>> tom: interest rates have surged since the fed launched its bond-buying binge, a month ago. that's pushing bond prices down for investors, and some think it's a warning of things to come. >> you bail. you really just get out. there is no way for a retail investor to properly hedge himself in this environment. >> suzanne: so where should you be putting your money? we talk with a strategist about what's better, stocks or bonds. you're watching "nightly business report" for thursday, december 9. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

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captioning sponsored by wpbt >> tom: good evening and thanks for joining us. susie gharib is off tonight, suzanne pratt joins me. suzanne, more drama today in the u.s. bond market as investors gobbled up long-term treasuries in a weekly auction. >> suzanne: the treasury sold $13 billion in 30-year bonds at about 4.4%, lower than expected. and tom, much of the demand came from foreign buyers. >> tom: bargain hunters emerged after interest rates rose sharply this week, hitting levels not seen since early summer, pushing down bond prices. erika miller looks at whether investors are changing their attitude toward bonds. >> reporter: don't let the calm on this trading floor fool you. there has been a major upheaval in the bond market. economist steve ricchiutto says it is due to president obama's agreement to extend the bush tax cuts.

>> unfortunately, what we are getting out of this proposal from both the administration and the republican side is more of the same: let's go out and spend money. nothing is done in here to address the long term budget problems. >> reporter: many americans invest in bonds through mutual funds. so far this year, more than $267 billion has poured into those funds on top of a record amount last year. the question for small investors is whether the party in bonds is over. is it better to ride out the volatility or take the money and run? >> you bail. you really just get out. there is no way for a retail investor to properly hedge himself in this environment. >> reporter: but others say bond prices are at low enough levels that they are looking more attractive. >> i think we're starting to get into that value proposition, where rates are high enough that people might get interested again. its the end of the year, we just a had a pretty big turbulent move and people want to see where we stabilize before committing more money to it. if individual investors flee

bonds en masse, it's not expected to happen until spring- - after first quarter brokerage statements start arriving in mailboxes. erika miller, "nightly business report," new york. >> suzanne: so, what's the best bet for investors now, stocks or bonds? joining us with his thoughts on that is nick colas, chief market strategist at b.n.y. convergex. >> hi, nick, bell come to the program. >> thank you, so much. >> weight in on. this where do you fall in the debate stocks or bonds? >> i think you have to look attic its as a better investment. right now i think bonds have a lot to prove in terms of understanding how much inflation, how much growth, and how much a deficit is hitting the prices. for me it's stocks much more than bonds right now. saeufplt is this the big bursting of the big bond bubble we have heard about? >> i don't think so. i think you will see more of a slow bleed.

won't see a lot o out of the cpi number next week. >> suzanne: should investors be shifting their portfolio out of bonds do you think. >> there is no need for a drastic step at the moment. i don't see a huge back up in bond prices anytime soon because of the inflation issue. if you're looking to make money in 2011 it will come to the equity market. we have had a great run but it's getting long in the tooth. >> suzanne: where would you like to see investors put money in the equity market, what sectors. >> i think you have to look at two sectors. in the domestic market the financials. the back up in the longer term help the financials and look at the growth. i look at those areas in equities that are pretty attractive. >> suzanne: we have seen

financials rallying because of that reason. >> yes. >> suzanne: what would change your feeling about bonds and have people shift a little into the bond market. >> i think the bond market is not a market that moves as dramatically as the stock market. looking at areas within bonds, government bonds are a safe place to be. as long as you hold the maturity you won't lose money. >> suzanne: is there anything for people to watch for, for the story to change dramatically? >> i think the next few months look at the inflation numbers and reports. that's a important factor for bond prices, the most important single thing to look at. >> suzanne: thank you for joining us this evening. >> thank you. >> suzanne: that's nick colas of >> tom: here are the stories in tonight's n.b.r. newswheel:

a mixed day for stocks, with the blue chips pulling back and tech stocks moving ahead. the dow fell two points, the nasdaq gained 7.5 and the s&p 500 was up nearly five points. trading volume fell slightly on the big board, to a billion shares, but rose to almost two billion on the nasdaq. there were fewer filings for new jobless claims in the past week. they fell by 17,000 to 421,000, and the four-week moving average for claims fell to a two-year low. economists say that number is a good predictor of labor trends. the value of your home appears to be dropping like a rock. continuously. real estate data firm zillow says this year, $1.7 trillion will disappear from home values. that's much worse than last year, which saw a "only" a trillion dollar slide. $9 trillion has come out of the housing market since it peaked 4.5 years ago. still ahead, venture capital money helped get google off the ground, but tonight's commentator thinks venture capital is becoming less adventurous. >> suzanne: president obama is squaring off with his own party over his tax package compromise with republicans. house democrats blocked a vote on the bill, saying it's too

generous to the rich and doesn't deal with reducing the deficit. house speaker nancy pelosi said the tax proposal needs to be changed before it comes up for a vote. there's still time for that to happen. if it doesn't, tax bills will rise next month by an average of $3,000 and unemployment benefits will not be extended. >> tom: an update on a story we told you about last night. there's been an arrest in the cyber attacks on the corporate websites of mastercard and visa. dutch authorities say they've arrested a 16-year-old boy into custody. v&v&v&v&v&v&v&v&v&v&v&v&

>> suzanne: tonight we're rolling out the first story from our new silicon valley bureau. reporter robin mcelhatton will join us monthly with the latest trends and corporate news in the technology sector. tonight, what do you get when you combine t.v. and the internet? for many people, it's new ways of watching far more than basic cable on their t.v. sets. >> tv and internet together at last. the world's first h.d.t.v. powered by google tv. >> reporter: expect to see ads like this one in the coming weeks as companies promote their new internet-tv offerings. whether it's an integrated tv,

stand-alone box or blu-ray player, all these devices allow you to bring web content to your television. google tv product lead rishi chandra believes it's the future. >> a lot of users watch great tv today on their television, but they have to watch all this web video on a p.c. or mobile phone. our belief is all of this should be coming into one single experience, inside the living room, and really that's what google tv is trying to deliver. apple tv, microsoft windows and others are also trying to deliver internet content to your television. they're all part of the over- the-top tv market. that is technology, video and demand content delivered over the top of traditional cable and satellite providers via an internet connection. analyst tim bajarin points out the market has been ten years in the making, but still hasn't taken off. >> we're trying to shove a medium like the internet on another medium that we've had for decades, and trying to bring them together and at least at this point, no one has figured out how to seamlessly integrate

them well. >> reporter: content seems to be the biggest barrier. some media companies are reacting to over-the-top tv by blocking programming on some of the new internet tv devices. gartner analyst mike mcguire thinks there's going to be a lot of thrashing about over content rights and licensing. >> these decades of agreements between broadcasters, cable companies, affiliates and the revenue and contracts are enormous-- you know, billions of dollars, and that's going to get reallocated over time. and, so there's a-- it's a substantial battle. >> reporter: some believe over- the-top is already cutting into the cable tv industry. a new report says 741,000 customers dropped their cable subscriptions in the third quarter, the largest decline in 30 years. cable companies cite the weak economy and high unemployment as reasons for the drop-off. others say it's because younger viewers are increasingly watching programs on their computers.

to move the over-the-top tv market forward, a coalition of cable and entertainment companies has set up the entertainment i.d. registry. it's working on creating an i.d. for content, like a u.p.c. code. analyst mike mcguire says it will make it easier for companies to track rights and report revenue across multiple platforms. >> the e.i.d.r. is probably, i think-- is one of the more significant developments to keep an eye on. that is going to remove some real serious friction points in the way content gets made available to services like google tv, apple tv, et cetera. >> reporter: once standards and content licensing are worked out, google's rishi chandra believes over-the-top tv will create new market opportunities for many. >> the d.v.d. market was a huge creator of revenue for a lot of content creators. i think the cable industry was a good example of how it created new value and new revenue opportunities. i think you're going to see the

exact same thing happen in the over-the-top market. >> reporter: eventually, internet tvs will be commonplace in our living rooms, but experts believe it will be five or six years before they evolve into a mass market product and that new day is here. robin mcelhatton, "nightly business report," san jose, california. >> tom: no, but it has been about bonds for the past several sessions. we did see, you mentioned this in the inter shrew with nick, we saw banking stocks continued to be in focus as interest rates are rising. let's get everyone updated tonight. >> tom: we'll begin with an after-the-close merger announcement in health care. hospital operator community health care made an unsolicited offer to buy tenet health. it is a $7.3 billion offer in cash, stock and debt-- that works out to $6 a share for tenet. if tenet accepts, it would

create the nation's second largest hospital chain. tenet stock was up a fraction during the regular session, but surged 50% after hours. it was trading well above the community health buyout price. indicating the market expects a competing offer. the wheeling and dealing continued elsewhere. in computer data storage, dell is talking with compellent about a deal. dell has offered $27.50 per share, or $900 million, to compellent. but that's below compellent's current market value. the two companies say there is no certainty they will reach a deal. take a look at compellent stock. for compellent shareholders, dell's offer represents less than today's closing price, even though c-m-l stock slid 14%. dell was down a fraction. speaking of deals, in the chemical gas business, the effort to buy air gas by air products may running out of air. air products, the buyer, has raised its offer 70%-- to almost $6 billion.

air products calls the price its best and final offer. the target, airgas, has demanded any buyout talks begin at $78 per share. word of the last best offer sent air gas stock falling down 6% to below $62. air products, meantime, saw its shares hit a new two-year high. for the second day in a row, the financial sector saw the biggest gains. a.i.g. stock regained what it lost yesterday and then some, rallying 13% on heavy volume. the sell-off yesterday came as it announced its deal with the government to begin selling its stake. now at the same time, one of the largest private shareholders, mutual fund manager fairholme capital, has increased its stake. the second biggest gain in the sector was in b.b.&t., the north carolina-based regional bank. this is the stock's first close over $27 per share since july. the bank's c.e.o. said today he wants to raise its dividend next year. but first the federal reserve has to give it the all-clear speaking of dividends, miner

freeport mcmoran is giving a special payout to shareholders. shares were up 2% on its plan to pay a one-dollar-per-share special dividend. it's also planning a two-for-one stock split. as shares are up four-fold in the past two years. dairy, pork and nuts were on buyer's menus today with a trio of food stocks on the move. dean foods jumped more than 12%. it has a deal to settle an antitrust lawsuit and plans of a corporate bond offering to repay other debt. pork producer smithfield was up 11% to an eight-month high. quarterly profits were better than expected. and nut company diamond foods beat the street and boosted its outlook. diamond stock added 10% to a new 52-week high. howard stern is staying put on satellite radio. the talk radio host inked a new five-year deal with sirius x.m. satellite radio. sirius stock is often among the most actives, and no different today. shares popped 5%, but remain below $1.50 per share. and that's tonight's "market focus."

>> tom: kohl's department stores, whole foods grocery stores and dell buy all of their electricity from renewable sources. well technically, they don't, but they buy renewable energy credits to offset all of their electricity power, a move that allows them to claim to be green. this is one of the stories in the january issue of "bloomberg markets magazine," which hits newsstands on tuesday. ben elgin is an investigative reporter at "bloomberg markets magazine." he joins us from san francisco.

>> tom: ben, welcome to the nightly business report. nice to see you. >> thank you. >> tom: let's start with the renewable energy credit. it gets a bit complex. a power producer sells a credit to a marketer and sells it to a buyer like dell. what's it in for the company? >> companies want to be seen as part of the climate curve. this allows them on paper to claim a substantial reduction in card on emissions. which is important for share holders and customers. >> tom: the marketers money goes to the power plant. the power plant receives it as a credit. does it translate to renewable power? >> that's what it's suppose to do. it's suppose to provide a second revenue stream to these

renewable energy developers. it's suppose to incentive green energy. we found in our investigation this wasn't happening by and large in the renewable energy space. >> tom: for instance, big companies say they have offset half of their electricity hour demand by buying the kr-z. i think it's 51% according to the epa. how accurate are these claims for folks watching the climate. >> ya, we found they're not very accurate. particularly if they're based on renewable energy credits. it's an opaque market. often times companies don't say where they get the green credits from. if you dig in and follow the actions as we did we trace it back to developers who say this is extra money, sure and fine it's good. it's not enough money to factor

into our economic decision making and build additional wind ask solar. >> tom: it's significant money companies are spending more the credits and ability to say they're green. is it a good investment for shareholders? >> you know, i don't think so. i think some companies are investing more in things such as energy efficiency or actually curtailing the amount of energy they use as a means to address the environmental issues and lower their over all cost of doing business. i think those are better r.o.i. expenditures for companies that want to serve shareholders and benefit the environment. >> tom: r.o.i., return on investment. you can read more of en's article. >> tom: here's what we're watching for tomorrow: we'll get an update on what's

coming in and going out of the u.s. when we see october's trade numbers from the commerce department. the economy is looking less ominous to our friday "market monitor" guest. howard ward of the gamco growth fund tells us why he expects a double-digit stock market rally in the next year. >> suzanne: most americans do want action on the deficit. but, many don't like current proposals to fix it. this week, the pew research center asked 1,500 people about the nation's big budget shortfall. seven in ten called the deficit a major problem that has to be addressed right away, but less than a third said they'd support the president's deficit commission to cut spending and raise taxes. pew researcher michael dimock says for most people, the question is "how will tackling the deficit affect wallet?" >> in principle, people understand it's going to take a lot to fix the deficit. but all of those steps sound very harmful to people at a point when they're feeling stressed already. >> suzanne: dimock says americans polled are evenly split over whether the government should stimulate the

economy or cut the deficit. google, aol, amazon.com... they're all companies we might never have known if someone hadn't taken a gamble. those someones are venture

capitalists, the money people behind startups. tonight's commentator says the money man's role is shifting. he's harry lin, c.e.o. of tahz.com, a technology startup in san diego. >> we've now marked more than two years since the start of the great recession. personally, i mark the start as september 2008-- specifically, the day that lehman brothers collapsed. at the time, i was c.e.o. of a new internet startup in los angeles, and we'd just signed a term sheet for our first round of financing with a venture capital firm. the morning that lehman imploded, a partner at the v.c. firm called me to tell me that they were backing out of our deal. in fact, they were putting on hold all new investments. because it sort of looked like the world might be ending. two years later, the venture capital landscape hasn't so much recovered as it's readjusted. gone are the days when a v.c. firm would fund a totally cool startup based on an idea and a founder. today, founders have to have boot-strapped their startups into operational mode, maybe even already be generating revenue, before a venture

capitalist will invest. while that may sound like sound investing, it's made entrepreneurs wonder where the venture in venture capital has gone. its all about growth capital for a proven business these days. where is that first investment coming from? other than the tried-and-true friends-and-family hat-passing, in many cases, angel investors have taken the place of first- round v.c. high-net-worth individuals are keeping the venture part of venture capital alive. the effects of this shift in startup financing won't fully be manifest for a few years, when today's startups begin having exits that provide liquidity to their investors. remember that getting in early gets you a larger piece of the company. maybe the angels will be singing praise be. i'm harry lin. >> suzanne: that's "nightly business report" for thursday, december 9. i'm suzanne pratt. good night everyone, and good night to you too, tom.

>> tom: good night suzanne. i'm tom hudson. good night everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you.

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