captioning snsored by wpbt >> paul: one of the presidens top economic advisers says t economy's been to e brink, but we're back from thabyss. coming up, closer look at how the economy's dog and where it's headed in the sond half. >> susie: from generallectric to bank of america to cigroup, some of the tion's biggest blue chips posd earnings today. results are downbut still better than expected. an update in stocks in theews. >> paul: tonight's mket motor guest thinks stimulus programs around the gle are woing. 's gary motyl chief investme officer at templeton globa eqty. >>usie: just a few years ago, everyo was jumping on the ethanol bandwagon, but goline prices dropped a credit costs soared. w, ethanol is being back- burner. >> paul: i'm paukangas. >> sus: and i'm susie gharib. this is "nightly busins

report" for fray, july 17. "nightly business rert" is made ssible by: this program was me possible by contributions to your p station fromiewers like you. thank you. >>usie: good evening, everyone the economy is impresse again. that's wt president obama's top economic advis lawrence

>>go higher in the months ahead but says that don't mean the imulus effort has failed. instead, he belies the policy helped sed the economy. >>. >> if we we at the brink of catastphe at theeginning of the year, we' walked some substantial distance back from th abyss. >> susie: t a major part of the administration's agend could po new economic challenges: althcare reform. late today, esident obama said his healthcare oveaul cannot add to the federal deficit a heeans it. joining us n for how that could affecthat's ahead for the economy-- rk zandi, chief onomist of moodyseconomy.com. >> susie: nice to see u again, mark. >> good evening. >> susie: all right, presiden obama really pushing now for health care reform but you thinkhis could derail the economic recovery which so fragil?

>> it could if alth care reform isn't paid for. it's important to insure th uninsured. we have to p for it. if we d't pay for it, it'll lead to larger deficit, more debt and higher interest res in a much weaker economy. at'll happen sooner than later. thatas to be part of reform. have to pay for it. >> sus: there are many pele saying let's postponeealth care reformor now. let's get the economy fuy covered and then we caneal with that. what is your view i that bate? well, you know, thathip has sail. if we were in e beginning of the year, i mit have argued that as well. we have a lot on our plate. it'll be nice to get awin, get something done rig. health care reform is a big project but we're w downhe path and we have to make it work. >> susie:all street was encouraged this wee by whole batch of positive enings reports whether yowere talking about int from thtech sector or goldman sachs and j.p. morgan from the bking sector, johns &johnson, isthe economy really

doingetter because a few big companies reported strong earnings? >> y. i mean, st think abou the opposite. if bigcompanies werefalling, that would sign the economy was ading in therong rection. the facthey're making money and in some cases profitsare rising is an iication the recession is coming to an end and we'lbe out of ression, i think, b late th year. >> susie: but wh you dig into some of the numbers lke j.p. rgan, for example, you see that the consumerloans are still in bad shape. they haveredit card losses, all a sign tonsumer is still struggling financially. so what kind of recovery are we talking out if the consumer not on board? >> you're right, susie. i think the economwill get out of thi recession and into recoveryy early next year but will be a very muted recory recovery. the secretary or, um, advisy summers said unemployment would rise until next ye.

he absolutely right. it's not going to feel very good for most peoe until unemployment beginso decline and that won't hpen until late next year. >> susie: itay even golater accoing to a former f govern, rry meyer, tay saying the u.s. won reach full employment and byhat, he mean 5% unemployment, until maybe the ar 2015! >> yh, you know, tt's a reasonable forecast. the unemployment rate i 9.5% today. it will rise intohe doubl digits, probably pk next spring. it will start to dline after that, but it will take a number of years to get it down to a level we conder full employment, a level where most people think if they go out an nt to find a job that th can get one. that probabl really won't be until mid-in the next decade. >> sus: every ecomic report th comes out, mark, there's a sitive side to itnd a gative side. hers are saying look at the foreclosure rate, look at ho

mu that's going up. do you think the government programs that ar supposed to prevent these foreclosures and othehousing isss are they working? >>ot well enough. in fact, if were to put my finger on the one tng that could derail the e of this cession and recovery eay next year, it will would be the foclosure crisis. foreclosure continueo mount. the president's ln modificati plan in an effort to stop the foreclosure crisi is not woing very well, at leasnot yet. now, the president is working real hard making changes to thplan and he'salling mortgage servicers, the folks that actually modifyhe loans, toather in whington in a couple or few weeks to get it moving. i'm hopeful that this ll work and in a year we'll get more mod's anthe forecsure criis willbate. >>susie: we just have a few seconds ft. a lot of people calling for a second stimulus or maybe a second stimulus for small businesses. in a few wds, what's your view on that? >> i think we shod wait until

the end of theear,cy see how the stimulus is working. if it's not working well enough and we thi the economy needs more help then, yes, another round stimulus for the economy would be hpful and somethin directed toward small business wou be great. >> sus: we have to leave it ere. thank you, mk, have a great weekend. >> you. >> susie: my guest tonig is markandi, chief economist. paul: after four straight da of gains, wall street spent most of the day slightly low on light profit taking wit better than expected resul from bank of america, tigroup and g.e.ushioning the losses. at noon the w was off 12 points, the nasdaq down eit poin. the mild selloff connced some buyers the path of least sistance was up so a late rally produced a mixed cse. the dow jones ended wi a gain of 32. at 8,743.94. it rose every day this wk, advancing 597. points. itbest week in months. the nasdaq add 1.58 to 1,886.61 today. it also rose every day ts week

for a net gain o130.58 points. the s&p 500 fell36 to 940.38 today. and for the week up 61.2 in the bond marketthe 10 year note fell 212 to 95-21/32 putting the yield at 36%. susie: a funny thing's been haening lately in the investment wld. despite thworst bear market for stocks in dedes, investors are pouring money into exchae traded fun or e.t.f.s. there are now 800 e.t.fsisted on u.sexchanges more than five mes the number just five years ago. what's behind the boom suzanne att takes a look. >> reporter: fm sugar to wind energy to gasoline pces and

luxu items-- you namit-- it ses there's an e.t.f. for almost anything that's rht, there's one for the gaming industry, t. exchange traded funds, or e.t.f.s, are a baskeof securities that uslly mirror an ind, from well-known benchmarks to obscure meases. many are first couns to regulaindex mutual funds. but, lately investors have been hungry for e.t.f.s mtly because of their transparey, tax efficiencynd cheap price. they can also be bght or sold atnytime, a clear benefit in the rent bear market. strategic insight has been keeping tabs oe.t.f.s for more than a decade and co-fouer avi nachmany crets mass appeal for the rapid growth . >> they satisfy a ve wide range of audnces, institutional investors, hge funds, financial advisors, mutual funds that acally invest a porti of their assets

in e.t.f.s. >> reporter: the e.t.f. piis minated by barclays global investors with its isharessoon to be ned by blackrock. statstreet global and vanguard slice up mh of the rest. that pie is getting tastr. e.t.f. aets stand at close to 00 billion-- double what the were four years ag but e.t.s account for less than 7% of the total fund asts here in e u.s. so, perts see huge potential r growth. vangrd's 39 e.t.f.s make up less than 10% of t firm's total assets und management. but, vanguard's fran kniry calls e.t.f.s the biggest opportunithe's seen in some time. >> we are very cservative in our product develoent and launches. we are vercommitted to the e.t. landscape and we think it is going to be major part of vangua as we move forward. >> reporr: this spring, bond king pimco and charles schb anunced they, too were launching e.t.f. a move some

experts predict will changthe e.t. landscape and attract more retl investors. t all providers however are gigantic. wisdomtrees an up and comer with lesthan one percent of the rket. is, by the way, the only pu play public coany that provides e.t.f.s. while the ree-year-old firm offers 51 equitynd currency e.t.f.s, it's yet to see profit. wisdomtree preside bruce vine isn't' worried. >> t e.t.f. business is exceptionally rong and i don't thg you've seen anything yet. i think 's going to really domina in the financial services industry over tim some predi e.t.f.s will pose a letimate threat to traditional mutual funds in the coming years. while others say, it's me likely they'llearn to coexist. >> we're not concern about real cannilization per se. we think it'a different buyer. >> reporte for those who worry t.f.s are the flavor of the month the investment world, consider thi they're trying to

get a fohold in the lucrative 1(k) business. ifhat happens, e.t.f.s could real expde. zanne pratt, "nightly busine report,"ew york. >> paul: now let's take a ok at some stocksn the news tonigh

>> susie: not long agoethanol was considered the miracleure for the nation energy proble.

mpanies were booming thanks ea money and a government mandate to blend ethanol io the nation's gasole supply but now ny firms are scrambli to stay in business. as we continue o look at "revivg the economy", dana bate reports the ethanol industry appears to be rning on empty. >> reporter: these corn fids were oe touted as the future to our energy independence companies sprung up aroundhe country toroduce corn-based ethanol, hoping it wld fuel their bott lines. ateast ten producers have filed for bankrucy this year. plans to buildew plants have beenhelved. sales of e-85 blends have dipped. environmental policy eert ken green sa the economics of etnol have come home to roost. >> at the end of the day, 's only competitive witgasoline when gasolinis very expensive, and gadoesn't stay expensive for very long. and so once the economicof it really worked thr way through the syst, and everybody went, "wow, i'm t going to make any money ofof this," that was partf the collapse.

>> reporter: bob dineen head the renewable fuels assoation. he says like many industries, ethanol has d a tough year, but things are improving. >> y see plants that had to shut down temparily coming back online, you see profitability turning to the industry. we're ill dealing with volatility ienergy markets and a diffict road ahead, but we're gettinthrough it. >> reporter: the.s. ethanol industry has enoh capacity to produce billion gallons of ethanol is year-- far more than the nation n use. then there's t issue of envinmental impact. recent studies have shown e oduction of corn-based ethan might actually increase greenhouse gas emissio, not reduce them. so a move on citol hill to make companies pay forheir carb emissions could cut into profits. >> you'rgoing to add to their busiss burden, not make it easier on them. >> reporter: environntalists like tim telleen-lawn of environment americsay we can't justocus on gasoline

substitus. >> we increase t efficiency of cars, we can reduce the amou we're reing on cars by using better public transit. we can use more eltricity from clean urces like wind and solar power, such ashrough plug-in hybrids. >> reporter:he future for the corn-based ethanol industris murk but ving those firms in place now gives the indury a head- startoward developing ethanol from other plantources. the question is ether scientists can develop tt fuel on a commercial scale fa enough. dana bate, "nightly busine rert," washington >> paul: monday: with the economy in recessionthe nation's airlines e struggling to turn a prit-- an update on their outlk. >> susie: a big win for daas mavericks owner ma cuban. a federajudge threw out an sider trading lawsuit agains cuban. but, it's not exactly a slam dunk. the dge gave the securities and exchangeommission 30 days to amend its complaint. the agency claims cuban acteon confidential informationhen he sold his stake in b firm

mamma.m to avoid losing three-quarrs of a million llars. >> paul: some of the natn's lawmakers want to see e paperwork on uncle sam'sailout of generalotors and chrysler. members a congressional committee want to read t e- mails on who decidedhat plants and dealerships would closand how work and retiree benefits would be cut. the ar is that some of those moves were spurredy politics not onomics. no comment on the quest from g.m., chrysler, or the tasury.

>> susie: re's a look at what's happening next ek. our fray market monitor guest is frank cochrane, predent of investment timing consultant on the economic calendar dnesday, the weekly report o crude l and gasoline inventors. thuray, existing home sales for june and wkly jobless claims. iday, a final look at july nsumer sentiment. also next week, quartey results from 3-m, ape, a.t&t, boeing, caterplar, coca-cola, dea airlines, ford motor, merck, microsoft and u.p. >> paul: my guest maet monitor is week is gary motyl, chief investment officerf the templeton global equity oup. ry, welcome back to the n.b.

>> pleasure to be here, ul, thank you. >> paul: now, you take a valuoriented approach to global iesting. what's yr current opinion on the worldarkets? >> we think the world markets are sll underlued and do fer good potential over the xt one to three to five years. paul: a bull? >> a bull but n an outragus bull. >> paul: oh, ok. are the economic smulus programs worki here and abroad? >> in the united state stimus programs haven't kicked in yet. we'reeeing more evidence inteationally that some of the programs are havg an effect, particularlyn china. long-term, that' something that we'll monitor. i would note thaunemployment rates are still fairlyhigh across the world andn most industries there's still signicant overcacity. not sure ilation is a problem in the near or intermediate term >> paul: ok. what are t most attraive countries in your opinion? why? >> we're finding good valu in

virtually every cotry right now. w valuations arebundant in the united states as wl as in europe. in europe, mosof the companies wee investing in do have a more global outlk aspposed to being focused within the eupean comme community. >> pa: what industriesare your favorites and why? >> one area we find very attractive right now is the technology area. this isan area being a value investors don't have an opportunity tonvest in frequent. right now the valuaons loo very good. this group undperformed in the markets the last 1 years. i think we have a nber of stocks we like one of whh is taiwan semiconduct manufacturing. this is listed on the big board simple tsm. world leader and semiconductor manufacturing. great technology. great balance sheet. ca in excess of debt, 5% dividend yld. very, very strg competor in all its maets. we look to have this company growing nicely i the next few years. >> paul: ok. another industryou like? >> tecommunications is one

which s been a little under the radar over the last few mont but we think it still offers very goodvalue, escially on a total return basis. many stocks have strong balance eets, good dividend yields. one we likeis telefonica in spain. it's doing wel in europe. it gets 40% of its revenues from latin america. >> paul: thi trades on the big board tef right? >> correct. >> paul: another instry you're fond of? >> somethi a bit controversial is health care. obviously we're all aware of what is going on with potential health care legislationut we think the vaations are attractive a discounts some of the problems. navart is a company ich is head qrtered in europ >> paul: stzerland? >> correct. trades on the new york stock exchange under the symbo in scx vs. stock withow p.e. multiple, 4 dividend yield, good breath of business. one thing don't know people areocusing on are is the

potential of pharmeutical companies particularlyn europe to tapnto the emging markets as those economies expand and the governments try to irove the health delivery system >> paul: whave a minuteeft foone more indusy you like and one oice. >> in the financl area, i think there's an interesting stock. it is, however, not sted in the uned states. it tdes on the frankfurt and munich stock exchges. german company called nich insurance. this cpany is the second largesreinsurance comny in e world. agn, strong balance set, -minus debt rating. ry good didend yield of about 6%. they'll able to take market share and really benefit from go pricing environment in tt ar over the nex w years. >> paul: we dn't have a cha on the munich read becse it doesn't trade anhere in the stat but ou explained it very cely what it's all about. gary, do you personay own these stocksor have any other disclosure? >> i don't o them directly but i do own them rough the variou templeton mutual fus i hold personay. >> paul: fr enough.

i'afraid our time is up but i want to thank you r being with us again, it's bn a pasure. thank you, paul. >> my guest gary motyl of the templeton glob equity group. >> susie: and finalltonight, rhode island is known as t ocean state and w billboards there e trying to make residents there feeless blue over the economy. the signare posted along the state's hiways. and say thin like: "the interestinthing about recessions is at they end." thbillboards and their optimism are needed, because rhode island'snemployment rate stands at nearly 12.5% other signs tell dvers their self wth is greater than their net worth. >> paul: there's a philosoph worth adopting. >> susie: yes, indeed. >> susie: that's "nitly business rept" for friday, ju 17. i'm sue gharib goodnit everyone and have a great weekend-- you too ul. >> paul: andou as well, susie. i'm paul kangas wishing all of you theest of good buys. "nigly business report" is made possible by:

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