this is "nightly business report," with tyler mathisen and susie gharib. brought to you in part by. >> thestreet.com featuring herbert greenberg who reminds investors that risk is real, with herb greenberg's reality checks in terms of stocks and risks. you can learn more at thestreet.com/reality check. bluest of the blue chips, ibm ceo in a rare television interview saying that ibm is re-inventing itself with a plan for changing the industry and growth. did fannie mae and freddie mac just make it easier for americans to get home loans? and open for business, small business owners are feeling more optimistic but does that mean more jobs and will the economy roar back? we have all that and more on

"nightly business report" this tuesday may 13th. good evening, everyone, and welcome. records fell again on wall street today as the dow industrials and the s&p 500 each closed at record highs, more on that in a moment. but we begin with big changes being rolled out at a company that as much as any defines the permanent blue chip, you may earn more in portfolios or funds, it contributed not one bit to the rising markets, the shares were off slightly. the ceo sat down with a rare television interview, the conversation was extensive and expansive, and david fab oer jo his us from new york city, good evening, it was a long interview, i don't think i had ever seen her on tv before. >> no, in fact, you would be right about that, tyler, she has not been on tv, certainly not with us.

almost two years into her tenure, remetti seems to focus on clients and employees and seems to be willing to communicate the transition, a significant one that this giant company is undergoing. 330,000 employees around the world but not a lot growth. i asked how she would get going. >> it is important to think of the word mix, in growing, data, around cloud, we ended last year at almost $4 and a half billion, up over 50% in the first quarter and in this whole area of engagement, social mobile and security. and to enterprise clients this will hang in the balance, important -- >> software sales, important for this company, like $21.1 billion. but again the question of growth

which is a key one for so many people i believe the software business grew 1.4% in 2013, slower than worldwide sales and key competitors, as well. do you believe that that is a cycle? or is that something we can expect to only be a slow growth business? >> no, when you look at our software business just like all the big businesses, they contain two pieces of them. very high gross profit into the growth initiatives, and then the work we do for clients, the core franchises which are reinvented, the clients profit for us in order to re-invest in the business. >> you have been running the company since january of 2012, ibm has successfully re-invent itself a 100 times. even since the found er took over. it is an enormous organization,

440,000 employees, who gives you the confidence that you can actually do what you need to do in terms of the word you used, re-invent. >> i have very strong confidence, part of it to me is a very clear strategy. i have a world of confidence in the people in this company. it is not a nonprofit company, it is an innovation company, we moved the talent and investment and they have moved again. >> to others that say why not move bigger, spend more on r & d to make sure that the cash flow that you have generating, to make sure that it is there? >> if we need more we'll invest in other areas, big acquisitions that don't return, big acquisitions that fail, that is not a good thing to do. so -- we're -- >> it is smaller acquisitions.

>> several ibillion. >> but ibm doesn't do the big acquisitions, why is that? >> by design. i get 150 acquisitions, so we are very much a serial acquireder, but very much doing it in the strategic areas, profit going into our global distribution system. and we always do them around the core of a strategy. >> and of course they are doing $6 billion of investments during remetti's tenure. >> fascinating conversation, by the way, great interview. you know, she made a very good case about ibm's strategy. but when you look at her tenure from january 12, until now, the stock has been the same. how much more patient do you think investors will have to be? and what type of reaction do you think analysts will have when they meet with her for investor day tomorrow explosi? >> you know i think tomorrow they will ask about the road map

they put out many years ago and are sticking to. they will ask many questions about the first quarter conference call about whether they can maintain the free cash flow guidance they can maintain going into this year. i also think you will continue to see the questions about manufacturing. something we talk about. they buy back an enormous amount of stock, $2.8 billion, it gives you the sense of the size we're talking about. all of those will be a focus. as for remetti, it was bad, he made it good, by the end things were slowing a bit. palmasno came in, turned it around, and by the end of his tenure turned it over to remetti, they have the same kind of arc to her career there. >> david i want to talk about something earlier we talked about. that is the volume of deals we are hearing about as you work your sources. already this year, proposed but

not completed. pfizer, astrazeneca, not even accepted. time warner cable and there are others. why are deals heating up as much? what are you hearing and where will the deals likely be for the rest of this year? >> you know, tyler that is a great question, of course. and you're right? we have been waiting for a wave of m & a for years and it has not really come, given the extraordinarily low year for borrowing costs. the stock price goes up, and you know, relatively strong equity markets certainly if you want to use your currency yet very few deals until now. i can tell you until speaking to the bankers and lawyers and other people who work on these transactions they're as busy as they have been in many, many years, it is my expectation we'll continue to see announcements, even perhaps some hostile deals, the likes of valeant and allergan which we don't typically see.

it is all about confidence. tyler, when you get ceo confidence moving in the right direction and the relative not too up but not too down you start to lay the ground work for other deals, when one company does it other companies may feel they need to respond. >> and certainly that inspires investors at all the big deals that are happening. david, thank you for joining us. as tyler mentioned, the dow and s&p closing at new highs but just barely with the s&p even topping the nineteen 100 mark for the first time ever. there was an unexpected slowdown in retail sales rising only one 10th of 1% last month as consumers cut back on buying big ticket items like appliances, the dow closed at 16,715, the nasdaqs lost 13, the s&p up a fraction of a point ending up at 18.97. and higher prices and

steeper mortgage rates blamed for the steep housing market, but relief could be on the way from federal authorities. that news as giants fannie mae and freddie mac surge today as some of the nation's biggest buildings like horton saw modest gains. diana olick explained how new rules easing credit restrictions may help some home buyers get loans and give a boost to housing. >> reporter: fannie mae and freddie mac, which guarantee the vast majority of new mortgages got new orders today. that could make those mortgages a bit cheaper for both banks and bo borrowers. >> we expect fannie mae and freddie mac to improve margins that affect liquidity in the single family finance housing market. >> reporter: to help loosen credit, fannie mae and freddie mac announced they would relax

standards on banks having to buy back bad loans, he would not lower limits from, something they had considered as a way to reduce government share of the mortgage market. >> this decision is motivated by concerns about how such a reduction would adversely impact the current health of the housing finance market. >> reporter: these, in addition to new programs to help some of the hardest hit housing markets like detroit are designed to ease credit as all cash investors move out and mortgage dependent home buyers move in. >> the key takeaway for investors is there is going to be a modest increase in credit availability that is going to help the mortgage market. but i don't think that you're seeing a radical shift to the fha or fanny and freddy. >> in another -- in another move to help credit, they would lower

premiums for borrowers who agreed to get credit counseling, they lost a lot of customers when they raised premium s to protect themselves. >> so could the new rules loosening credit restrictions really jump start the buying market? and what is the down side to the rules? he covers the housing market, so bob, we all thought that fannie mae and freddie mac were going to be winding down, not expanding? what is the switch and is this going to make things better or worse? >> yeah, it is going to make things better or worse, that is what it is going to do. i think there is some truth to the idea that there might be some better availability of credit out to certain borrowers, but the bottom line is that the housing market is not really going to be made better by changing financing rules. it is going to be made better by

having a better economy's having a real low unemployment rate, not by having people drop out of the labor force. you can only do so much with the credit rules. i think at the end of the day you have to have people that have good credit. the banks have been concerned because there are pushbacks for mortgages. this caused them to be for costly, creating higher credit scores. well, that hurdle will probably go down a little bit now but it is not clear it will make a lot of difference. >> you know, bob, a lot of deals i understand that are being made in housing are all cash deals. what does that tell you either about the nature of the economy or the health of the credit markets? >> yeah, the all-cash deals i think have been running somewhere a little bit north of 30% of the market. the real problem is that new home buyers is still a very small proportion of the market. new people just can't get into the market. housing prices are high. and this is the problem, housing prices were low for a while during the crisis.

while it was bad for people who owned houses it was good for people who wanted to buy them. the problems come from the fact the economy has done a little bit better and housing prices have recovered. >> you know, bob, you said the housing will recover when the economy recovers. a lot of people believe if the housing recovers, the economy will struggle, is that back wards. >> the housing is far too small that will create the growth that will drive the economy forward. >> the prices, actually they are year over year quite healthy. is that actually a bad thing because they have gotten so high in some markets that basically affordability has gone so far down? >> of course you still have some markets that are pretty depressed. my hometown, detroit, has still very depressed home prices. and that has been the situation there for sometime because the

economy is depressed. and places where the home prices have gone up, they recovered from the tremendous selloff. they are probably normal or maybe even a little bit high. whether they're high or not depends on the interest rates. if we get inflation, if interest rates drive up, it will cause downward pressure on home prices, they can be high when had interest rates are low. interest rates are low now. there is a relationship you have to keep in mind. the interest rates are low because the prices areñi so hig >> thank you, bob. thank you. and to read more about the changes in the mortgage market, go to our website, nbr.com. and small business is often called the back bone of the u.s. economy with more than half of americans working for or owning one. and a new survey showing a six and a half year high in optimism by small business owners raising a lot of hopes now for jobs and maybe even economic growth. hampton pearson has more.

>> optimism among small business owners was at a post-recession high in april. but there is no sign small businesses nationwide are ready to take off. the closely watched optimism index from the national federation of independent businesses went above 95 last month. for the first time since the fall of 2007. but nfib chief says that it is just a modest gain in a still slow growth economy. >> it is not much of a breakout as we pointed out. the average of the index going into the recession was -- and that is over 40 years, was 100. so we're still five points below that mark. but progress is progress. >> among the success stories, z burger, its six locations in the greater washington, d.c. area has gross sales of more than two and a half million dollars a year. more locations are under way and just this week it added a brand-new solid and sandwich to

its flagship d.c. location. >> we have a lot of mothers and fathers that come here and get a solid and sandwich and then go over there and get a burger and drink for their families. >> the expansion here follows over building blocks for future small business growth nationwide, more than half of small businesses say they plan to expand, small businesses are able to raise prices and the job creation index is up several points. >> we have had several months in a row where firms created employment on balance and that has not happened since 2006. so we are moving ahead. >> three major concerns face nearly all small businesses, concerns about taxes, government red tape and regulation and poor sales. for "nightly business report," i'm hampton pearson in washington. still ahead, is another tech bubble brewing? we talked with the big deal

makers in silicon valley coming up. victims of wall street thief bernii madoff are claiming more than expected. they have claims from people in other countries who say they lost money in his ponzi scheme totaling about $4 billion, two times as many claims filed in bankruptcy proceedings. and french bank in talks with the justice department and other agencies to pay more than $3 billion to settle investigations into whether it

violated u.s. sanctions against doing business with iran, sudan and cuba. and private lender agreeing to re-pay 60,000 members of the u.s. armed services a total of $60 million that it over charged for loans and ignored an interest cap required by law. here is attorney general eric holder. >> according to an audit, excessive rates were charged to 93%. 93% of active duty service members who had loans that were owned or serviced by sally may. >> sally may will also ask that all three major credit bureau reports delete any credit history related to those charges and any improper default. and coke plans to up its stake in curry green mountain, the company that makes a single

serve coffee maker to 10% that's correct comes after -- that comes after they signed a deal, shares of keurig surged to 19.07. microsoft coming occupy with a lower cost version of the video game console, retailing for $100 less than the regular device, but the cheaper console wouldn't have connect, and it will offer all x box 360 owners access to netflix without having to pay an extra fee. shares popped to 40.42. roeurope's highest court rud today that people have the right to be forgotten, and they can have google to remove information on search results like article links. the ruling means that google will assume the responsibility and cause for removing that information. here is how shares of google

performed today up a fraction to $541.54. shares of whirlpool fell after the government reported that electronics and appliance stores saw sales decline last month, the stock was downgraded from neutral to buy. the firm found declines in brazil, whirlpool shares down almost 3% to 151.55. top investors, entrepreneurs, and innovators gathered for the conference in san francisco. and as they all looked to invest big sums, a lot of them are asking whether there may be a bubble brewing in the tech sector. josh lipton has more. venture capitalists are always on the hunt for the next big money maker and it is here at venturescape where pros are talking about the latest

investments. it is a conference in san francisco where the top innovators come together for panels and lots of networking, one big topic this year? is there a tech bubble in silicon valley. values are going higher, air b & b and drop box are both valued at $10 billion. space x at nearly $5 billion, pinterest and uber are around $4 billion. despite these valuations some argue there is no bubble in silicon valley unlike the last tech bubble here, they say. start-ups today are real businesses with real revenues. >> back in '99 most companies were going public, that is about nine years now, you see it in their revenue and level maturity. today, the value is about $106 million, the numbers from 2013.

>> venture capitalists invested about 10 billion, that was the highest total quartly in about 13 years. the software industry received the highest level of funding rising nearly 40% from the prior quarter to $4 billion. that was followed by biotech and i.t. services. they say they have to prove they're the rich valuations. >> from the outside you look at the drop-off from a $10 billion market cap. you say there is a lot of room and value they need to build in from a financial standpoint. >> bubble or no bubble, venture capitalists are finding plenty of places to commit capital. only time will tell if they're paying a smart price for their investments. josh lipton, "nightly business report," san francisco, california. and coming up, how wall streeters, sports stars and celebrities are teaming up to

give back raising tens of millions of dollars for those in need. some of the biggest names in sports and hollywood have made their way to wall street today as trading firm btig held the annual charity day. all the day's commissions are being donated to a whole bunch of worthy organizations. bob pasani was there as some chipped in and told us where the money is going. >> what would get sports star eli manning, shaquille, and dallas maverick's owner and shark tank star, mark cuban, as

well as 50 other stars together in a room in mid-town manhattan. >> they're here for the annual btig charity day. >> we're really excited about today. we have raised over $30 million in the last 12 years, 250 charities participated last year and i think over 100 celebrities in the past 12 years participated. >> it is a simple idea. all the money they collect today goes to charity. each celebrity represents a charity they are associated with and makes a series of honorary trades on the floor on behalf of btig clients. the money raised from commissions gets divided up between the charities. four time nba champion shaquille o 'neill represents his mother's charity. >> managers say that charity

work has become increasingly important in the age of social media. new york giants quarterback eli manning had a tough year last year, but is still popular with the public. >> if you have the best season of your life or a season where you don't do as well you still want to be nice to people and go out there and work hard. >> they hope to raise roughly $5 million for charity. and for all the men and women who work on this floor the hope is that that will counteract some of the negative pr that has been around for wall street. for "nightly business report," i'm bob pasani. >> and i'm eli manning, at the btig charity event. what a nice guy, finally tonight, the annual robin hood foundation dinner bringing hundreds of celebrities and water together -- wall street together to raise money for shelters and job services, bill

ackman of pershing square, jeff bezos from amazon. and the tennis legend, in bad boy john mcenroe, putting on a nice smile. they raised $30 million including for the american dream fund to help new immigrants struggling in poverty. wall street giving back. >> 60 million there, 50 million here, adding up to big money. i'm susie gharib, thank you for joining us. >> and i'm tyler mathisen, thank you for joining us, we'll see you right here tomorrow night.

tonight on "revolutionaries" -- >> earlier in my career i used to say in 50 years everybody that doesn't play video games will be dead. so we're almost to that point. >> trip hawkins is a pioneer of computer games. as the founder of the legendary companies 3do and electronic arts, he demonstrated the vision and creativity to capture a global audience. john markoff talked to hawkins about his early career, business strategy and path to becoming a revolutionary. major funding for "revolutionaries" is provided by the intel so trip has been in the news a lot recently. i think you gave a keynote in london yesterday. that's very recently, it's been