>> tom: ben bernanke says its time for lawmakers to get their act together on raising the debt ceiling. >> i fully understand the desire to use the debt limit deadline to force some necessary and difficult fiscal policy adjustments, but the debt limit is the wrong tool for that important job. >> susie: the fed chairman thinks even a small delay in payments could spell big trouble for the nation's financial markets. it's "nightly business report" for tuesday, june 14. 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. a strong warning from ben bernanke today, susie, about the risks of delaying a vote on increasing the nation's borrowing limit. >> susie: tom, the federal reserve chief warned congress against using the debt ceiling debate as a weapon to force budget cuts. he said failing to raise the ceiling could cause "severe disruptions" in the markets, higher interest rates-- the u.s. could lose its prized triple-a rating-- and could damage the u.s. dollar's special role as a reserve currency.

>> tom: bernanke minced no words as he urged lawmakers to reach a deal "without resorting to brinkmanship." >> i fully understand the desire to use the debt limit deadline to force some necessary and difficult fiscal policy adjustments, but the debt limit is the wrong tool for that important job. failing to raise the debt ceiling in a timely way would be self-defeating if the objective is to chart a course toward a better fiscal situation for our nation. >> tom: late today, vice president biden said he's making progress on budget negotiations with republican and democratic lawmakers. he's now confident the talks will produce more than $1 trillion worth of cuts and a tentative deal by the july 4 congressional recess. >> susie: americans got some encouraging news on inflation today after months of battling high food and gas prices. wholesale inflation as measured by the producer price index rose just 0.2% last month. that follows a hefty increase of

0.8% in april. still, one benign inflation report does not make a trend, and economists are still keeping a close eye on price tags. suzanne pratt explains. >> reporter: on wall street, there's always something new to fret about. lately, however, a rather old worry is gaining attention. it's stagflation, and it occurs when the economy experiences stagnant growth-- the "stag"-- and high inflation-- that's the "flation." add in high unemployment and it can be a very nasty economic recipe. economist steve richuitto doesn't see it because he thinks current high oil prices are temporary. >> i'm not really worried about stagflation so much, because the economy's deceleration is going to take some of the inflation pressure that everyone's been worrying about off the table. and, it's not the u.s. slowdown that's important-- it's the global slowdown that's taking place. >> reporter: in the late 1970s, the u.s. was pummeled by stagflation. many americans probably still remember those sluggish, high- priced days.

they may also recall the federal reserve had to hike interest rates to 20% to fight inflation, ouch! >> the problem with stagflation is the soft growth environment. if you can't wring inflation out of the system you're forced then to create a very long and protracted downturn in the economy to break the inflation pressures. >> reporter: still, some experts say there are reasons to be concerned about stagflation-- maybe not this year, but next year. namely, first-quarter g.d.p. showed an economy running at a meager 1.8% and fresh data suggest growth will remain sluggish this year. meanwhile, gasoline prices are up 33% over last year and food is more than 3% higher. nevertheless, others say wage inflation is also a must-have ingredient for stagflation, and big fat raises are pretty unlikely with the unemployment rate at 9%. as a result, economist aneta markowska is more worried today about anemic growth than stagflation. >> the real risk is that we get

into this environment where you have slightly elevated food and energy prices, but that squeezes people's budgets with wages not participating, and it kind of reduces demand on everything else. >> reporter: the bottom line on stagflation? not a huge concern just yet. but, if oil and food prices keep rising we might start to hear more about it. suzanne pratt, "nightly business report," new york. >> susie: here are the stories in tonight's n.b.r. newswheel: stocks headed higher today. the dow rose 123 points, the nasdaq was up 39 and the s&p 500 added 16. trading volume rising on the big board to 913 million shares and falling on the nasdaq to 1.7 billion shares. investors were encouraged by today's retail sales data.

showing consumers are still spending sales fell for the first time in almost a year last month, but still came in better than expected. they fell two-tenths of one percentage point in may. if you strip out weak auto sales, the numbers were better than expected-- up three tenths of a percent. job cuts are on the way at lockheed martin. the aerospace and defense contractor plans to cut 1,200 employees from its space systems unit-- trimming the division's workforce by about 8%. still ahead, tonight's "word on the street"? "buyout." we look at what makes for a good retail buyout candidate. >> tom: derivatives or "swaps" played a key role in spreading the damage from our housing collapse around the globe and sparking the financial crisis. well, now it's going to take a little while longer to write the rules that are supposed to make sure that never happens again. the commodity futures trading commission voted today to push back its deadline for action from july to the end of the year. darren gersh spoke with c.f.t.c. chairman gary gensler today and began by asking him why

regulators needed more time. >> um, the american public needs us to move forward and get all of these rules in place. congress gave us one year to do that. it's complicated subject and we substantially finished proposing 51 of these rules but it's going to take us more time. we hope to be able to complete the final rules over the course of the rest of the calendar year. >> so you're supporters have said to me, you know, he's the most aggressive regulator in washington. your critics say he's the most aggressive regulator in washington in fact so aggressive that these rules on margins and the way he's implementing the dodd frank reform law risks hurting american business. what do you say to that complaint? >> i say that transparent

markets and well regulated markets benefit the american public and businesses and ultimately help promote jobs. the financial system fails america and the regulatory system failed. but what we know from prior failures out of the depression that well regulated markets help promote the economy. and this market, this swaps market that was so much a part of the crisis and all we need say is aig needs to have some oversight. needs a cop on the beat. needs transparency where people can see where the markets are. i think what we're doing here actually helps business and america. >> one other thing that happened during the financial crisis is we found out some of the derifd derivatives were customize and difficult to read and they were

trying to make it more open and standardized and put it on exchanges. can you do that with those kinds of very customized derivatives and if you try to push them there which some of the regulations are trying to push them to, know, becoming like stocks where anybody can trade them, aren't you going to make it harder for people to do that? >> this sounds like some of the rationale where the market has not been regulated for 30 years. it's too customize and so forth but in fact probably three-quarters of the market place is quite standard now. if somebody wants to protect gens a risk that interest rates move up and down is a standard product called an interest rate swap and there are many in the oil markets and that's standard and we moved to central exchanges like in the stock market and those thing that are

customized can do it. corporate america can do that and we allow that. >> one issue that affects everybody in the country who uses oil which is is everybody and also investors is a position limits on commodities. there's a concern that are speculators driving prices up and down and you're proposing limits where they only have so much of the market and how will that affect individual investors because one of the issues out there is if you're a financial advisor said should get protection on commodities and inflation and you do that that the big funds may not be able to actually buy the positions they want to satisfy investor demand. >> um, for the longest period of time that markets have been around people that want to hedge a risk meet speculators in the market place and the commodities futures trading commission does not set prices but make sure when the heather and speculator

meet in the market place it's transparent and open and free of fraud manipulation and had the position limit to make sure there's no one speculate we are a large position and there's a diversity of point of view and people meet in the market place. that's what we're trying to accomplish. they existed in the oil markets in the 1980s and 1990s. they went away in 2001. what we're talking about is re-introducing them and congress has mandated and we'll get it done. >> with that gary gensler, thank you for your time. >> susie: boeing is bracing for what could be a long battle over its decision to put a production line for the 787 dreamliner in south carolina. union workers in washington state are suing, calling the move illegal because employees in south carolina are non-union. the national labor relations board says the move is retaliation against boeing's unionized workers for a walkout in 2008.

boeing says the main reason for moving the line to south carolina is lower production costs. the company also points out that it's added about 3,000 jobs in washington state since announcing the south carolina plant. >> tom: meanwhile, wisconsin's supreme court has ruled on that state's controversial labor legislation. late today, it said the law limiting bargaining rights of public employees can go into effect. members of public employee unions also will have to pay more for their health and pension benefits. wisconsin's governor says the law is necessary address the state's budget problems. the law passed in march after weeks of protests by thousands of demonstrators at the sate capitol.

>> susie: two different responses from american businesses on plans to hire. big companies will add more jobs than small businesses. the may survey from the national federation for independent business shows 13% of small firms plan to add to payrolls over the next three months. that's down from april. and 8% of small firms expect to cut jobs. meanwhile, the business roundtable-- a group of c.e.o.s from the nation's 200 largest companies-- says more than half of its members expect to hire more workers over the next six months. 11% say they will reduce payrolls. >> susie: so tom today the blue chips were feeling good.

the investors were feeling good and the blue chips crossing over the 12,000 mark and nice to see investor confidence. >> after six weeks of what has been a pretty steadily downward trending market and go ahead sue suzie and roll. >> tom: fueled by the surprisingly strong retail sales report, tame wholesale inflation data and a strong read on chinese industry, u.s. stocks staged a broad-based rally. let's start by looking at today for the s&p 500. here it is. this is what happened. buyers came out at the opening bell and stuck around. there was a small dip in the last 40 minutes of trading. that came as federal reserve chairman ben bernanke pushed again for congress to address government debt. pull out a little bit putting today's rally in context, here are the past 90 sessions.

the market has been trending lower since the beginning of may. despite the trend, it has not dropped below its march low. that's a key level to watch. today's buying was broad-based. stocks closely tied to the global economy did the best. the energy select exchange traded fund added more than 2%. materials and industrial e.t.f.s were up almost 2% each. now copper economically sensitive commodities also staged a rally. here are the past 180 sessions of copper. it began weakening in march about two months before we saw the stock market trend lower. copper is at a multisession high thanks in part to strong industrial production data out of china. that china data helped the u.s. shares of several chinese stocks. here's online search engine baidu, up almost 6% today. nice move! we're looking at the past 90 sessions, but even with this rally, it's down 10% in the past

week and a half. similar story at online media firm sina. this is the past 90 sessions. the big rally up, this is a 12- month chart. shares bounced more than 6% today, but this stock has lost more than a quarter of its value in less than two weeks. even with today's jump. back here in the states, the focus was on retail sales and a new number one coming to j.c. penney. ron johnson is the head of apple's retail division. he will join penney's board of directors in august and become the store's c.e.o. in november. prior to apple, johnson spent 15 years with target. the market likes the hire. j-c-p stock shot up 17.5% on better than 10 times its usual volume. nice rebound. shares had fallen since reporting its latest quarterly results and hitting a 2.5-year high. electronic superstore and apple reseller best buy turned in these quarterly results. earnings were better than

forecast but same-store sales continue falling. best buy shares have had a tough year, falling hard in mid- december thanks to a sour outlook. shares have not been able to recover and have been trending lower. today, volume was five times normal on this 4.5% rally. nokia and apple's patent fight may soon be over. nokia says it has agreed to settle the lawsuits for a one- time payment from apple and royalty payments in the future. the two have been fighting over the technology used in the iphone, which nokia claimed patent over. both stocks were up. nokia gained 2.5%. shares have been near 13-year lows recently. apple was up less than 2%. and that's tonight's "market focus." >> susie: while stocks gained ground today, charles schwab said its clients are nervous about putting money in the markets. the brokerage firm said its daily average client trades fell 23% from a year ago and were down 9% from april.

the investment firm also noted more of its investors headed to the sidelines in may, pulling over $1 billion out of stock funds and parking almost $1.5 billion in money market funds. >> tom: this week's $2 billion buyout of shoe company timberland is just the latest involving a retailer. in the past year and a half, j- crew, gymboree and jo-ann fabrics have been bought out. that brings us to tonight's "word on the street," "buyout." jeanine poggi is a reporter at

the street.com. >> tom: what makes for a good retail buy-out candidate. >> a good candidate needs to have strong cash flow, clean balance sheet, good earnings leverage and also have turn around potential under new management. >> tom: so strong financial and looking for an opportunity to turn around. one of those that's been rumored to be a buy-out candidate for the last several months has been tiffany. the high-end retailer and jewelry stores. shares have clearly rallied well. is there a turn around potential or has it already turned around? >> well, tiffany is a great company to look at lagging a 52-week high and it means there's potential for the stock to move higher and doing well and recoug recovering. >> tom: polo ralph laueren had a

break-out quarter and concerned a little bit about the japan situation and one rumored to see venture capital money, private equity money. where's the turn around with the rally we've seen over the past year. >> what we saw was chatter around ralph laueren and there's potential for a buy out and it's a global brand and hidden gems in the company and there's no success there after ralph laueren itself so they may be looking to sell itself. >> tom: how important are those strong global brands when it comes to looking for a retail bay-out candidate. >> global brands are essential and that's the big thing right now in retail. a lot of acquirers aren't really looking for stores because you have all the lease obligation and the stores are being pressured so much right now so a lot of them are really look for the global brand where they can

have sources opportunities and other wholesale opportunities there. >> tom: certainly a strong brand for better than a generation has been the gap. it's been struggling for stability for some time. choppy stock price recently falling off its high. word is the gap may not be a good buy-out candidate, why not. >> i don't think it's a desirable candidate the sales are struggling domestically and i don't know how many is there for a possible buyer. there's always the international operations which they've been strong with in pushing overseas growth but i'm not sure it's enough to offset the trouble as the home. >> tom: any disclosures. >> nope. >> tom: read jeanine's article, jeanine poggi with the street.com. >> susie: here's what we're watching for tomorrow: we'll see the may reports on consumer prices and industrial production, along with the weekly updates on mortgage

applications and crude oil and gasoline inventories. also tomorrow, hilary kramer is our "street critique" guest. email your questions to streetcritique@nbr.com. the food and drug administration put kellogg on notice today, saying one of its cookie-making facilities was "contaminated with filth." the f.d.a. gave the company 15 days to clean up the plant that makes keebler and famous amos cookies. inspectors found traces of listeria at the plant earlier this year. kellogg calls food safety a top priority and it says the facility will undergo a comprehensive cleaning. >> tom: sara lee will spin off its international coffee and tea business, but will keep its north american meats business. the firm had previously said it would spin off both businesses to create two separate publicly traded companies. the meats business, maker of jimmy dean sausage and hillshire farms products, will cut costs while it continues to consider price hikes. sara lee expects the split to be complete early next year.

>> susie: investing in a college education-- tonight's commentator says the economic evidence shows it's a no brainer. he's jamie merisotis, president and c.e.o. of the lumina foundation.

>> we hear a lot these days about what the experts think about jobs, about education and about our economic future. recently there has been a lot of talk about the value of a college education. many experts, myself included, say we need a lot more americans to complete a post-secondary educati. some question this advice. here's my recommendation: examine the evidence for yourself and then compare it with your own judgment and experience. the facts show that the number of jobs for workers with high school diplomas is shrinking- rapidly. in many cases, entire industries that employed these workers are vanishing. unemployment for people who have gone to college is half the rate as it is for those who have only a high school diploma. lifetime earnings of college graduates are nearly double of high school graduates. plus, look at what the projections of most leading economists show. by 2018, at least 60% of the jobs in the u.s. will require

some form of postsecondary education. my advice is simple: work the numbers. calculate what you can afford, including reasonable levels of debt, and find an education that's the best fit. it might be a career technical program. maybe it's a bachelor's degree. you may even decide to finish the degree you started many years ago. whatever it is, start now and think for yourself. after all, isn't that what college is really supposed to teach us? i'm jamie merisotis. >> susie: that's "nightly business report" for tuesday, june 14. i'm susie gharib. good night everyone, and good night to you too, tom. >> tom: good night susie. i'm tom hudson. good night everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by:

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