this is "nightly business report" with tyler mathisen and susie gharib. >> up to the market news and indepth analysis. our rating service provides an objective independent ratings daily on over 4300 stocks. learn more at the street.com/nbr. fork in the road, the dow and s&p hit levels never seen before. but they couldn't hold on. now, investors wonder if this year's big run-up may soon hit a roadblock. tougher rules? first the bank then the insurance company. now, an arm of the treasury is looking into tighter regulation of mutual funds, and it could impact many of the companies you

likely invest with. and mission critical. america's cities fund a big chunk of our economy, but many find themselves in a financial bind. tonight, we begin our five-part series in oakland, california, to see how that city is trying to fix itself. we have all that and more tonight on "nightly business report" on this monday, november 18th. good evening everybody, and welcome, it was not easy or smooth. but the dow closed at another all-time high today, its 39th of the year. perhaps equally notable the dow crossed the 16,000 mark for the first time ever a and the s&p scored its own first, piercing 1800, neither held it long, though, stocks got an encouraging bit of news by william dudley who says that the banking will strengthen. the jobs pictures will improve

and so should consumer spending, but late in the day a wet blanket got tossed, coming by carl icahn. he called some companies' earnings a mirage and says some companies could have a big drop. well, it was not big, but the number did drop after that. the dow surged as much as 67 points higher initially, finallying closing up 13, the nasdaq fell, because of slumping shares of apple. why are some like icahn worried, while others carry on. >> reporter: the first trigger? home sales began around a fresh in this case data around thursday when we get the number, the houses economy will be questioned. also this week, inflation

readings, on wednesday it is a consumer price index, and on thursday, producer prices both expected to remain low. if not, and inflation is higher than expected concerns will grow that the fed will be more open to scaling back or tapering its monetary support, another potential catalyst, earnings, this week we hear from the top earners, home depot, j.c. penny, target and gap. the economy could provide an expectation into the season, a time when retailers in general do about 20% of their business for the year. there are also a lot of long-term head winds, including europe, still dealing with deflation and tepid growth, impacting the bottom line in all sectors, then there are the valuations, remember those? the stocks get more expensive. the momentum means powering the

rally like netflix, and best buy, all up better than 2% for the year. some markets are worried, some not. >> we still think the market is attractive at these levels, so new highs are fine, as long as as the marketings are continuing to catch up. >> reporter: however, the valuations in the markets are slightly above their 10-year average, prompting some to disagree with the notion that the market will continue to move higher. it was a good day at boeing, the biggest gainer in the dow today with shares climbing one and two thirds percent. the aerospace giant secured orders for a $100 billion order at the dubai air show, most of the orders were for the upcoming 777 x jet coming from the middle east carriers, but only after boeing promised to buy materials

from them. air boss locked up $40 billion in new orders. meanwhile, boeing continues to battle with union workers who built the planes, it is now negotiating with home states outside the home base of seattle to build the 777 x jet liner, the move coming after the contract with boeing that would have meant reduced benefits and higher medical costs for union members. as for boeing, they say they have no plans to reopen talks with the union. and j.p. morgan, and accepting responsibility for bonds sold by j.p. morgan in 2008. terms of the newest deal cleared the way for a possible $13 billion settlement for the federal government with all for the failed agreement. the justice department will have

an agreement sometime later this week. and home building following two straight months of declines over two straight months of concerns about the government shutdown, most of the meshes are optimistic that the housing recovery will continue, but some are worried that lawmakers will again fail to reach a federal budget and could shut down the government for a second time early next year. meanwhile, new data from the treasury shows that foreign investors pulled out of short-term u.s. treasuries in september during the last budget battle. foreigners dumped more than 130 billion in investments, the numbers were higher showing $14 billion. investors buying up stocks in china's markets today, the shanghai composite rose 3% following the announcement by chinese leaders of massive social and economic reforms, including opening up its markets to more investors, encouraging

competition among private companies and allowing more foreign investment into the country. more foreign reform, easing up on the parents' one-child policy, which some say has caused more aging population, it has created an unexpected boom in investing in the older generation. >> reporter: at a nursing home in beijing, the sing-along is led for the fellow residents. the 82-year-old is one of a number of senior citizens, benefitting from elder care. nursing home life is good, he says, i feel really safe. due in part to the decades-old one child policy china is aging faster than other developing nations. pension and health care systems here are not well equipped, raising questions about how china will be able to take care of a quickly rising number of

old people. >> in the next 20 years, the number of elderly age 60 and older will be more than the total population of the united states. >> businesses had help to provide answers, this company opened offices here two years ago to offer home visits. >> there is no home care service, so we think the market is huge. >> reporter: local entrepreneurs are also joining in. businesswoman yun created a three-star hotel creating activities and room and board. people can visit the pharmacy, there is a massage area and other areas they hope will make it a distinctive and competitive industry. >> reporter: still, they say it is not as cultural accepting in the u.s. sometimes children don't want their parents to go into nursing

homes, she says, sometimes the elderly are reluctant. even so most businesses expect their investments to fully mature, along with china's graying population. for nightly business report, in beijing. still ahead, bit coin, you probably heard the term, but how does this virtual currency work? and why is congress holding their first-ever hearing on the matter. you may have heard about bit coin, that is a virtual currency that has been around for about

four years but is just now starting to gain more interests from retailers and from investorers. because of that, congress wants to find out more about the digital payment system, whether it is secure and if it is good or bad for consumers. mary thompson was at a house meeting here today in washington and joins us now. mary, let's start with the back backs, what is built coin? >> if you're going to buy one, you pay cash for bit coin. you keep it in an on-line wallet and can use the bit coins you have to pay for services and goods at retailers that accept the bit coins. now, a couple of things are different than u.s. dollars, first of all it is not backed by a single government or commodity like gold. it was backed by a japanese programmer who limited the number of coins that could be produced. currently, there are 12 million in circulation and are produced

by computer solving math problems, once the problems are solved they get a couple of bit coins put into circulation. and the value of the bit coin is determined by a number of exchanges around the globe where investors and retailers trade these digital currencies. >> it sounds a little complicated for the individual guy, i don't know how congress, you know, felt about all of this information. why are lawmakers looking into the bit coin? >> well, there are two reasons, first of all, there is a lot of hope or promise in these digital currencies, primarily for two reasons, one, the speed at which you can transact, meaning i can send money to you in a matter of minutes, possibly without the problems you may have with a credit card or transferring money from one bank to another. also, the idea of inclusion to millions who don't have access to a bank or cash but could have

access to a phone where they could store their digital wallet. there could be a problem because criminals see the digital currency as their favorite form of money. and as we heard in testimony today from the department of homeland security, edward lowery, or from secret service, that made it a lot tougher trying to track fraud. listen in. >> one of the largest changes is the reach, the reach of the criminal, used to be that we had to worry about back in the days of early access device fraud, we had had to worry about somebody dumpster diving or trying to get an actual image of your credit card. today, anyone in the world can reach anyone else in the world. and that has changed how we have to enforce our laws. >> point of discussion again in today's hearing. >> mary, who is using this? who is investing in it? and what is my risk? in other words, could my bit coins lose value?

>> they certainly could lose value. what we've seen is a huge jump in the bit coin value. it came during the euro zone crisis, a number of people were looking for places to store their money in cypress. the numbers rocketed. since then, we've seen china having an increasing interest in it, and then investors in the united states, famously, the twins that were interested in the bit coin. but more recently, a second market has opened up interest. we're seeing more interest in the digital currency. but as you look at how high it climbs, it could fall as well, as people lose interest. >> all right, mary thank you, from the hill today. and for more information head to our website, nbr.com. and a boost in chicken sales

helped boost profits, tyson's net income surged more than 40% in the first quarter, earnings in revenue beat investments, sending shares to $29.42. sales force.com saw quarterly revenue increases, beating analysts' estimates slightly. they posted earnings after the bell in line with forecasts and also issued a mixed outlook. the stock closed down 3%, closing at 55.51 and rose just a bit in after-hours trading. also out with earnings after the bell. urban out fitters, beating both earnings and revenue estimates. quarterly profit increased 18% and was driven by strong growth, thanks to the anthropology and retail chains, they finished the regular session down a percent to $39.64.

super value hit with a rate. goldman lowered the ratings to a sell because of food stamps and increased competition in the grocery business. the stock was down. and bank of america thinking that microsoft was a little too excited about stocks trading. there could be a 10% drop off in microsoft shares if ford's allen m mullaly is not chosen as the next ceo. the announcement is expected next month, sending shares down of microsoft one and a half percent to $37.20. the chinese solar equipment maker posting a second quarterly profit, sending shares to a three-year high, increased solar projects helped the shipment

forecast, the bright outlook sent the stock up nearly 13% to $33.30. sony sold a million play station 4 consoles in its debut on friday, the fastest start for a play station system ever. sales are watched closely since sony is depending on the ps 4 to revive the consumer electronics business. some consumers reported problems, but shares were up. and some worry that the federal reserve may decide to push back the date that banks will have to comply with the so-called volker rule, an important part of the law that has to do with the way the wall street banks are regulated. it has to do with taxpayer-funded bailouts by prohibiting banks from investing their own money for profit. and there could be new rules for the funding industry.

the government is now considering tougher regulations to protect investors against another financial crisis. our next guest says it could be a big mistake. he is brian reid, chief economist at the investment industry. we have a statement from the treasury council that put out this study regarding those rules and i want to read it now, brian, that council is in the early stages of analyzing the asset management industry and its various activities as the announcement moves forward the council will continue to be informed by the work of the ofr and welcomes continued engagement with asset managers and other stakeholders. that from the treasury, but brian, your group and many in the asset management business from black rock to fidelity to pimco say that the study on which these potential new rules is based is brutally flawed. why is it so bad? >> well, i think the big problem here is that fundamentally, it sort of ignores sort of how the

capital markets and mutual funds and epf operate in those markets. if there is a big chasm between the capital markets and mutual funds and banks on the other side, and this study just completely tries to paper over that chasm and not really focuses in on the unique features of capital markets and could really -- at the end of the day just turn the capital markets and mutual funds on their heads. >> well, you know, brian, the investors have been happy that in the aftermath of the financial crisis that there were new safeguards put in for banking, the same for insurance companies. and here you have the mutual fund industry. it is a $53 trillion industry with a lot of players. why not this industry, too? >> well, i think the statistic that you cite there is one that comes from the report, it is a key example of how the report sort of fundamentally misunderstands the asset management industry. and i'll give you another

example, and that is we went through -- as you allude to, the worst financial crisis in 2007, 2008, and 2009, probably the worst since the great depression. and in that report, there was nary a discussion on how they operate in those markets and how they behave. we saw up-flows to be very minimal. they accounted even in october of 2008, the worst monday, the out-flows from stock funds about equally 4/10th of a percent of the overall market capitalization. so they make these broad sweeping generalizations, and don't say okay, what can we learn? i think if they had done that, there would not be the sort of worry that you're observing. >> i guess my counter to that, brian, and i mean it with all respect, things are not runs on

funds until there are. the mere fact that the investors didn't panic in 2008, doesn't mean they might panic, you know, number two, back to susie's example, the companies have been designated as systemically important. you're not saying that funds are not important or big, are you? you're saying there is something in the structure in the way funds operate that innoculates them from the kind of risks that other financial players have? >> the key here, when i invest in a mutual fund, be it stock or bond fund i know that i could potentially experience losses just as when i invest in stocks. i also have the upside prescrib potential. what the asset manager does, it doesn't say i'm going to protect

you, nor should the government say i'm going to protect you. if the government goes down the slippery slope and interject itself in the market, it could cause a problem. >> you know, what if investors say i want to sell out, i worry about a market event or something like that. are you saying that other investors in that fund are protected if there is no ripple effect? there is no impact? >> what i'm saying is that those funds are mark to market every day. their prices are set with all the other assets in the market. so that investor is not harmed because they're getting a new price every day. a full market to market price, unlike when i invest in a bank, that is staying at one dollar. and so i think the key here is that when i invest in a fund or i invest in a stock or bond i know that i could potentially lose money when the market goes down. but the harm to me is from the

market going down. and that is what i expect is investor, the markets are going to go up and down. >> brian, thank you very much. and we should point out that we did invite representatives from the treasury and the national stability oversight company to join us, they sent us a statement and will join is perhaps later. brian reed, thank you. and five issues in five days, tonight, we take you to oakland, california, to see what that city is doing to fix its badly broken finances. an update now on the botched rollout of the government's health care system. one spokesperson overseeing the

efforts to fix the on-line marketplace wrote to congress saying that it is improving, and that his departments for medicaid and medicare services will update the subcommittee on the marketplace tomorrow. meanwhile, united health care dropping thousands, leaving many wondering if they can see their long-time physicians, united health care says the cutbacks are the result of government under-funding of managed care plans for the elderly. and more on money being spent on premiums on medical claims in the last quarter. and finally, nbr has more on the week-long series, and the economic issues facing america's biggest cities, many of which are in a critical situation. scott kohn has more from

oakland, california. ♪ ♪ ♪ >> reporter: curtis robinson is not your average pastor. before he took the pulpit at the church, he spent time as a stockbroker, which figures into his work. peace comes at a premium in oakland, with 127 murders last year, and the highest armed robbery rate in the country. >> we have to have more at the police department. >> reporter: the mayor says the city is hiring officers again but the force is still down by roughly a quarter in the last four years, thanks to budget cuts. it doesn't help that about $4 million a year, around 2% of the general fund budget is going not to oakland but to goldman sachs. >> we have tried to negotiate with goldman sachs.

and i have not totally given up. >> reporter: the payments are a result of a 15--year-old swap contract, to guard against rising interest rates. trouble is, rates went down, not up. and the city wants out. but under the contract that would cost around $15 million, money that oakland doesn't have. curtis thinks they took oakland for a ride. goldman sachs declined to comment, but asked about the deal at last year's annual shareholders' meeting. the ceo said it is not fair to ask goldman sachs to tear up a legitimate contract. that, he says, is not how the financial system works, oakland is not alone here, neither is goldman sachs, oakland sold hundreds of these contracts in the '60s, making millions, the spokesperson said it is costing about a billion a year, what is frustrating is that unions look at cuts. and tomorrow, we'll travel to

chicago where the municipal pensions are making others look like child's play. and that is nightly business report, i'm susie gharib, thank you for joining us. >> and i'm tyler mat eson, thank you for joining us. >> nightly business report has been brought to you by street.com, up to the minute stock market news and in-depth analysis. our rating service provides objective independent ratings daily on over 4300 stocks, learn more at the street.com/nbr.