>> this is n.b.r. >> susie: good evening. i'm susie gharib. will the world's economic powers take action to boost the global economy? investors are waiting on key meetings at the federal reserve and european central bank. >> tom: i'm tom hudson. this week we're looking at regional banks. why smaller bank stocks are out- perfoming their bigger competitors. >> susie: and what's it going to take to make a new generation of innovators? we visit a camp teaching teenage girls about engineering. >> tom: that and more tonight on "n.b.r.!" >> tom: there are high expectations this week economic leaders in the u.s. and europe will take action to help their struggling economies. beginning tomorrow, federal reserve policymakers hold a two- day meeting in washington.

central bankers in europe meet on thursday. and the important u.s. july jobs report is released on friday. the hope is policymakers will announce new ways to get the world economy growing. darren gersh reports. >> reporter: on wednesday, the federal reserve may give investors a new date to mark on their calendars-- 2015. chairman ben bernanke and his colleagues had promised to keep rates exceptionally low through late 2014. >> i think it would be natural, given that the economic outlook is still fairly weak to extent that out another six months and suggest that rates are going to continue to be very low for a long time. >> reporter: but promising to keep rates low into 2015 is likely to have a small impact on the economy. a more aggressive move this week to launch another big program to buy bonds and bring down interest rates is considered a long shot. while the fed isn't happy with the soft economy, it isn't worried yet that growth has broken down. >> i think that will temper the willingness to do something extremely aggressive at this stage.

>> reporter: europe is a different story, which is why expectations are higher for the european central bank's meeting on thursday, especially after comments from e.c.b. head mario drahgi last week that seemed to promise aggressive action to stem the financial crisis. >> the conditions in europe are much more volatile, less stable than they are here. so any move by the e.c.b. could have a much more stabilizing impact than the moves by the fed could have here. >> reporter: but with expectations rising for aggressive action, so are chances for central bankers on both continents to disappoint skittish investors. darren gersh, "n.b.r.," washington. >> susie: still ahead, why size matters for companies faced with the threat of lower government spending on the military next year. tonight's word on the street is defense. "nightly business report" is brought to you by:

captioning sponsored by wpbt >> tom: in advance of the central bank meetings in the u.s. and europe this week, u.s. stocks marked time today. the dow slid almost three. the nasdaq lost 12. the s&p is down less than a point. midwest manufacturing was back on the climb in june. the chicago federal reserve reported its midwest manufacturing index gained 1.1%, after falling in may. meantime, the recession deepened in spain in the second quarter. the spanish economy shrank by 0.4% from the first quarter, marking the three straight quarter of contraction. >> susie: as we mentioned, this is a critical week for investors. our guest warns there is a lot of room for disappointment. he's nick colas, chief market strategist at convergex group. >> there's a lot of pressure

on the head of the european central bank as we mentioned. ms proed last week, he would do whatever it takes to protect the euro. is he going to be able to deliver on that promise? >> i tell you, at this point, susie, it's hard to see how he could deliver on what are elevated market expectations for fairly dramatic action from the ecb. and i also note that the federal reserve faces challenges meeting expectations after the run ups we've had in stocks. >> susie: going back to europe and the central bank, start there. what can the ecb do or say that will be meaningful to solving the financial problems of the euro sown? >> they've got to focus on the sovereign debt of privy country, , spain, portugal and italy. interest rates have skyrocketed to over 6 and 7%. levels that are unsustainable

to remain in the euro. the ecb has to focus on getting interest rates down by buying debt on the open market to soak up some of the supply the market is bringing out there to bring the interest rates lower. >> susie: and what about in the u.s. with the federal reserve. some analysts are saying maybe the fed is going to wait and see what europe does first, because the fed meeting comes before the european meeting. the fed is in a tough spot. the jobs market is slowing down, and there's an unemployment number on friday. the federal reserve will have access to that number going into a two day meeting. i wouldn't be surpriseed to see them act in some way to acknowledge the markets are expecting them to keep interest rates low and provide more liquidity into the system the latter part of the year. >> susie: there's a lot of room for disappointment. on one hand, the investors are waiting for the fed to take action on what everybody calls qe 3. on the other hand, maybe

investors there doubts it will be a meaningful impact on growth. what do you think is going to happen here? >> the bottom line is markets need further stimulus to work higher. you have a good stock market in the u.s., and a good bond market. but the market is impatient for activity from the fed. they know they're not going to get support from congress and the white house who face a big fiscal cliff. that creates uncertainty in the central bank in our corner as investors hope for the markets. >> susie: and speaking of jobs, what do you expecting for the report on friday? >> well, it's clear the labor market is slowing. we're looking 60 to 80,000 jobs added, and unemployment rate. the kind of report that doesn't give us much cheer because the economy is not really moving forward. >> susie: a lot to look

forward to this week. thanks nick colas from the convergex group. >> tom: jury selection got underway today in a san jose federal courtroom as technology giants samsung and apple battle over what could determine who controls the u.s. smart phone and computer tablet markets. ruben ramirez reports. >> reporter: it's the latest and could be the most-watched high-stakes court fight between apple and samsung over patents. at issue is product design. apple sued samsung claiming samsung copied the look and feel of its iphone and ipad.

for its part, samsung claims apple copied the iphone from sony. but late yesterday, the judge overseeing the case ruled samsung can not argue sony may have influenced apple's iphone design. combined both companies produce the top two smartphones in the world. >> this is really a test to see whether or not the technologies that apple has developed over the last number of years are in fact being protected by laws and courts but also being infringed upon by competitors like apple and samsung. >> reporter: jurors won't hear is what apple's late founder steve jobs had to say about device makers like samsung using google's android operating system.. jobs said quote, "i'm going to destroy android, because it's a stolen product. i'm willing to go thermonuclear war on this." apple wants $2.5 billion in damages, but more painful could be if samsung is barred from selling its smartphones and tablets in the u.s. kessler says it's about setting

precedent for other device makers on how closely their designs can resemble apple's iphone and ipad. >> if you think about it, samsung is involved, google is involved, microsoft is involved. you have a whole host of companies that are kind of lining up to compete in this particular category. >> reporter: the trial is expected to last about four weeks. ruben ramirez, "n.b.r.," washington. >> susie: there's another patent battle brewing in a new york bankruptcy court. this one involves eastman kodak. it's putting its treasure trove of 1,100 patents up for auction. some of the biggest names in tech are teaming up to put in their bids. on one side: it's apple and microsoft and the other is a consortium including google, samsung, l.g. electronics and h.t.c. the patents could fetch more than $2 billion. kodak hopes the sale will help it get out of bankruptcy.

>> tom: the scandal surrounding the bank to bank interest rate known as libor has landed in u.s. federal court. berkshire bank has 11 branches in new jersey and new york. the bank claims it lost money because the big banks responsible for setting libor kept rates artificially low. berkshire bank argues the lower rates cost it money on loans it made with interest rates linked to libor. last month barclays bank admitted some of its traders and executives tried to manipulate libor. >> susie: the libor scandal has brought more scrutiny to the business of banking, especially big banks. but smaller banks have been improving their businesses and perhaps their images as their bigger colleagues struggle. this week on "n.b.r.," we are

looking at regional banks beginning with erika miller and a look at the outlook for the stocks of these small and medium size banks. >> reporter: it seems like there's a chase, bank of america and citibank on every corner. so it's easy to forget that there are more than 80 other publicly traded banks in the u.s. many of them are community and regional banks and strategists say their investment outlook is bright. >> a lot of things are different about than them. number one they don't have a lot of the big risks that people are concerned about: europe, derivatives, and those issues. number two, regionally, banks are growing they are lending again. and that's a good backdrop overall for the regional banks. >> reporter: plus, the smaller the bank, the less vulnerable it is to stricter regulation from washington. but regional banks still face hurdles, including growing pressure on net interest margins. that's the difference between the interest a bank earns from loans and what it pays depositors. >> the ten-year and longer term interest rates have come down, banks are having trouble finding attractive assets to buy. so what you are seeing is the

asset yields on the banks balance sheets are coming down every quarter. and this should go on for the next few years. >> reporter: if you are interested in buying regional bank shares, credit suisse's recommends looking south. >> i generally like banks that by geography are in the southeast. these banks normally have lower valuations they also have larger non-performing assets portfolios that will benefit as real estate prices rise. >> reporter: his top pick is regions financial-- headquartered in birmingham alabama. credit suisse has done investment banking and other business with regions. k.b.w.'s picks are benefiting from strong loan demand. >> if you look at banks like signature bank in new york or first republic in san francisco, they are having 20 plus percent loan growth and that's a very good back drop for a bank. >> reporter: it's not clear that regional banks stocks will outperform big money centers this year. if the pressure for increased regulation eases up from washington expect big bank stocks to surge.

erika miller, "n.b.r.," new york. >> tom: between the occupy wall street movement and those big banking fees. tomorrow, we'll look at how community banks are benefiting from people's reluctance to put money in larger banks. >> susie: a boeing 787 dreamliner hit a snag during a pre-flight test over the weekend. safety regulators are investigating a problem that caused the engine to eject debris, leading to a grass fire near its south carolina factory. the plane is powered by general electric engines, but boeing says it's not aware of any issues that would cause concern for g.e. powered planes. last week a japanese airline grounded its 787s with rolls royce engines for service. the 787 is boeing's premiere plane and has a big impact on the company's bottom line.

>> tom: it was a quiet day of trading after the stiff rallies late last week. for the first two hours of today's session it looked like the s&p 500 was going to be able to build upon last week's gains, but by late morning the index was trading in a narrow and negative range. volume was 657 million shares on the big board. just under one and a half billion on the nasdaq. the telecommunications sector led the gains, rising 0.7% food and beverage stocks helped the consumer staples sector rise a half of one percent. the telecom sector has been in focus over the past several trading sessions thanks to a mix of business outlooks and stock buybacks. sprint continued the climb it began last week over enthusiasm for its turnaround plan. the company has been overhauling its wireless network. shares were up 4.6% today, up 33% since wednesday. a.t.&t. added 0.8%, putting the stock at fresh four year highs. the company increased its stock buyback plan. since 2010, a.t.&t. has authorized buybacks totaling

more than 10% of outstanding shares. speaking of big american brand names, coca-cola reorganized its operating structure, giving two top executives more responsibility. it's seen as a move toward the possible succession of c.e.o. muhtar kent. coke shares gained 1.4% to their highest price in more than a decade. the company will consolidate its north and latin american operations under one executive and its international group with another. leading the consumer stock rally was food producer con-agra. shares were up almost 2%. last week, the stock had hit a seven month low. today, the company announced a $265 million buyout of unilever's frozen meals business in north america. this would be the fifth packaged food acquisition by con-agra in the past year as it tries to pump up its growth. we have a $3 billion deal pending in the engineering business. this one is focused on energy engineering. chicago bridge and iron has

offered just over $3 billion for the shaw group. it's mostly a cash offer with a little bit of stock. shaw shareholders would get $46 per share. the offer sent shares of shaw flying, up more than 55%. but by closing below the offer price, it indicates some degree of investor worry about the deal getting done. the buyer, chicago bridge and iron, fell more than 14%. after the closing bell, the market focus was on health insurer humana. earnings missed the mark by nine cents per share. while revenues were higher, so were expenses. these results from humana weren't expected until next week, but in addition to the disappointing quarterly results, the company also lowered its full year outlook as its medicare patience use its services more than expected. shares were flat during the regular session, but fell as much as 10% in after hours action, trading below $64 per share after closing at $70.55 cents per share. four of the five most active traded e.t.f.'s were lower. only the s&p 500 tracking fund

eeked out the thinnest of gains, one penny higher. and that's tonight's market focus. >> susie: tomorrow on "n.b.r.," we'll check in on housing. >> the overseas bailout. in the new book titled bailout. he said there was a double standard for how banks were treated during the crisis. >> the approaching threat of government.

>> tom: the approaching threat of less government spending next year continues to hang over the defense industry, but just how big of a threat less spending is may depend on size. tonight's word on the street: defense. joe deaux is a reporter with thestreet.com. joe, before we talk about size and defense, what about the sector with the threat of the fiscal cliff. this budget sequestration is out there at the beginning of next year. >> so far, the sector seems lrlt. the budget cuts aren't supposeed to take effect until january 2017, and a lot of them were made with previous budgets. seeing promise with investors for dividend yields which a lot of investors hold at a premium when you compare to the low bond yields from the treasury. >> tom: is that how you explain theeral we northrup grumman. the stock price just caught fire since the lows back in the spring time, and still yielding over 3%. but at a 52 week high. >> northrup grumman is

actually doing all right. since june 1st shot up 13 1/2 percent. analysts are still hanging back on the stock. they say short term, you know t does seem like they'll be okay. the dividend yields will stay up, but five, six years from now, growth is flat. analysts are looking long term and saying of course things are fine right now, and the stock is performing well, so investors can jump in on that for the moment. >> tom: investors aren't reflecting that concern with the share price activity. think small here. irobot is a company best known for consumer vacuum cleaner. small cap, and the share price trades at a significant discount chaire compared to six ago. irobot just announced their

government systems sales have gone down, but it has been offset by consumer spending like the roomba vacue cleaner. the government spending is going down on things like the robotic warrior. and clear systems heavily concentrated with government contracts and thermalim imaging, in the midcap space. and the share price reflects concern, doesn't it? >> that's right. clear, on the other hand, has seen drops in both commercial products and in government products, 12% in commercial drop, 16% on government drop. and they're trying to make a pivot and rely less on the military product and move towards boarder and airport security. on the commercial side they're trying to sell a lot more physical product, but a lot of the analysts for these smaller cap companies, it could go either way. really lucky or if big trouble when the budget cuts come

through. >> do you own any of the stocks i mentioned? >> no, i do not. >> susie: while some kids are playing during summer vacation, others are honing their engineering skills, at summer camp. purdue university runs the camp, which is turning a group of teens into engineers. diane eastabrook shows how the program is making geek chic. >> you want to do kind of like a hoodie pocket? >> reporter: make no mistake. this is no sewing class. these teenaged girls are fastening wires and electrodes to hospital gowns to monitor patients heart and breathing rates. >> so where are you going to attach them? we're going to have one here, here, and here. >> reporter: these 30 high school sophomores and juniors are taking part in a hands on summer engineering camp at purdue university. the week-long program is sponsored by the school's women in engineering program. besides designing a smart hospital gown, the teens are also learning how to design a biodiesel engine in the mechanical engineering lab. and how to measure cartilage components in the chemical

engineering lab. the camp is fun, but challenging. >> this project is actually a scaled-down version of what this department asks their senior in college of engineering to do. like many universities purdue has had a tough time attracting women into engineering. in fact the national science foundation says right now only about a fifth of the students enrolled in college engineering programs are women. the associate director of purdue's women in engineering program says the problem isn't that girls aren't good at math or science. it's that many don't understand the impact of engineering. >> they don't clearly see in engineering how it makes a difference in the world. they may think engineers just build bridges and not see a clear connection of how that helps humanity. >> reporter: groh also thinks learning from women graduate students and working with girls just like them makes engineering cool. many of the campers here agree. >> making all this stuff with

the gowns and everything i feel like i'm improving people's lives and just giving me a satisfaction when i go to bed at night. >> i would love to design and own a theme park that's why i want to do industrial engineering. >> reporter: the university says about a quarter of the teens who've attended the camp over the past ten years enroll at purdue after high school to& study engineering. it hopes to meet or improve on that average with this group. diane eastabrook, "n.b.r.," west lafayette, indiana. >> tom: while the supreme court upheld the health care law, including its requirement for individuals to carry health insurance. the full impact of the law won't be known for years. more people carrying insurance is supposed to hold down overall price increases, but tonight's commentator worries more health insurance could be too much of a good thing. here's the "wall street journal's" simon constable.

>> the problem is that insurance is actually the root of the problem with healthcare. or in other words, more people having insurance could actually make things worse. the exact problem is that insurance divorces the cost of the healthcare from the purchasing decision. when you go to the doctor and pay $20, that represents a tiny fraction of the true cost. the insurance company pays the rest, likely another $200 or maybe even more. so what? well because you don't pay full price you'll likely consume more than you otherwise would. maybe you go to the doctor when really you needn't have. the result is that the increased demand drives the cost of healthcare up for everyone. having more insurance actually means well see even higher prices. thus the problem of costly healthcare will be exacerbated. what we actually need is a return to a time when few had healthcare insurance that covered pretty much everything including routine office visits. instead insurance should be just that-- for catastrophic events that might otherwise sink us financially. i know that's not popular but it

is what it is. i'm simon constable. >> susie: and finally tonight, american olympic track and field athletes are going the distance on twitter. the olympiads launched a social- network protest over sponsorship restrictions. the tweets take aim at an olympic rule that forbids athletes from advertising for non-official sponsors, during the games. big companies like coca-cola, mcdonald's and visa pay about $100 million to have their names attached to the games. but tom, athletes say the rules aren't fair to struggling competitors, who don't have big name sponsors. >> struggling to stay alive. but olympiad type of products and prices come with restrictions as well. >> susie: and that's nightly business report. for monday, july 30. have a great evening everyone. you, too, tom. >> tom: goodnight, susie. we'll see you online at nbr.com and back here tomorrow night. "nightly business report" is brought to you by:

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