the golden state is tarished as lifornia teeters on the edge. i-o-us are pilinup and now uncle sam may step in and take unprecendented action to guarantee a state's debt. plus, the racial savings gap...why some racial groups set more money aside for retirement than others..and the reasons behind the disparity. and...from iran to north korea...how tensions across the globe could impact business here in the u.s..and the chances of a global recovery....it's all ahead on this edition of first business. last time we saw the stock market these lows ahead of wednesday's opening action, it was a couple weeks before memorial day that march tomay rally. but the june swoon has really picked up speed here. beejal and we're seeing a bit of a sell-off here in july. yes the s&p 500 back into negative territory, down 2 1/2% for the year. so now the focus is on second quarter earnings season. alcoa, chevron, pepsi bottling co. all reporting earnings this

week and of course experts are saying the focus is going to be on how these companies foresee the rest of the year. and not only these companies were going to be hearing from in the days ahead but those key financial companies that were able to spark the rally back in march. is there any reason for optimism that we saw in the first and second quarters to continue to wash over in the second half of the year. california faces several more credit down grades... as every day passes... and it does not have a fiscal 2010 budget in place. this week, fitch ratings is the latest to cut california's credit rating to triple b - which is 2 notches above junk status. state lawmakers are in the process of trying to close a 26 billion dollar budget short fall... in the meantime... california is now facing a liquidity problem... because it has no budget, it cannot issue short term bonds to continue bringing money in. "the implications are they'll keep getting downgraded until budget gets solved.. we can see california going down into barely investment grade... i

don't believe they will default - that would would be a hurdle.. political suicide for california. brian battle of performance trust is closely watching california's fiscal troubles... he believes the situation could get to the point where the feds step in and help stop the bleeding... "i think california is waiting for the government to come in and give a lifeline...i don't think dc has the cash to hand them because every other state will line up too - but a guarantee from uncle sam - will help california sell short term notes with a fed gaurantee and get them liquid again." brian battle says it's a short term solution - that would buy more time for state officials to hammer out a budget and he says he believes the obama administration will be forced to help california - because a default would shut

down the municipal bond market... causing a huge ripple effect for the entire financial system. for now though, the problems are contained to california. more americans are falling behind on paying their debts...and it's beyond just late mortgage payments. almost one in every 20 credit card account is late. while that's not a record higher, the balances on those delinquent accounts is up, meaning people are paying more with plastic but not actually paying the credit card bill. other late paying loans include 3 and a half percent of home equity loans. and three percent of directo auto loans. especially before happy independence holiday, three out of last four trading sessions we've seen some pretty stiff sell-offs for u.s. stocks. ben liechtenstein traders audio.com, along with us over at the cme group listening in. any difference to the selling that we saw on tuesday compared to what we saw before the fourth of july holiday? yet we've been seeing an enormous amount of supply hit the market recently.

it's been of the closing and pre closing bell trade. yesterday was a perfect example of that we had as high energy selloff coming in late afternoon session. and just moving the market lower with the enormous sum of supply. a couple of good bids on the way down but the supply has been meeting demand in a big way at a high energy trade is on the downside. when you talk about supply, lots of folks looking to sell, what is it your sense perhaps that they're getting short or just profit-taking after the rally? i think we're seeing some new shorts coming into the market right now. ever since we broke 900, we've been seeing this high energy trade on the down side, now that we are in the 880's, i think there's a little bit of room to open up the door right now for some more downside potential here. the fundamentals are very remain very negative at this point for high-energy trade. you mentioned 880, these matched the lows that we saw back on may 15th, your expectations sounds like it's not gonna hold. no i don't actually. i think were going to test quite a bit lower as well. i think the market has a lot of pent-up energy in it right now. we've had really subdued

trading session for a while now, most of the rally that we saw was above 900 was underwhelmed extreme rally were light volume conditions and a lot of skepticism towards that rally. and right now we're seeing this playing themselves out as far as the actual market and where the value is right now at this point. i expect more, the next couple days. ben liechtenstein listening to it, watching it all at traders.com, over at the cme. still to come geopolitial tensions and america's bottom line...how unrest around the world is affecting u.s. business. plus, the role race plays when it comes to retirement savings...a look at why there's such a huge gap...when we return after the break.

the bear market for stocks over the past year and a half has taken a huge bite out of many people's retirement savingsassuming they have any. while more people are saving more money thanks to the recession, there's a big racial retirement savings gap. barbara hogg is a principal at hewitt associates, which is out with a new survey conducted along with ariel investments. barber welcome to the program is nice to meet you. but to be here. disservice fascinating it finds a difference between racial groups and their participation in the 401k savings and how much they are contributing. will take a look as though the differences. explain what you think these differences exist. i think there's a lot of factors that go into differences that we see in this something that's actually look at a lot people's ability to save their inclination is creating an immediacy are rounded but we've found in the study is differences among race that we can explain by some of the other factors that could drive

participation. things like a toward tenure or salary. if you control for al those factors but still a significant difference in the contribution as well and was also interesting as we take a look at those numbers is how little people are saving overall even among white saving only 8 percent of their available money. a lot of people have been underestimating what they need for saving and one of the sea here overall we have a lower savings rate down we need we also see the disparities between african-americans hispanics and whites in agents. can one reason why it the hire unemployed arista we see along racial lines because the job description of the scene of the past 20 months or so and on the primary for african-americans if are almost 15 percent compared to 9 percent for whites. i think that factors into this and may not be directly related to the contribution rate. so those are people who are actively at work and how much they are saving. so probably other things. it is more concern for people's in their jobs. and losing the ability to say if it would mean

britain their savings patterns. speaking of that when you take a look at the average bonuses among the ratio groups was striking here is just the big disparity from african- americans 21,000 to 35,000 for whites but still very low numbers overall when you're talking about if savings for the golden years. exactly so again when you look at the numbers of people aren't thinking of the pools of pay that they need in order to fund their retirement so overall across-the-board we see no savings rate lording we should seek and within that we see even lower savings rate for hispanics and african-americans has primarily due to lower participation rates and lower savings rates once therein. was to be done here for plan sponsors pulled companies that sponsor these retirement savings plans and for the administrators that offered a different choices? i think plan sponsors because of the awareness of lower savings and retire me and at adequacy overall has already been making efforts to help the broad population like automatic an automatic increase in your rates

over time those are all a first step in terms of getting people in the gate and started on the right path people i think beyond that it also gives them into communication how we interact with participants, making sure that we are talking about it and raise that are relevant to them do we have the right motivation and communication would we talk about everything as financial impairment and you're sure golden days on the beach for all we talk about things that are important to them. for one case savings is about we're going to equal pay with tools that make your own decisions and responsibilities in as we saw over the past fit 28 must a lot of people have stuck their head in the sand and said i'm not one open those statements because i know that they are awful. i think the last few months or few year in the fact has been harder people and has shatteredonfidence. one thing that we have going for us is that the nurse said that what's driving these plant designs and driving the lack of savings also means that people are getting out as fast. when we see reactions some of it is moving

away from the market. final point here there's a big difference and the amounts of loans that folks will take against those retirement savings and happen to these dollars what they're still working to see these numbers here and again when five whites almost one in every two african- americans are taking money against their money. this is one of the numbers but is more surprising in the results won't but that it is that a huge difference assisi there and it's surprising that it shows different groups are looking at their 401k as a weight to solve immediate needs as well as long- term needs. in a thing about loans is that when you get into for immediate if you go when he paid back in a dozen decrease your savings otherwise is fine but if you take a long and is suddenly you look you lose your job is very likely to become a distribution which means you're walking your nest egg. big risk when it comes to those terms it fascinating that we appreciate you sharing it with us. great. if think so much. principal at hewitt associates.

online items looking for bad banks...on our website, a market pro talks about at-risk financial institutions and where you can find them doing business. plus, from oil to cola... we get second quarter earnings from some of the world's biggest companies...what analysts are expecting... and...what one market pro is watching out for as we head into the second half of the year. straight ahead on the show... how tensions across the world are impacting business right here at home...that's coming up after the break.

a questionable election in iran, a presidential coup in honduras and missile testing by the north koreans. the global credit crunch is one problem but geopolitical tensions and even violence pose big risks to resparking the global economy. ron cruse is author of "lies, bribes and peril". international businessman at large. nice to meet you. how would you describe the business climate for u.s. companies looking at emerging markets in looking to go global? right now is very tough course everybody is retrenched but basically i will state that the climate is awful but the studies have been basically the u.s. is going to be the smallest part of the gdp the world gdp court the next five to 10 years. so basically my outlook is that there are market share to win. globally. yes. those emerging markets in the small markets are seen as the sport is going to reignite the global economy and provide a big upside growth because those consumers have a lot of

leverage whereas the u.s. consumer doesn't power companies of position and those somewhat risky areas in the market? but i think that might vary by industry. going back to the other point if you think about the seller but industry which is a little bit of trouble today but from a legislative point of view it doesn't take long to think the guys with toothpaste and everything can be far behind. how they do with you left to be very costly aware. you write about courtroom chasms that exist when western companies think that is their way in a going to win new country and russia is going to be the same s alabama was when they moved into new states in the u.s. but is much different

so what are the risks? risks is that you don't get your product properly to the people i say. for really the operating but and never mind a product in the service if you can operate freewill if he can't work with the locals and understand marketing in the local area if you just can't deter office and your phone set up and which can be depending on the market can be very big problem. corruption is a big problem to the world. we've seen him recently in russia with a swedish retailer ikea said no more investment in russecause the cost of cuption. this week the president meeting with the prime minister pepsi announcing a million-dollar investment so you really have this interesting dichotomy were some firms disagree on whether the cost of corruption is worth the investment. i think pepsi will be a great look to see to see how they do with this. but

personal experience in russia is that it is one of the transparency and national is one of the most corrupt countries in the world. of course as american said it be interesting to see how pepsi does it. as americans facing the legislation involved with practices act is much tougher to cross those bridges. the rest of europe really in asia they are the sharpness of the legislative swart is not near what the united states is. at the ski for u.s. companies looking to move into some of those more risky because it basically hold u.s. companies to u.s. standards for u.s. business practices even if it's happening in moscow or beijing or cause the stock. that is exactly right and the real

issue is that true competition currently the largest conviction lately in terms of corruption was the company who was called paying 1.2 billion would be in bribes. seoul unfortunately a german company had been the fifth largest in german ellen said the 3840 if larger company in the world of a deadly it was all part of their fabric " if you were an american company competing with siemens somewhere in the world whether it be russia or venezuela or israel you really do have much of a chance. interesting read lies briars and pearl quite the international entrepreneur cadets. with a handful of state government still in financial crisis we'll take a look at the

impact it's having on the municipal bond market. that's coming up in chart talk next.

the municipal-bond market seems to be on h. right now with the handful of state governments that have yet to pass their 2010 budgets california being the most critical is the eighth largest economy in the world. this is a big idea in a big market here a lot of investors have flocked to prominence of poke bonds in the past several years because of tax exempt status for a lot of the interest rates and quite frankly paying a higher interest rate

but still be sent in, compared to the equivalency of the u.s. government debt. the yield on some of these exchange traded fonts are pretty healthy around 3 1/2%. let's take a look at one of them and you beat is the largest the t f is a national e t f that includes municipal bonds from local governments across the united states has and if we zeroed in on c m f which is the california muni bond e t f that includes bonds issued in california to finance various city projects cities within california involving utilities and school districts. he said this during the break what is remarkable instability with these forms and certainly yes some volatility no doubt especially if back in october when it was getting out everything except for u.s. treasury but they have coming warming back because of their tax-exempt status. and if you take a look at the one your performance here for both of these e t f they're pretty flat they haven't moved really except for the dive back in october they are pretty much at the same level as they were a

year ago. still in that range for in you be 99 on the downside about 2 1/2 on the upside and california by exchange traded fund municipal bond you're looking at close to the downside as it has faltered because of the california state situation. certainly did look steady on the trucks but anything can happen especially with the critical situation that california is in because if california were to default in experts say the chances are small but if california government will shut down the list send a tsunami of fact across the in tigard to a half trillion dollar bond market. watchlist it's beginning to be an annual compliant....oil prices spike and people grumble about speculations driving up prices in the futures market. those speculators traditionally are any investors...like hedge funds or investment funds...who are not directly linked to the oil itself. now, the chief regulator of the futures market says it would consider putting limits on speculators playing the energy markets. (chart) as oil prices have gone from

$150 to $40 back to $70 in the past year, funny how we hear the worries about speculators pumping up prices...but never complaints about those same investors pushing down prices.