as small business lending company c-i-t awaits a lifeline.....a look at the environment for small business lending how the recession is impacting it. plus, goldman sachs pulls in it's biggest profit in years... how the company is weathering the recession so well....even looking to hand out extra cash to employees. and...from autos to insurance, how some companies are fattening up their bottom lines through advertising...even in the midst of diminishing marketing dollars. by a quiet drift higher in the market welcome in everybody ahead of the action glad you're along for the right we've been talking about a pretty significant week this week in so far so good inflation certainly ring up the wholesale level will take a look at consumer numbers and decent earnings from the financial sector so far. and we continue

to give more financial stock earnings later this week as well as technology earnings but also another market mover to look for as the potential claims this out on thursday in and has certainly been one in the past several weeks here as we try to get a grip on just how much worse or better the job market is getting. also how much worse or better technology may be getting dell computers in the pc market may bottom and silk resolve's after the bill yesterday watching certainly technology and how the market absorbs these last figures. with small business lender cit group on the verge of bankruptcy - waiting for a goverment rescue - the situation has some worried about the impact to small and mid-sized businesses. some experts believe if cit group goes under - it would eliminate a crucial source of money for entreprenuers and companies across america - cit group says if it fails, almost 800 manufacturers and 300-thousand retailers would be

at risk... the concern is that thousands of small businesses could lose their credit lines - and would not be able to continue daily operations... including paying employees. this environment continues to be a challenge for businesses... especially when credit has virtually dried up. "the biggest challenge to small business is how are they going to have that entreprenuerial spirit without capital funding.. if it dries up all business entities out there trying to revitalize the economy would struggle with that venture. " cit has received 2.3 billion dollars in taxpayer money under the troubled asset relief fund... it also faces a payment on 1 billion dollars worth of bonds next month... some believe that even if cit group is not too big to fail - they say the small business sector certainly is - and that its survival will depend on how the obama administration handles this situation. critical juncture for adminsitration - whether back small business - they have not gotten much of stimulus money..

small compared to what wallstreet gotten.. what gm. has gotten small business advisor ken gaebler says there is a possibilty that the government could work out a pre-packaged bankruptcy with cit group - so that creditors would be forced to take losses... and taxpayers would not have to bear the entire cost. as general motors emerges from bankuptcy and re-tools for the next generation of cars - several plants around the country are scheduled to shut down over the next two and a half years, beginning this month. among the *temporary plant closings include: one in orion, michigan which will close for 1 year and reopen as a small car plant in 201. others include spring hill, tennessee and pontiac, michigan. gm says those plants will be on standby and will be activated only if needed to meet a higher demand. another 14 plants and distribution centers will close for good over the next 2 years. the u-s government along with the united auto workers union and the canadian government now own most of gm - the new company is expected to issue new

stock to the public as early as 2010. we're pleased to see gm and chrsyler out of bankruptcy - they have opportunity to keep internationally, had it not been for steps we took, situation in michigan would have been far worse gm sales says the goal is to shrink staff to about 60- thousand employees in the u-s and eliminate several executive jobs. the new gm is expected to reach full operation in 2011. in a week where we get bank and technology earnings - stocks have been gaining for past 2 days - dow up 200 points since monday - are you surprised? i'm very surprised that we have put j.p. morgan bank of america and city group still yet to announce their earnings this week. are very surprised that

the race last week losses ahead of these huge earnings reports because everyone is go look at the financial sector and the retail sector to see if this recession is really winding down and starting to contract. i want to go back to the issue with c i t group we know the potential cuts ripple effect of a possible failure by c i t but it doesn't seem to be weighing on the markets. i think the market right now has been so elated by goldman sacks earnings that the c i t bailout is a really affecting anybody right now traders are trading at a or is the note trading pattern although you may not have noticed that all because we have this huge rally since monday but the fact of the matter is traders are believe risks mentee right now. they're not really adding or new positions. and they're probably more disappointed that the government has to build the company but maybe not a surprise that the warm we started seeing this happening at the beginning of the year. that you as always for all of your insight lian feldstein of options city.

still to come the power of advertising....how some big companies are using it to generate big dollars. plus, investment bank giant, goldman sachs reports it's best profits in years....how the company managed to do it during these troubled financial times...that's coming up after the break.

the gold standard of investment banking continues to find ways to make big money. goldman sachs is coming off its best quarter for profits in years, generating big money and controversy as it pays back its tarp money and sets aside billions for bonuses. janet tavakoli is with tavakoli structured finance and rob stein is managing partner at astor asset management. both will be welcome to the program. let me begin to janet this quarter of goldman sacks in numbers $13 billion in revenue is this a typical of how banks have behaved in last quarter of? if it is a bit a typical gold demand has done a fabulous job would generate revenue. what does said there is atypical in other ways too. because they have managed to remain independent and they have managed to get a lot of concessions. if we've given them a lot of belau money to the front door in the back door and they're looking to pay 49 percent of the revenue out if as compensation this house must have reserved for compensation. is one of those, traverses the

i've mentioned in let me ask you will return to that issue in a moment but aren't resolved or a scene with a look at the revenue is $13 billion earnings per share of almost $5 per share is this an indication that this market is returning to some sense of stabilization? if the market is turning to some sense of stabilization but i don't think this is the indicator of that. goldman is an exception and they have the ability to adapt to changes of the marketplace they are able to take revenge of their position in the marketplace. i don't know if i would equate the read turn to the liquidity of the marketplace with their strong earnings. us to look at the mix of earnings here because a significant investment banking was actually down as with management services it was trading in all about trading in volatility here and to the point you just mention some of the belau one in some of that assistance that goldman has gotten on a top line and bottom-line money was paid back tim billion dollars plus interest. is this significant does that give goldman the sense

of independence he referred to earlier? is significant in a number of ways because paying back the part of money the 10 billion part money it owes them to remove the restrictions on executive compensation and on the evidence. that looks good for investors but is he to be good for the people were getting paid at goldman sacks. with that said that hard money enables goldman to weigh in and trading with the confidence of more liquidity. they made a lot of money to look at all of the subsidies that we have given them. we allow them to bet become a bank holding company which means they can borrow from what the fed discount window last march we give them a huge concession of the primary dealers and goldman is one of them were able to borrow at the fed when built in something called t s l f what they were able to present non the government guaranteed to pull a products and we know all about them hit the remote worth the triple a rating and there were able to get a lot of liquidity from the fact. they have been subsidized by the u.s. taxpayer both directly and indirectly

and i would argue that they wouldn't have been as profitable have we not given them money. if you agree with that? i don't in fact there was a handful of firms that were similar in a van in a similar boat in didn't return nearly a return equity that goldman did he additionally that provided a function as you mentioned of liquidity is slowly be freezing and is partially due to firms like goldman sacks that are in there not only trading when but creating a vehicle for liquidity flowing to solve the structural products and some of the toxic gases. could be a matter of as it always has been accused of is a smarter than the rest of them they're able to take that. at the example goldman hasn't been smarter than other people but they are better connected. goldman is extremely well connected now what is different about goldman that some of the other investors for more investment banks? some of them

have been in merged into banks and some of those banks merged with other banks that weren't doing so well so they're mixed in with some weak sisters and right now as some of those mergers have weekend for court the banking system and they weren't doing as well as goldman in the first place. but they're not as weak as it would have been. let me finish. if you look at what happened with a i t as an example goldman get an immediate transfer of about 8.1 billion and collateral from aig because it was the counterparties cut some of those aig cut had been training with aig prior to that prior to the bailout of the id you got more than 7 billion from aig in a really pressured a i t in pressured aig auditor. so if they could get more collateral out of the idea before they failed in a get enormous windfall of collateral after a i t fail if they never would have gotten that had we not build out a idea a aideed bailout balloon from 85 billion to no more than a hundred cost and $80 billion but you are an investor goldman was the only

been a factor. there weren't the only been a very current that was always going on in there with a large is because there was the largest holder is so the loss in the president has been feared their trading the big discount apart with the biggest top of the assets. on or not kennedy like goldman sacks thought? when you can borrow at these rates and trade with impunity in but a whole bunch of assets and level three where you don't have to account for them you get new banking accounts and is not a bad deal. i have overlooked the future profitability cricket guess i like it but would you buy any from the have those criteria or just goldman? i'm not buying any of the financial first because i think they have hidden liabilities. i agree with that. and as the ongoing investigations into wrongdoing over the past few years in the mortgage market. the big problem we have to leave it there for jan and robbie we appreciate the comments. thank you. online items

money magazine ranks the best places to live in the country...on our website find out which factors helped push them to the top of the list and how the recession played a role. plus, the high cost of healthcare and where you can find savings. and...why it may be too early to tell whether or not the government's stimulus efforts are actually working...you can catch these stories and more our website at firstbusinessx.com. and straight ahead on the show.... the importance of marketing...find out which companies are coming out on top thanks to the power of advertising.

automakers and insurance companies may be out of favor but there are some that are taking business away from competitors. ford has been grabbing a bigger slice of the auto market and progressive insurance has become the third biggest auto insurer as each continues to spend to advertise. hayden noel is a professor at the university of illinois college of business. nice to see welcome to a program. thanks for having me. we have seen companies cut advertising significantly. because the advertising market has been so sold off in those companies that are still advertising seem to be able to be growing their business. is there a connection? yes there is. there has been a lot of research done that looks at the connection between advertising spending especially during a recession and positive outcomes and growth for companies. here we have seen after the 7475

recession companies that actually spin on advertising show an increase in growth substantially especially in the long term. an example would be philip morris they took the opportunity to spend in a soul in increase in growth but other companies hersheys for instance all eight decrease in growth after the recession because they did not take the opportunity to spend at that point in time. both chief marketing officers will tell you it's not just in the money on advertising it depends on how your spending that money in the message write exactly. the thing with the recession would be of course would be that consumers are watching how they spend their money they're much more cautious. so you have to make sure that you have a targeted message in a message that addresses the concerns that they have at the time. we don't have money what we do with it. how we spend a limited dollars that we have so the messages

have to talk to the consumer. value is what it's been all about in this recession no doubt. he brought along a couple of examples beginning with kraft foods and its a one steak sauce and you take a look at where stakes offense and is in a grocery category which is the biggest single category the interpreter for kraft food operating in comp. how was the message of a one changed here? a one is a great steak sauce i use it on occasion but the recession a recession time people spend less money on things like stakes of course so a one shift at the message and the message now is a one is also great for hamburgers is a cheaper alternative but you still is going to target the audience that could purchase the product. talk the same goals which quaker oats which is a decent provider of a pepsi profits best of 4 percent less than 5 percent of the overall sales come from quick ropes or pepsi but you can

see the margin business in old is pretty good for pepsi in the shareholders' hear how is quicker also changed and it's been around for a long long time? doreen the recession in the '70s and also when eddie's chicago all shifted this message in the message of the time was we are a great provider of protein called we can actually they didn't come out and say it but if it could be a meal replacements some money for the eggs and sausages and the entire process you just bought a box of quick goals in a separate new float family. and we see this on the online marketing for instance a quick goals we've seen the bulk of oaks that's all you see you don't see the glass of orange juice the slice of toast along with it is just a bowl of oatmeal. no eggs and bacon you guessed it the oaks. finally here from a private company s.c. johnson but again one that has shifted the message trying to orient itself to the value to customer. ziploc has been a focus again on things like freshness but in addition to that message of

freshness there's also the message during the recession that you can use this pro leftovers he'd only have to use it when you buy a lot of food to keep food prussia instead when you cook a large meal peaking keep the leftovers for days on the in using ziploc bags. when the economy began to stabilize and grow again duties by you messages tend to have some stickiness to stay around? they do stay around but a lot of these companies actually had other messages because the growth. you can then target of the consumers with different types of messages and not only talk about frugality and the value if you get from these prints. he appreciated the for the insights professor at university of illinois college of business. with the back-to-school season almost here we take another look at the retail sector which continues to outperform the broader markets. that's in

chart talk next.

as we head into the back-to- school season starting next month the retail sector continues to be one of the best performing once a year to date of 36% for x r t. back-to- school season begins today as a matter of fact and will talk more about retail sales of back- to-school and more will take a look at the retail exchange traded fund x r t uc and bouncing around its range between 29 and 1/2 to $26 which is close to the high end of the

range going into the season. certainly it held that lower- level here the may lows right round $26 a share but i want to point out to individual stocks are going to be big back-to- school retailers not necessarily big holdings in this e t f but what your take a look at this closely yearly lows were talking about $46 a share for the yearly lows in the stock is above that and 48 so year to date down 14% and you compare that to seeress holding of 53% and ask you during the break hell does that make sense? i do know this sears's actually already launched a holiday store meaning the christmas holiday and will not even to the back to school holiday tour that helps explain some of this will talk about back-to-school retail stocks again coming tomorrow. send us your e mills in your house and your budget comments at first business x. c o m. will see you online or next time.