troubles. looking for how to repair what many people think of as the american dream. why possible inflation and a drop in the u-s dollar... pose a bigger risk for higher gasoline prices in the next several months. plus the rulemaker. a market watchdog is poised to get more power in its effort to watch over investors. all that and more an om this edition of first business. small gains but gains and none the less in the month of august. welcome everybody. it certainly no horror story but the last time we actually saw stock prices this high was the week of halloween. we have to go to the dark days of october and november the last time we saw the stock prices. the gains have been pretty small in recent days as well as the volume which is still pretty low. nonetheless as long as these markets continued to rally in the last hour and three minutes of the

trading session you got to take that as a positive. it seems to be less bad is kind of the name of the games and certainly late this week with the employment numbers due out at the end of the week, that is the expectation. nobody thinks the economy is the run of the dime, but maybe things are not getting worse. gasoline prices at the pump are expected to remain steady for the rest of the year... that is unless there's an unexpected run up in crude oil prices.. right now - the national average stands at $2.56 for a gallon of regular unleaded - some believe those prices are a bit too high considering gasoline demand is down 3% from a year ago... and inventories are pretty high.... at 213 million barrels. because of lower demand, refiners across the country have continuosly slashed gasoline production - they are running plants at only 85% capacity when the normal usage is 92% - and refiners are not going to increase production until consumer demand picks up.

so when it finally does - could there be a risk of higher gas prices because refiners cannot keep up with demand? some experts say yes.. but we may not see it until later this year. "in the near term, there's no concern about demand increasing... we may begin to see it in the 4th quarter... but it won't be a concern until towards the end of the year... vs. next few months." some analysts believe the bigger risk to higher gas prices is what happens with crude oil. "if crude increases strongly.. and people pile in because of a hedge gainst inflation or collapse in us dollar, we'd see a run in crude and that would lift gas prices - and see higher prices at the pump " for every 10 dollar a barrel

increase in the price of crude oil - gasoline prices are expected to rise about 24 cents a gallon. a04 well we give back in the oil prices on tuesday but the stock market rally continuing. umrai gill along with us with performance trust capital over at the cme group. umrai as we've seen the stock market rally continues since march how is that a fixed income especially those mortgage backed assets across your desk? well you've seen on that asset class moved very much in line with equities over the past number of months. and reason being those assets are secured by a lot of the same assets that exposed the equity markets. housing. real estate. so some of the fundamental numbers we've seen recently have really developed a bid not only in equities but in junk bonds as well as residential mortgages. they've all gone up in price, others better liquidity, and the fundamentals seem to be improving. and the technicals

are definitely much better. yes i want a focus on mortgage backed assets backed by housing collateral and the housing side in the united states, is that give you hope that perhaps we're finally seeing some stability when it comes to home evaluations and prices? well as the prices are forward-looking still eke you ask me a few months ago if you saw the same rally does this give optimism to the housing market i probably would've said no. this rally at first was technically driven meaning people bought those assets and drove them up in price. with the expectation of a deceleration in bad news. what's good about this go around, is that a bad news became less bad. so the evaluations were actually supported by some of the fundamental data. at least in existing home sales, new homes sales and yesterday's number pending on sales. so all of the fundamentals are starting to improve all little bit but we're still always a way. we're improving from a month ago but pretty awful compared to a year ago. umrai gill with us with performance trust's capital

over at the cme group. small businesses across the country are still waiting to see their share of federal stimulus money which has just started to trickle down slowly. advisors to small companies say there are many opportunities waiting in the pipeline - but won't be available until next year. however, many small businesses are skeptical about seeing much of the economic stimulus money. in a recent survey, only 3% of small business owners said the stimulus money would help their companies. more than 70% see no impact and 24% think it will hurt their business... because of higher taxes. stimulus money not hit completely about 5% has hit the streets.. where actual people take advantage.. in construction seeing it.. also woman owned firm.. construction gs and civil engineer.. there are some military contracts becoming available in

september. but there's real concern that many contracts are going to larger firms... leaving small businesses hard pressed to compete... for example.. large information technology firms are getting a lion share of the contracts... what we've done to overcome that is teamed with large companies to help ability to attract funding as women and minority enterprise.. that's worked.. but yes some of larger contracts going to larger firms. onshore technology group, a small business in chicago, is still waiting to be paid 30- thousand dollars for contract work done for the state of illinois. still to come

trying to find the american dream. as home prices have collapsed and energy prices have soared, re-defining the american neighborhood. plus, america's stock watchdog could get more bite. we sit down with a top regulator and what the new rules may mean for investors.

if the obama administration gets its way hundreds of thousands of money managers will have to sign up with uncle sam. the white house wants to greatly expand the net of the securities and exchange commission to include hedge funds and other private investment fund advisers. andrew donohue is with us now. he's the director of investment management at the securities and exchange commission. andrew nice to see you. welcome to the program. is the agency prepared for these perhaps thousands of new registrants? i think we're very capable of handling any mission were given. these advisers were and irs men would be 1000 or 2000 additional

advisers for us to handle. we currently handled 11,000 plus investment advisers. and i don't mean to diminish the challenges we would wind up having but the investment advisers at the administration had suggested that we have responsibility for clearly in my view at the few of the commission should be with the regulations. but take a look at a list of these. hedge fund advisers, private equities advisers, venture capital, and it was a couple years ago that the sec tried to regulate the hedge fund in a court of appeals threw it out calling it and arbitrary rule. what's different this time around? well a couple things. one i think with respect to our goal i thought where absolutely correct. the means we use to achieve that goal in the current statutory structure the court found we earned the way we were

trying to achieve it. the means of being that the sec might not had the powers to regulate hedge funds. no it wasn't that. there is an exemption that exists inside the investment advisers act that says if you have 14 or fewer clients that you did not have to register as an investment adviser. and it does the one matter that the client have pooled investment vehicles that have hundreds of investors and manage billions of dollars. so it's an anomaly right now that if you let 15 clients and 30 assets under management you have to register with us. but if you're a big hedge fund manager at a private manager and you only have 14 clients and yet you manage $10 billion you're not registered with us. and that is the anomaly that goes back to 1940. certainly with a smaller investors out there are looking at the potential for new

regulatory relief as a part of hedge funds and larger investment advisers so what's it for them watching over these hedge funds what could have been different what would've been different over the last 18 months? i think a couple of things. one thing is we do not have great information ourselves inside the commission with respect to the activities of the private funds or their advisers if they're not registered with us and we're not getting information with respect to them. when could that ability have minimized some of the systemic risks that we saw and created over the past six or seven years that culminated over the third and fourth quarter of last year? i think it would've been important to have that information but i couldn't point to any one or two things that would have made that much difference in that context.

tomorrow, we'll continue our conversation and talk about what the s-e-c wants to do to protect money market funds...more with andrew donohue, the director of investment management at the securities and exchange commission. the american dream...or the new nightmare? what it could take to revive....and sustain the american neighborhood...that's coming up after this in-the- know message

still ahead the american dream...or the new nightmare? what it uld take to revive....and sustain the american neighborhood...that's coming up after this in-the-know message into a nightmare for millions of americans, their nieghborhoods and their communities. foreclosure rates are skyrocketing and mortgage modifications are ow to stem

the tide. it may be changing some people's minds about their idea of a sustainable community. john wasik wrote the cul-de-sac syndrome, turning around the unsustainable american dream. we visited two very different communities, a suburb about 50 miles from downtown chicago, and an urban neighborhood two and a half miles from the city center, a neighborhood once known for the maxwell street market, which is now called university village. this is a place that's centrally located. it is tied into the city because it is in the city. you don't have to go far to get good transportation. there are plenty of amenities. a university up the street to the largest health care complex is just a mile from here. it's all accessibility. in terms of property values, they're going to be retained over time because you have all this infrastructure in place and because it's not going away. keep in mind in the early 20th century this was a bustling area. there were people from every country and every ethnic

group working here, living here, it was a very vibrant neighborhood. at one time this was a jewish italian and you name it everybody lived here. now it's a mixed element. there's a bunch of people living here from university professors to students, empty nesters, a wide variety of people and that's the whole city character. the traditional criticisms of our that you have something that is a little bit too sterile way too many chains stores, a lot of the character has been lost. and i think you can make that argument here. you've taken a whole lot of maxwell street it's there by name only. i can agree with that. but in another cents you have to wipe some of the old. well did is an area that has been extensively we develop. this is part of $100 million

development. and the whole idea was to get people living here. before this is a really scrappy ugly area and people didn't stay here very long for many reasons. it was just a rag. now people are living here, they work in this city, or literally just a mile away. so they don't have to sit on the train all day long or they don't have to drive. they can take a bus just across the street. well were all coming full circle. i mean this was just the ground zero for the american dream and the 20th- century. immigrants wanting to go somewhere else. well they got their places in the suburbs now they're coming back here and that the irony. but that's not a bad thing since these are beautiful townhomes. some of them are affordable. some of the 20 percent of this development are for affordable housing. the price ranges from 160,000 to $1 million. if you wanted a palace in this city you

can buy it. no matter how you do development, you have to have open space. you have to have someplace where people can go and be among trees and open field and things like that. when and this is a beautiful park. it used to be sort of an urban wasteland. you have a nights running track of, you have some ball field, soccer fields, and it's a great place to go. so no matter where your at, if you're going to have an urban development you need to have someplace to go where there's a little bit of an escape, a respa from the city life. when you have high-density development, the general principle is you're going to use less resources because the stand-alone single- family home, the bigger the home the bigger the resources it uses. it's simple. and if it's out far from city and far from other suburbs, you consume resources just getting there and back. so think of all these families here who take their kids to soccer, they walk out

their back door and they're here rather than sitting in the car for a half hour. or if they have to commute the take public transportation. it's much more efficient. in that neighborhood, there are 377 foreclosures according to realty trac. tomorrow on the show, we'll visit a suburb about 50 miles away that exploded with housing developments during the boom, but now is home to more than a thousand foreclosures. coming up in chart talk we take a closer look at a big technology giant that is beating the market. cisco is out with earnings on wednesday. we'll take a closer look in chart talk next.

on wednesday investors will be watching earnings from cisco systems technology company. now a dow performer, it's actually the third best performance it the dow. it has provided a lot of spark no doubt in the rally for the dow and the s&p 500 and nasdaq. a gigantic company here with its tentacles in many different types of companies and a different industries including the telecommunications industry. and the stock here popping above what had been some resistance at $22.00 a share over these numbers. said its january 1st this stock is up 38% so it's definitely being the nasdaq 100 and the recent it's because of all the recent notes in the recent weeks, and the quarterly results at the higher end of estimates. you take a look at the stock chart over the

last six months, it has behaving pretty rationally in terms of the way technical analysts would take a look at it. it tends to bump up against some areas of technical resistance as it did in may or june at $20 a share and that went to the upside and went to up to $22 a share and i think visibility is going to be the key for this morning's call. a big ones to watch for the dow and the nasdaq. watchlist private payrolls. if there's to be any sustained stability in the housing market, the stock market and the economy overall, there will have to be hiring. a-d-p is one of the nation's biggest processors of company payrolls and its own survey of the job market has showed continued destruction of jobs. in the first quarter, the a-d-p national employment report found an average of more than 690-thousand lost jobs each month. by the second quarter, that had dropped to an average of just under a half million each month. less bad...but still bad.

one more item a bank teller in seattle is out of job after he ran after a guy trying to rob his bank. the bank's official policy is to comply with a thief and let the cops sort it out. the teller gave chase, knocked down the suspect and waited for the police. two days later he was fired.

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