friday sept. 17th you're watching first business: financial news, analysis and today's investment ideas. a check on the financial market now with frank lesh, futurepath trading. kind of slow these days in the stock market it seems like people are waiting until the midterm elections are over. there is no doubt about that we are certainly in a

holding pattern. i think one of the things that has us stuck in here today of course is we are dealing with the expiration of the stock index futures, stock- index options and stock options as well. a lot of traders here like nothing better than a slow steady expiration. it is a lot easier to figure out what options are exercised and what options are assigned. going forward it certainly seems like this indecision about elections, the economic uncertainty probably keeps us stuck in a range until we get a better idea. we do have earnings coming up, hopefully they will provide better support for the market but it seems a lot of traders expect that we have seen the worst here, that we have had

a slow down and that's about as worse as things are going to get here at this moment. we would certainly like to see some improvement on the employment data and the housing data. we have a gold reaching another high and it is probably because of this uncertainty we have going. no doubt about it the economic uncertainty, the currency volatility as well have been pretty wild as of late. political instability and not knowing about the election, all this is driving investors into the safety and sureity of gold. they have an asset that will hold value and we have done a slow steady increase here in the gold market. that has certainly been a bullish factor. it looks like everyone is still bullish on gold these days. thank you for joining us frank lesh, futurepath trading. the manufactering sector is in hiring mode. but here's the kicker eventually, there may not be enough people to do the

jobs. that's right too many jobs and not enough skilled workers for jobs here in america.we found that out after asking why so many students kept popping up at this year's international manufactering show in chicago. every where we turned young people were scattered among the masses of people at the international manufactering techonology show."to show them what manufactering is all about that is is high tech and there's a lot of computers and modern equipment that they don't get a chance to see anymore.they might not have ever seen how things are made.they just go to the store and buy things but have no idea what goes into making it." there are jobs all over the country for skilled people one thing we are hearing more and more from companies is that jobs are coming back from china.and one of their concerns is we don't have the skilled people to staff our plants to

gear up.there is a definite shortage of skilled people with advanced manufactering skills."even with the economy in the dumps they are looking better especially with the conomy picking up there's always been a need for skilled machinists."i think so it will help get my name out there more keep up some of the business contacts.we are seeing a resurregence in apprenticeship across the country.absolutely if you have the skills that are in demand there's an employer out there that wants you.the pay is great entry level with cnc skills $16 =-18 to start in many places.good start on the

career.in wisconsin yeah, wehave 700 plus manufactering jobs as along as you are certified coming out there to get certified going back home and find a decent job while i'm in college."i'm looking to get into the manufactering field and that's why im here.just anything with machines and robots that's my interest are you " "alot of speed as far as how things are picking up expecially in the robotics" jim wall of nims also tells me there is also a resurrgence of apprenticeships, with people getting paid to work and learn. deadbeat banks.they not only miss dividend payments under the tarp bailout program they also are refusing to buy back billions of dollars worth of bad loans they dumped on fannie mae and freddie mac. we are now joined by mike van zalingen / neighborhood housing services of chicago. this week we have learned that fannie mae and freddie mac are sitting on at least $11 billion of bad loans that banks made that did not meet the lending requirements. are banks legally obligated to buy those loans back? yes

absolutely they have warranties and contractual obligations that say if you give fannie mae and freddie mac junk loans you have to buy them back. this week we learned that banks have been stalling for three months from buying back these bad loans. why are they stalling? they do not want to take the risk. we are talking about $11 billion worth of bad loans that they have to buy back. they do not wanna spend money to buy loans back because if they buy them they have to deal with them. they do not want that headaches so they are dodging their obligations. that could be a huge hit to their capital cushions right? absolutely a few billion dollars is a lot of money. you say we could be looking at allot more than 11 billion dollars and that that is just the tip of the iceberg. this is just what fannie mae and

freddie mac know about. they buy these loans in large bulk quantity so once they investigate the 15 trillion dollars worth of loans they are sitting on they will probably find a lot more junk their going ask lenders to buy back. so we know that this is a huge problem but why is the government not forcing this issue, why is this going on for more than three months? according to the report they are saying that we just asked the banks nicely for the money back and they have said no. the next step is litigation. the authorization to sue the bank is going to come from congress and as senator durbin said the banks own congress so you are not going to see a lot of people in congress with the spine to say go ahead and sue these banks. realistically do you think in the end these banks are actually going to buy back these bad loans that they have dumped on fannie and freddie? if congress grows a spine and says we will not stick the taxpayers with

this debt we are going to make the banks take these back then that could happen. if congress wimps out like they usually do then i will not hold my breath. in the meantime if banks are trying to figure out a way out of buying back these loans then how so? there are seminars going on now where they are trying to figure out a way to weasel out of purchasing these back obligations by saying it was not me it was another third-party. they are trying to figure out ways to avoid repaying these. this is an issue we will definitely keep watching. thank you for joining us mike van zalingen / neighborhood housing services of chicago. lawmakers are moving the small busines lending act forward the long awaited bill that could boost lending to small companies now moves back to the house of representatives for a final vote.if it passes, small business owners would have access to $30 billion dollars in loans through community banks.plus get $12 billion in tax breaks.the money comes from the $700 billion dollar stimulus package .republicans have held up the bill for months

calling it another bailout.president obama disagrees and contends it will not add to the country's debt.the bill did get some support from two republican senators. up next the chief economist at fannie mae..weighs in on whether he thinks housing has bottomed out yet.

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there's definitely adrenaline. there was the explosion, and i remember just opening my eyes, and it got both of my legs. i had surgery after surgery, you know, i was on a lot of pain medicine. "what's going to happen next? and how long am i going to be here?" the wounded warrior project dropped off a backpack for me. and it had everything in there that i could possibly have needed at that time. peer visitors, people who have been where i had been before, said, "look, brother, "everything's going to be okay. "three months from now, or four months "from now, a year from now, you'll be fine." that type of thing was an invaluable service. to be honest, i don't know if i would be as well adjusted as i am now if it wasn't for them. to learn more, call... or visit woundedwarriorproject.org. the housing market is still stuck in the doldrums. more than three years after the peak

some economists are doubtful we will see any major improvement for the next few years at least. we are now joined by doug duncan / chief economist, fannie mae. it seems that we have a mixed outlook on housing. in your opinion has it bottomed out or not? our forecast is pretty consistent with what the results of the survey say. in this survey 80 percent of people say they feel like housing has bottomed. in particular when they talk about price they figure it will be flat or 1% increase. we may differ a little in that we may think there may be a little more downside to the prices but not a large amount. we do not expect a strong recovery in housing for a while. that will wait on a pickup in employment which we do not see happening for a couple years. there is very modest growth from a historical standpoint. housing is a big piece of that. let's talk about the numbers on existing home sales for example down 32% from 2007. home prices are down 16% from 2007. you said prices could

see a little more downside, how much are we talking? it is difficult to tell because of the policy interventions. for example you saw prices actually go up a little bit for the first couple quarters because of the temporary tax credit. we expect that that up tick will be given back and maybe a little more of that into 2011. i would be doubtful if arm lengths transactions fell more than a couple percent further. that said the survey makes it very clear that the demand side is very soft. when asked if you move today would you be more likely to rent or buy as compared to the beginning of the year in an increasingly higher percentage of people said they would likely rent. this was both among renters and non renters. households are trying to get their balance sheet back in order and their income

statement back in order. they recognize in order to get credit going forward you will have to have a good credit profile. in order to maintain the house and make it a sustainable transaction you'll also have to have better financial characteristics. how long do you think it's going to be until consumers do start to feel more comfortable about owning a home as opposed to renting? i think the key variable is going to be jobs. we simply have not seen a pickup in private sector payroll sufficient to give people the confidence that their incomes will grow in such ways to support a mortgage. if you look at the delinquent bar portion of the survey you see that they report a significant loss of income. unemployment clearly has an impact on housing market and until we see a turnaround in that we will

not see a strong turnaround in housing. i want to talk about the state of the government mortgage finance companies. fannie mae and freddie mac have been propped up by $148 billion in taxpayer money. there has been no cap on how much the government is willing to spend to save the two companies. could this turn into a never ending bailout? right now the focus is on how the companies participate in helping solve the problem. particularly for delinquent households or those who are struggling to keep up with their mortgage. this is one of the reasons why we did this survey to understand the attitudes of the delinquent homeowners. we wanted to see if there was anything we can do programatically to help them. i think that discussion on what to do with the government agencies will take place. it has been well announced in the public arena. in the meantime we are going to work to try and understand and find solutions for people to keep their homes

if they're capable of doing so. do you have an opinion on whether this can be a never ending bailout at all? that is not really my focus. we are under a conservativeship and are conservater makes those kind of announcements. my particular job is to provide a forecast for the company and its leadership'' on where we think the housing market is going to go so that we can develop the best strategies to minimize the cost of taxpayers and help the most households that we can. i want to get to one more point talking about loan modifications. from june 2009 to june 2010 fannie and freddie have permanently modified 400,000 mortgages. with the foreclosures potentially reaching into the millions this year does that progress seem kind of dismal to you? there is no question there are difficult circumstances driven as we were talking earlier by what is going on in the employment side of things. it is very difficult

if someone has lost their source of income to find a sustainable solution that keeps them in the house. so we are bucking the economic trends and attempting to help as many households as we can. you clearly see that in the survey data with the delinquent households a significant rise in those who say they have suffered a serious loss in income. the survey backs up the general economic picture that you see including the housing piece. thank you very much for joining us doug duncan / chief economist, fannie mae. still ahead uncertainties in healthcare and on wall street have one viewer concerned that's next in viewer mail.

welcome back everybody time now for viewer mail i am joined by paul eggers. paul you have our first e-mail. this one is from william moore. he writes uncertainties from government issues such as health care, banks too big to fail now bigger,etc.. it's a little like scuba diving. you can see a hundred feet but there is the great white shark just 101 ft. from you. that is really a good analogy. you can add a whole bunch of issues to his list of uncertainties. you have problems in real estate in the housing markets. real estate professionals believe maybe 4 million to 7 million trouble properties could be hitting the market. there is continued weakness in the job market of

course and the outcomes of the midterm elections in november. all these are creating uncertainty. especially for the stock market with these elections coming up. let's get to are next email from foster christiansen. he says all this government charade is a scam on the public to redistribute wealth from those who can least afford the loss to political cronies both here in america and all over the world. he has an interesting point and if you take a look for example how the government really has not been tough enough on the banking sector. looking at these numbers, 123 banks missed their tarp dividend payments in august of 2010. that is a huge jump from november of 2009 when it was just 55 banks. now the treasury department is saying it is just now starting to crack down on the problem. i think that just goes to prove that the treasury department is putting these banks interest ahead of taxpayers. that is an interesting statement and whether the government will continue to be weak on banks remains to be seen. certainly voters will be tough on their

elected officials maybe in november. and that is a huge factor in this situation. so many people are sick of the way our government officials have been acting so they obviously have a big voice in this situation in november. certainly the tea party is taking advantage of that situation. thank you very much paul and thank you for sending us your e-mail's. remember we also want to hear your voice mails so you can give us a call and leave us a message. or again you can just e-mail us. coming up trader matt cavanaugh says the market is at a critical level we'll talk about that in chart talk. [ voices on television ] [ ringing continues ] [ laughter on television ] man on tv: no problem, no problem. woman on tv: are you okay? man on tv: look, ma, no skis! announcer: falls on tv can be entertaining. falling at home can be devastating.

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we are now joined by matt cavanaugh/cmz trading. what a day yesterday. oracle had great earnings news as well as research in motion. texas instruments also did a share buyback. what do you make of all this for the s&p 500? we do you think this will mean for the big rush in tech right now? it is definitely a strong sector. you have kind of conflicting signals. you also have fed ex coming out saying that they do not think the economy is growing as quickly. kraft also said they do not think the economy is recoverings well. you have a mixed picture there.there is a lot going on in this marketplace and we are back at the critical 1125 1130 area in the spx. what happens next is gonna be dependent on the

numbers and government information that comes out. what do you think it's going to take? clearly there is good news and bad news coming into the market, but as a traitor what are you watching for? the big thing that i watch for is the sentiment. what people are thinking. a couple weeks ago when we rallied pretty hard off of 1040 the big change in sentiment was that even if these numbers weren't so great we are not going back into a double dip recession and i think it's the same thing now. looking forward to next week we have a lot of numbers. we have housing numbers, we have a lot numbers about the economy, we have the fed rate decision and i think that will be a critical juncture. if the numbers continue to be pretty good maybe we will bust through this 1125 range. if not it's a range bound market so we could be going back down. thank you very much for joining us matt cavanaugh/cmz trading. that is it for today's show, thank you as always for watching. have a great weekend everyone we will see you back here on monday.

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