investors follow the strategy of don't fight the fed? bob walberg of thestreet.com joins us with answers. >> suzanne: a year after driving out of bankruptcy, chyrsler's financial picture is improving... slightly. the automaker lost $172 million in the second quarter, compared with a first quarter loss of $197 million. revenue rose 8% from the first quarter to $10.5 billion. sales in the u.s. have improved this year, but chrysler has not been as successful as its rivals. c.e.o. sergio marchionne predicts the company will break

even or generate a small profit this year. >> tom: food maker sara lee is looking for a new boss. chief executive brenda barnes is stepping down. she had a stroke in may and has been on medical leave. barnes became c.e.o. in 2005 and transformed sara lee, focusing it on its food and beverage brands. chief financial officer marcel smits will continue as interim c.e.o., but the firm's considering both inside and outside candidates as barnes' permanent replacement. euquu

>> suzanne: tonight's commentator has been on the road, and he's brought back a first-hand take on the nation's economy. he's bernard baumohl, chief global economist at the economic outlook group. i just returned from a two-week drive looking at nearly a dozen colleges with my teenage daughters. the trek through ten states proved to be interesting in two respects. besides visiting these schools, the trip gave me a chance to chat with a diverse group of people along the way, and thes talks quickly turned to the economy. most expressed bewilderment. for instance, hotel managers and restaurant owners hear about a recovery, but they're not yet convinced. small shop owners are pleased interest rates are low, but what good is it if one can't get loans? college seniors read how companies are earning record profits, yet few firms are hiring.

is the recovery on track or not, they ask? the uncertainty is understandable. the economy grew at a moderate pace during the first nine months of its comeback, and it was supposed to pick up more speed last spring. instead, it got tripped up by two spoilers: the eruption of europe's sovereign debt crisis and mounting fears that china's economy will suffer a violent crash in property values. alarmed by these two threats, u.s. employers, consumers and bankers all turned cautious again in the second quarter and the economy suffered for it. now the good news. those two speed bumps are starting to fade. there's fresh evidence that economic and financial conditions in europe are improving and that chinese policymakers are successfully engineering a soft landing for its economy. as a result, i expect both employment and consumer spending to pick up markedly later this year. i'm bernard baumohl.

>> suzanne: that's "nightly business report" for monday, august 9. i'm suzanne pratt. good night everyone and good night to you too, tom. >> tom: good night suzanne. i'm tom hudson. goodnight everyone, and thanks for joining us. we'll see you again tomorrow night. "nightly business report" is made possible by:

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