this program is made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> tom: good evening, and thanks for joining us. tonight susie gharib is off. and suzanne pratt joins me.

suzanne wall street spent the day again sorting through a new batch of economic reports. >> suzanne: a mixed day. retail sales gained 4/10 of 1%, but much of that was due to higher gas prices. outside of auto dealers and gas stations, almost every time of retail reported lower sales in july. consumers are still cash-strapped, and worried about the economy. while it rose this month, it is still at depressed levels. >> tom: yeah, it is. with all of the mixed economic numbers, no wonder investors big and small are feeling confused. so where do we go from here? it is a question a lot of individual investors are asking, bout as scott gurvey reports, they're finding few solid answers. >> reporter: many investors are sitting firmly on the sidelines. they're unwilling to invest in stocks because of uncertainty about the

earnings and corporate earnings. and they're unimpressed with current low yields. s&p's sam stovall says fixed income investments made day should be short-term. >> investors can look not only at the treasures, but they're yielding such puney returns, you can look to high quality qorpt bonds and even high quality municipal bonds or deferred issues, which offer noot dividend yields, or even limited trusts if you're looking for a high payout, and you're worried about a higher tax rate down the road. >> reporter: financial planner jonathan satovsky, says investors who believed they had a solid financial plan in place before the recession should stay the course. >> the truth is 99.9% of people are terrible market timers, they get in and out at the wrong times. so if you have a plan and a structure that works for you and you understand the

level of volatility you're going to live with, and you have a sleep at night quotion with enough liquidity, you can go living your life and not get caught up in the min min newshouria of day to day. >> there is so much uncertainty out there, it elevates the risks we see to investors. so at least in the near to intermediate term, we would be remaining cautious. but i do remind investors that we are currently in the worst two quarters of the 16-quarter presidential cycle, which, interestingly enough, is followed by the three strongest quarters of the 16-quarter presidential cycle. so you might not want to be cautious for too long. >> reporter: one result of current investor caution that is considered a positive by economists, the savings rate. now at 6.2%, it was 1.2% before the recession. scott gurvey, "nightly business report," new york.

>> suzanne: hereñi are the stories in tonight's nbr news real. the dow fell 16 points, the nasdaq lost 16 points, and the s&p 500 was down four. trading volume sell ahead of the weekend on the big board and the nasdaq. oil futures were down for the fourth straight session, and crude lost 5.31, or almost 7% on the week. consumer prices rose 3/10 of a percentage high, but excluding food and energy, the core rate was almost flat. blam blam is suing bishops, transocean and halliburton. no word on how much alabama won. republican senator charles grassley wants to know what it means for the automaker's biggest investor, uncle sam.

he is asking for an analysis for i.p.os, and how to get the best returns for taxpayers. >> tom: still ahead on the program, japan's hottest fashion house has big plans for global expansion. we introduce you to uniqlo. >> suzanne: in the wake of a housing meltdown, the federal government poured billions of dollars into fannie mae and freddie mac to keep the market afloat. next week the obama administration will hold a summit to figure out what is next for the mortgage giant. stephanie dhue looks at what is at stake in the debate. >> reporter: being able to grill on the balcony sold matt colms on his first home. but getting a 30-year fixed-rate mortgage put the payments in reach. >> i wanted to make sure my payments were study for an extended period of time. having a variable interest rate may have had me go over the budget of what i could afford.

>> reporter: that 30-year fixed rate is available through fannie mae and freddie mac. these agencies used the government's backing to buy mortgages from lenders to encourage more home loans. danilo pelletiere says without uncle sam, the traditional 30-year fixed-rate mortgage might not be an option. >> very few banks would take the risk to give most americans that long-term financing without some kind of explicit or implicit guarantee from the federal government. >> reporter: but that guarantee has come at a huge cost. since taking them over two years ago, the government has pumped $150 billion into fanny and freddie. and that bill is expected to get much higher. the f.h.a. has also taken on more risk. taxpayers don't realize how many home buyers have been touched by that lending. >> i think there was a

sense amongst most americans they were not government subsidized. what this massive bill tells us is that many of us were government subsidized. and we have to figure out a way to provide those benefits at lower costs. >> suzanne: the f.h.a., fannie and freddie backed 95% of new mortgages. the challenge is how to shrink to role without hurting housing. he now thinks the government should now phase out fannie and freddie and scale back. >> you can't have it all. if you look at our system, which has failed, compared to the rest of the developed world, you'll find if you take ever single policy lever that you can possibly have in housing, and you made a list, and then you said, okay, which ones does the united states have, we check every box. >> reporter: matt colms isn't sure how long he'll stay here, but he is glad he is no longer renting.

>> i'm happy with my choice because i feel like my money is working for me. >> reporter: the question now is: how much money should government spend to help homeownership. stephanie dhue, "nightly business report," washington. >> suzanne: so, tom, a lackluster end to a rough week for equity investors. it looks like it was all about the economy. >> tom: it was all about the economy. the market ending with a bit of a whimper, but it was in the red again

today. let's get you updateed with tonight's "market focus." just some small losses today but investors saw last week's slim gains reversed and then some with all of the major indices in the red four out of the last five sessions. the dow industrials losing more than 3%, and cisco and hewlett-packard were the two worst performing. disappointing revenues at cisco, and the fallout following h.p.'s bos, mark hurd. and the nasdaq powered lower by the cisco disappointment. the s&p 500 fell almost 4%. all three of the major indices now in the red for the year. the telecommunications are key costumers for cisco. and telecom stocks have been a bright stock for investors this week, and since the third quarter began.

the telecom services sector was the only of the 10 sectors to ink out a small gain. so far this quarter, telecom is the best performing sector, too. up more than 10%. after spending the week worrying about the economy and digesting earnings, several merger announcements hit the tape on this friday. first comes from the world of private equity. blackstone group has a deal to buy energy company dinagy for $542 million. and they will assume dinagy's debt, and as part of the deal, blackstone will get $1.4 million back. so here is how the three players fared. dinahgy, clearly a big winner. closing price above blackstone's offer. and the market things a better price may be coming. blackstone was weaker by 3%, and n.r.g. slid 2%.

big blue was in the market for a marketing services company. ibm spending $480 million to buy unica. and ibm paying $21 million in cash. and the stock shy of that number with a 118% gain. the deals weren't confined to the u.s. two latin-american airlines plan on combining forces. land air from chile and tam from bazooka are b.c. brazil, and the two have struck a deal to have land air by the brazilian carrier, 1.95% of tam's holders have to okay the deal. in the energy sector, equipment company alice chandlers is the target of an $890 million buyout, this by a norwegian company. we mentioned the disappointing retail sales earlier in the week.

two stores disappointed their shareholders. jcpenney cut its earnings, and shares hit a new low on the disappointment. dillard's, meantime, closed at a six-month low, and it also swung to a profit last quarter, but revenue was down. a quartet of new stocks hit the market. india's biggest online travel sight makemytrip became public at $14 a share. and on wednesday we saw a couple of i.p.o. s, and china changu makes plates and screws for bone fractures, and media mine makes software to manage digital advertising, and the average price there $11 a share. and that's tonight's "market focus."

alcoholic p.m. >> suzanne: attention shopoholics, one of japan's best known chains is expanding in the u.s. it is called uniqlo, and it has nearly 1,000 outlets in seven countries. it wants to quadruple that empire over the next empire. >> reporter: almost every man, woman and child in japan, population, 127 billion, own as least one item from this chain, uniqlo. by offering staples like jeans and t-shirts at budget prices, uniqlo has

literally sewn up the japanese market. uniqlo wrapped up about $7 billion in domestic sales last year. >> really, they have a huge range. whether you're a 20-year-old fascia20-year-old fe girl or a businessman or a retiree, they have basically something for everybody. >> reporter: but having filled closets all over japan, there is little room to grow at home. as the japanese population declines, uniqlo is on a mission to go overseas. >> our vision is clear: to be number one in japan, and then in asia, and then in the world. by 2016, our overseas scale will exceed our domestic business. by 2020, we want to be the leader in the world apparel business. >> reporter: not content to be asia's apparel company, uniqlo plans on opening one or two new stores swrr in the world

every -- somewhere in the world every day. the glitzy address would be its new home in the soho district. >> reporter: virtually unknown in the united states, but new yorkers know our brand. movie stars and celebrities patronize our soho store. we wanted to open and fifth avenue, but it has taken this long. >> reporter: they are going to lease a space on new york's premier shopping space to a tune of $300 million. a record for manhattan real estate. >> they're not just for soho, but really the whole city, the whole country, and the whole world. and fifth avenue is the best place to start that. >> reporter: but analysts say uniqlo will be forced to roll out cautiously in the complex and comparative priced

markets. >> reporter: some are a lot cheaper than uniqlo, and arguably lower quality, but far more trendy than uniqlo. >> reporter: analysts agree that uniqlo's quest to beat out gap and others, but depend on acquiring other retailers. >> uniqlo is setting a very, very steep goal to achieve that, even by 2020. it is probably unattainable without acquisition. >> reporter: and tad aashi is considering another step. the company is considering listing its shares on an oversees exchange. they're looking at developed and developing markets. "nightly business report," tokyo. >> tom: next week, cindy sweetie, and look for

july's reports on producer prices, and housing starts. and monday on the program, stu schweitzer will be back telling us what the economic slowdown will mean here in the u.s. and abroad. >> suzanne: oprah winfrey's new tv network is getting a big bucks boost. discovery communications is ramping up its funding from $100 million, to $189 million. and the talk show host and billionaire will take part in more programming on the channel. the oprah winfrey network is expected to launch next year, a joint adventure between oprah and discovery. >> tom: research in motion,-maker of the popular smart phones will apparently give the indian government a way to read encrypted data. they're pressuring research in motion over

securities concerns. but they run over their own network, who secure networks in canada and other countries. >> tom: corporate earnings may not be as strong as the stock market thanks they are. so says tonight's market monitor. he is douglas cliggott,

the u.s. equity strategist who joins us tonight from boston. welcome back to "nightly business report." >> thank you, tom. it's great to be here. >> tom: so what's the problem with earnings that you see? >> well, i think looking backward, there really isn't a problem, tom. there have been -- growth has been very, very strong. it's more when we dig into the details that actual earnings growth numbers have been much, much stronger than revenue growth. and we think of the equity market as just this incredible information processing machine. it is always looking ahead. and so when we look at indicators that have historically be a good guide to the future, six, nine months out, they're pointing to a much slower revenue growth profile. and if revenue growth slows down, we think earnings will slow down even sharper. >> tom: douglas, let's give folks a starting point.

earnings up 38% year-over-year so far in the second quarter. there is the top-line figure, revenues up just 10%. this kind of clearly highlights your concern. >> and i think that's a critical point, tom. but, also, i'd say the reason the equity market did so well last winter was because it was anticipating strong earnings growth like we got here in the second quarter. now in effect, the market is trying to figure out what are fourth quarter earnings going to look like. what are first quarter earnings of next year going to look like. most of the indicators we see point to very severe flattening out of the growth profile. >> tom: douglas, when you take a look at earnings in the second half of this year and into next year, with interest rates as low as they are, and the federal reserve promising to keep interest rate lows, doesn't that continue to argue for stocks over bonds? >> well, it argues for

certain stocks over bonds. and when we try to make that calculation, we we're sort of relentlessly guided to are those equity securities that pay significant dividend yield. yields that are actually now comfortably over the 10-year treasury yield. >> tom: that's not saying much with the treasury yield 3% at this point. beginning with intel, this stock has caught wind of the selloff this week, below $20 a share. what makes you like technology as a dividend play, a surprisingly dividend play. >> semiconductors are our favorite area of the market. one very important reason for that is the very high percentage of u.s.-based semiconductors and their sales outside the u.s. in the case of intel, intel has 65% of its sales

going to asia. and so we think in a world that's slowing down, asia is still likely to be the brightest spot. and so part of our portfolio we would like it to have a significant amount of asian exposure. >> tom: okay. just one minute left and two other picks we want to get to. give us 20 seconds on mcdonald's. just off of an all-time high, and clearly it has seen global growth. >> it has. it's a similar theme. it is a global footprint. the security is yielding over 3%. it's got a very strong balance sheet. it's got a good historic growth rate, and so, again, we think it's positioned -- will it slow down if global growth slows? yes. but it should slow a lot less than the average equity security. >> tom: and another global brand folks will recognize, pepsi, and the frito lay snack business, and a yield here close to 3%. why do you like this

consumer stock? >> the same thing as mcdonald's. a global footprint. a very stable business. it should hold up much better, even if we do slow down quite a bit. again, we come back to the same metrics, very good quality. >> tom: and clearly a global footprint. any disclosures for this trio? >> yes. personally i own intel and pepsi. >> tom: all right, our market monitor guest, douglas cliggott. >> suzanne: and finally there was an unusual occurrence here at the new york stock exchange. yesterday more than 2% of the equities traded met 52-week highs and 52-week lows. it is like the hindenburg owe men. it exploded and crashed in new jersey in 1937. the indicators supposed to signal a sharp correction ahead for the stock market. a market slide is supposed to be confirmed by a

second hindenburg happening within a month of the first. so stay tuned, and yikes. >> tom: and on friday the 13th, we might add. >> suzanne: yup, i was looking at that as well. that's "nightly business report" for friday, august 13th. i'm suzanne pratt, have a good weekend, everyone, and you, too, tom. >> tom: you, too, suzanne. i'm tom hudson. thank you for joining us. we'll see you back here next week.

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