>> susie: another rough and tumble week for stocks ends in the red, as wall street ups the odds of another recession: >> we put the odds at actually greater than 50-50 at this point. >> tom: but small businesses continue looking for opportunities. our series, "how to fix the economy, "looks at how one small firm is dancing its way to growth. it's "nightly business report" for friday, august 19. 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 >> susie: good evening, everyone. stocks down again with volatility still the buzz word for the day. investors sold stocks on continued worries about the european banking system and tom, the prospects of a global recession. >> tom: susie, this was the fourth week of losses. here's a rundown of the numbers today. the dow lost 172 points. the nasdaq fell 38.5, and the s&p 500 was off 17 points. trading volume was heavier than normal heading into a summer weekend. one and a half billion shares moving on the nyse, 2.4 billion on the nasdaq.

the dow fell in three of the week's session, for a net overall loss of 4%. the tech heavy nasdaq was hit the hardest this week down 6.6%. the s&p 500 dropped almost 5% over the past five sessions. let's look at how the dow industrials has traded this month. despite the drop this week, the index remains 100 points above its low of last week. >> susie: many major brokerage firms have lowered their forecasts for the u.s. economy. one common theme: they're all talking about recession. erika miller reports. >> reporter: wall street economists are waking up to what many ordinary americans already know: there's a rising risk of recession. >> i wasn't aware we'd ever gotten out of the last one. >> i think we're heading towards a second one. >> it's not like there's a chance that things are going to be getting much better very soon. >> reporter: many major

financial firms now put the odds of the u.s. slipping back into recession at about one in three. a recession is usually defined as an economic contraction of six months or longer. s&p's beth ann bovino is part of this group. >> i had been expecting the recovery to be slow and uneven. i have been calling it a half speed recovery for some time. unfortunately, now it's starting look like a quarter-speed recovery. >> reporter: but others are skeptical there even is a recovery. bill gross, who manages the world's largest bond fund, believes recession is likely. as quote, markets recognize the impotency of policymakers. b.n.p. paribas' bricklin dwyer is also in the recession camp putting the odds at about 70%. >> over the past week, we've become increasingly worried. the recent data has pointed to a sharper slowdown in terms of consumer confidence and manufacturing confidence, as well as the other indicators which generally show the economy has not come out of the

recession as far as we would have liked. >> reporter: the main problem is that consumer spending is about half as strong as it is during a normal recovery and it's that spending that makes up 70% of economic growth. the u.s. consumer is not the only problem. there are worries about weakening global demand due to japan's tragedy. china's fiscal tightening and the european banking crisis. there may also be psychological reasons that make consumers and businesses feel uneasy. from the federal reserve to the capitol to the whitehouse to the european union, many americans have lost confidence in the institutions that are supposed to protect the global economy. >> a lot of this recent loss of confidence has come from a lack of political will to make things happen in washington. and we've certainly see european struggles as well. so people are losing confidence in their governments ability to reduce the long term deficit and create growth. >> reporter: even if the u.s is able to skirt recession, the recovery probably won't feel like one.

many economists believe it will take a year or longer, before economic growth is strong enough to make a serious dent in unemployment. erika miller, "nightly business report," new york. >> there's no recession in sight. we're going to skirt it but with a slowdown that's going to be meaningful. >> tom: still ahead, tonight's market monitor guest is investing for a recovery. he's marshall front, chief investment strategist at front barnett. >> tom: the nation's largest bank is cutting jobs. bank of america will layoff 3,500 workers by the end of september. that's just over one percent of its workforce. a spokesperson said the cuts will be spread across all business units. b. of a. is not the only banker scaling back-- bank of new york mellon, goldman sachs and state street have all recently announced layoffs. >> susie: just how weak is the job market? a new report shows that unemployment rates rose in july in more than half of all states in the u.s. while the nation's overall unemployment rate fell to 9.1% last month.

joblessness was up in 28 states, unchanged in 13 and down in nine. nevada is still the hardest hit. the unemployment rate there: 12.9%. north dakota has the nation's lowest: 3.3% as we continue our series, how to fix the economy, tonight we focus on jobs. darren gersh reports on some out of the box solutions that could boost job growth. >> reporter: if there aren't enough new jobs to go around, how about this: instead of laying off one worker, reduce the hours of four or five people. and then use unemployment benefits to make up some of the lost pay. it's called job sharing and economist dean baker says preventing a job from being lost is as almost as good as creating a job. >> it doesn't make sense to say the government is going to pay you to be completely unemployed with unemployment benefits, but it's not going to pay you, if you are working short hours. so why not have that option available to firms, available to workers. it's really very much a

conservative idea. >> reporter: another creative way of thinking about jobs is to focus on helping improve the skills and mobility of workers who have lost jobs in hard-hit industries like construction. wells fargo chief economist john silvia says people who have lost their jobs may not have had to look for a new one for many years. training in job search skills and some cash to relocate may be enough to launch a new career. >> i think we know that a lot of people are stuck in their house and perhaps they need help moving to a job location, in other words, there is another job out there for them. it just doesn't happen to be in their hometown. so i would rather focus on the workers, rather than that jobs. >> reporter: since we are having trouble creating enough jobs here at home, why not bring in some help from people who have good ideas for new businesses. companies like google, intel, ebay and yahoo were all founded by immigrants. which is why the kaufman foundation's tim kane wants to offer start-up visas to foreign entrepreneurs.

>> something everyone in washington agrees on is high skilled immigrants are great. and this idea of a start up visa would focus on entrepreneurs and let foreign entrepreneurs come in. if they can create three jobs here, why not? >> reporter: and while we're at it, why not give unemployed workers here a chance to become entrepreneurs? seven states now allow workers to get their unemployment benefits while starting their own businesses. there are many creative ideas like job sharing that have been tried out in pilot programs. the challenge now is to find good ideas and make them big ideas. darren gersh, "nightly business report," washington. >> tom: from big ideas to small business. small companies are the engine of u.s. economic growth responsible for as much as 75% of all new jobs. as we look at ways to fix the economy, we found one small business owner who has overcome challenges while benefiting from good timing. >> my dream has always been to

own a dance studio. i decided to open this studio, the first of its kind in the country, to combine three different divisions in the entertainment industry-- dance, photography and a p.r. agency all in one. >> reporter: kristin weissman's studio-k offers a variety of dance classes to adults. these days, classes are packed. membership has grown from 20 people to more than a thousand in less than a year. that growth has sparked hiring. the studio started with a staff of 13, it now employs 32 people. but opening the studio was not an overnight success. >> it was really hard to get a bank to believe in my vision and what i wanted to do, especially because it was a first of its kind concept. it took two solid years of consistent effort until i had a bank believe in my dream. >> reporter: these days, it's even more difficult for small businesses to get approved for a loan. according to regulators including the federal reserve, lending fell by about 9% in 2010 to just over 4 million loans totaling nearly $180 billion. the national entrepreneur center

in orlando, florida has helped facilitate more than $125 million in loans since 2003. it's coached and counseled more than 70,000 small businesses, including studio-k. executive director jerry ross echoes a sentiment heard across the nation: one of the biggest challenges facing small firms is access to capital. >> whether that's working capital to keep the business going or capital for expanding the business. what we've been able to do at the entrepreneur center is to help people get ready to go before the banker. >> reporter: the other big challenge is uncertainty. >> when businesses don't know what to expect, they don't do anything. so they may be looking to hire, but they're not sure what their costs might be if they hire someone. they may be looking to expand so i think if we have some confidence in what tomorrow may look like or what tomorrow may bring that businesses will start to bet again on the future. >> reporter: getting small businesses to grow is crucial for the u.s. economy, because small business makes up 99.7% of all u.s. employers. since on their own, most small

firms can't do much to increase confidence in the economy, ross says for now, they should focus on business basics. >> find out what you do the best. some people compete on price, some people compete on service, some people compete with a superior product. number two is to get help. from everyone and anyone who can provide help. number three don't be afraid to fail. because you don't have all the information all the time. the image of the small business owner sitting behind their desk knowing it all is not true. >> reporter: kristin weissman of studio-k says the key to her success has been staying persistent. >> never give up the dream. i know everyone says that, but it's so true. you will hear a million no's as they always say in anything you do until you get that one yes. >> tom: all week long we have reported ideas on "how to fix the economy"-- we want to hear your ideas. contact us online on our website at nbr on pbs.org.

you can also send us your ideas for fixing the economy on twitter @biz report and if tweeting isn't your thing, "friend" us on facebook at b.i.z. r.p.t. response, susie, and we'll continue to see that online hopefully, swell. >> susie: we sure need some ideas. here even though trading today was calmer, still a lot of anxiety because of this very overused word "uncertainty." people just don't know what's going to happen next and what is the next big idea if there is a big idea. >> tom: and that's led to the sell-first, ask-questions-later mentality. let's go ahead and >> tom: a morning rally failed and stocks sank to their lows of the day into the closing bell. the s&p 500 popped into positive territory, but only for about an hour this morning. as the session wore on, the

selling picked up, pushing prices lower. technology was the biggest loser led by hewlett packard. shares got walloped shedding a fifth of their value. volume was huge, five times normal. this is just the past 30 sessions. investors sold fast and often after its restructuring announcement and h.p. cut its financial forecast. this is the past two years of h.p.q. back in august of last year, mark hurd was forced out as c.e.o. new boss leo apotheker's biggest move yet has been to get out of the computer hardware business and focus on services and software. tonight, h.p. is at a six year low. the ripple effect may be felt at intel. shares sank almost 3%. nomura securities lowered its estimates for intel, predicting the chip maker will miss its revenue targets this quarter. while we're talking technology,

a couple of software stocks made big moves in opposite directions. design software maker auto-desk fell almost 12% thanks to a disappointing forecast. tax software maker intuit was very strong, up more than eight percent. a strong outlook, a stock buyback plan and announcing its first ever dividend all helped shares today. global consumer stocks were bright spots. mcdonald's bounced up 2%. now about two dollars below its all-time hit in july. additionally, it is one of the few dow jones stocks up this week we also saw buyers back in wal- mart. that stock was up 1%. despite the swings, wal-mart stock is almost back to where it was trading at the beginning of this month.

however, not all is well in retailing. teen clothing store aeropostale is losing out in the popularity contest with shoppers. sales and profits dropped in the past quarter and shares fell 14% to a new 52-week low. gold has been a stellar performer during this stock sell off, but what metal has been better than gold. while gold gets most of the attention as it continues to hit new highs at $1,850 an ounce, silver has provided better returns since over the course of this year. silver is up more than 36% this year. silver mining stocks have been trying to play catch-up. silver wheaton, coeur d'alene and pan american silver are bouncing off year to date lows hit earlier this month. each were up more than two and a half percent today. and gold mining stocks also are trying to catch up. gold-corp, newmont mining and barrick gold were up about 2% or more today. newmont closed over $60 per share for the first time this year.

and that's tonight's market focus. >> susie: jackson hole is a vacation spot for many americans, but next week, it will be a hot spot for economists. as you know tom, every year, the kansas city federal reserve hosts this economic conference. the most anticipated event is a keynote speech by fed chairman ben bernanke. >> tom: susie, the kansas city

fed has been holding this event for more than 30 years. its part brainstorming session, part social event. but last year the whole world was watching what was going on at this wyoming resort. that's when bernanke unveiled the fed's plan for a second round of quantitative easing known as q.e. two. under that plan, the fed spent seven months, buying $600 billion worth of u.s. i.o.u.'s >> susie: tom, now everyone, not just economists are hoping that bernanke will present a grand plan to boost the u.s. economy and stave off another recession. his speech is next friday morning. we'll have complete coverage and analysis. >> tom: here's some other things we're watching for next week. our friday market monitor guest is hank smith, chief investment officer of haverford investments. we'll also see the july reports on durable goods and new home sales. monday, with local municipalities in california and florida recently downgraded, we'll talk muni-bonds with

marilyn cohen c.e.o. of envision capital management. >> susie: royal dutch shell has finally managed to stop an oil leak in the north sea off the coast of scotland. more than 200-tons of crude oil are believed to have spilled in the week since an underwater pipe burst on one of its oil platforms. shell says another 600 tons of oil remain stuck in the pipe and removing that oil is the next step in the clean up process. >> tom: uncle sam will soon be back in the business of selling permits for oil exploration. the interior department said today it will hold an auction this december for tens of millions of acres in the western gulf of mexico. its the first permit auction since b.p.'s massive gulf oil spill last year. that disaster led to a flood new regulations and a ban on new permits. the interior department wants a minimum of $100 per acre for the drilling rights. its previous minimum was $37.50 an acre.

>> tom: every day this month the dow jones industrial average has seen a trading range of at least 200 points. often, like today, it's been much more. those kinds of swings have tonight's market monitor calling this market dysfunctional. he's marshall front, chairman and chief investment officer at front barnett associates. he joins us tonight from the cme group in chicago.

marshall, welcome back. nice to see you again. >> thank you, tom. >> tom: so with this kind of volatility, do you think common stocks are still appropriate for individual investors? >> i think they are appropriate, but clearly the uncertainties are almost unprecedented, economic uncertainties in this country, lack of political leadership and will to get things done, but, you know, there's an overlay, tom, that's disturbing, and that is the fact that we've got markets that are run amok an really create very, very high risk over the short term for investors. so special care really needs to be taken. >> with that in mind, is the current environment, our trading markets broken, should you invest only with a duration of say a couple years at least? >> people seem to be investing with a duration of an hour. i don't call it "duration," i think it's renting sciewrtsz of one kind of another. and part of this has to do with

this high frequency rated tradig that's really exacerbated volatility to a degree that's unprecedented. i really don't know where the regulators are. i really don't know where the exchanges are to allow this to go on. traders are pushing the markets as far as they can, and they push and push and push until they can't push anymore on the up side. then they reverse it, bring it down and push and push and push. i think the solution is to bring back the uptick rule. i think another solution would be to consider a one cent transactions charge, and there are other things that i'm sure could be done to close this down. i think there would be a substantial improvement in market valuations if people weren't scared that they were going to be snowballed by this type of activity. >> those proposals are certainly not without their criticism. let's talk about economics, though. >> yes. >> tom: is the u.s. economy in your estimation nearing a recession? >> no, i don't think we're near

a recession, but i do think there's been a material slowdown since june. at that point we were forecasting growth of 3% for the second half of the year. at this point we've recast that and we're looking for growth of about 2%. that's a substantial trimming of expectations. but we have good reason to believe that we're not going to have a recession. there are a number of high-frequency indicators that we look at, including one that we parsed this afternoon. this is a report by the federal reserve, a quarterly report that shows that loan officers at banks are easing lending standards. this is a second consecutive quarter we've seen those numbers. money supply is growing, m2 at a rate of about 20% a year now. we've soon resolving credit begin to perk up. lots of things that you look at that tell us that we're going to skirt a recession and continue on with a moderate recovery, at

least through the end of the year. >> . >> tom: marshall, you mentioned market lending going back up. xlf is a prxy for the financials. give us a quick 30 seconds on how you're holding your nose to get into financials. >> let me tell you, it's the worst pick we've made ever in the history of our firm. we've been very early and really didn't recognize the degree of risk that these bank stocks presented. but nevertheless, we're sticking with them. and we've been adding to them. >> tom: okay. >> we believe the major banks are selling somewhere between half and perhaps two-thirds of their net tangible book, a very, very unique opportunity to double your money in a year. >> tom: looking for value there. looking for growth from technology. we saw it get waylaid today and this week with hewlett packard news. what makes you like technology? >> in an economy that we think is going to be slower in growth than most had thought and where it's going to be difficult to

find businesses that are growing more rapidly than the general expectation, we think that technology companies, well selected and aa broad swath of them indeed, will provide better opportunities than the average company that is more dependent on the general growth of the economy. >> marshall, you were here in february. you liked technology back then. you also liked industrials. here's how those funds have behaved, down 15% for tech, down 21% for industrials. do you still like them? >> absolutely, absolutely. global companies where they have an opportunity to participate in growth in the developing markets really offer unique opportunities. >> tom: do you own funds that we mentioned here tonight, marshall? >> i do not. >> tom: marshall >> susie: and finally tonight, the king is dead or at least

headed to retirement. after commercials in which he showed up in people's beds and peeped in windows, burger king is retiring its king mascot. he has starred in ads for the fast-food chain for several years, but with sales slumping. burger king last month switched advertising agencies. tom, we'll see its new ad campaign this weekend. the ads are more about burgers, not about the king. >> tom: that's "nightly business report" for friday, august 19. i'm tom hudson. goodnight, everyone and have a great weekend-- you, too, susie. >> susie: good night, tom. i'm susie gharib thanks for joining us. tom and i hope to see all of you again next week. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. thank you.

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