captioni sponsored by wpbt paul: c.i.t. reportedly reaches a deal with creditors for $3 billion in new ans. the lifeline for the sma business lender lps give wall street a boost >> suzanne: when icomes to health care rerm, president obamsays it's time to stop talking and start workin towards legislatn. but figuring how to pafor it continues to be an uphl battle for lawmers. >> paul: weaker demand for cl phones led to drop in quarterlprofits at texas struments. we'll take a broader look the tech sector and whathose companies say about the tlook for the ecomy. >> there are just tomany carriers chang too few passenrs and the industry has to shrink. >> suzanne: t getting smaller may not be the only option. the future of domeic airlines

in aurbulent economy. >> pl: i'm paul kangas. >> suzanne: d i'm suzanne prt. susie arib is off tonight. this is "nightly business report" for mondayjuly 20. "nightly business report" is made possib by:

this program was made poible by contrutions to your pbs station from viewers likyou. thank yo >> suzne: good evening eryone. it's rare when a finanal services stockurges nearly 80% one day. but that was the case foc.i.t. group today on rorts it has found a way back from the brk of bankruptcy. dow jones says c.i.t. bondholds have agreed to rescue the century old commercial financeirm with a $3-bilon loan. much of the money ll be available mediately. and c.i.t. reportey would be able trestructure outside of a bankruptcy. c.t. lends to mostly small and mid-sized business. and fus itself by selling bonds. so when the credit mkets froze, it wain trouble. the treasury departmenhad been in talksith c.i.t. for a deral bailout. but that plan di't materialize. so far, no comment fm c.i.t. on the rorts of a funding deal.

>> suzanne: joining me n with his thoughts on that c.i.t. al well as his outlook for the stock market is stuart schweitzer, global maet strategist at jp morgan ivate bank. u, welcome back to the program. >> thanks so much,ues an >> suzannete me about this c.i.t.eal. how importan was it today, do you think, in continuing th overall posive tone that wee been seeing in stocks? >> oh, i thinkt was really important. c.i.t. has aut a milli customers in america and so finanng from c.i.t. is really important particarly as you said a moment ago to smaller businesses a across america. >> suzanne: not only the c.i.t. deal but bett than expeed earnings were als out the again. ey have been for the last week or so. helping to sort of set this ni tone for the mark. en you talkbout earnings, you' not really talking about pfits being bter thanxpected. you say wehould focus on revenue. tell me why revenue is so important to thistory right

now. sure thing. i want to see both earnin and revenue but partularly revenues saeltz revenues, very important her because take the first quart. ta last quarter. companies beat earnin esmates but their revenues fell short of wall street expectations how di do tha how did theybeat on earnings? unfortunately it was cutti by cutting s much staf, cuttinjobs. want to see revenues get better soompanies c stop cutting people. >> suzanne: and do y expect th tone for better revenues to continue? what are we seeing from companys in termsof gdance abouthe third quaer so far? >> it's begin to go g a little b better. so far tough the early stages of this reporting season, the companies th have repord he come i with average venue gains somewhere around 5%. not too bad considering that the economy has bn shnking. but i wldn'txpect an immediate rn-around in the labor market. in the last couple of recessions it took basical 15 to 18 months until the recessionnded until the unemployment rate peaked.

i pe it will come soer is time but i do thi it will take a bit of time yet. >> suzanne: evybody has bee mentioning the jobles recovery. ththing that you told me earlier when we spok that worrieyou the most the the human toll of this recession. all ese jobs lost. i mean,how ist possible that we're going to connue to see a market, you know, rally, when we' seeing all these job cutsontinue? >> well, i tnk it's very challenging. the market rally couldn't ntinue, in my opinion, for the long term less consurs are able t start spendg again. but in the nr term, if companies produce bett earnings and if output begins to increase because companies have slashed theirnventory so now they se... now they need to ramp production back up, i think that can create a littlebit of positive srit around t economy a can help the market to continue to do better for a whe. >> suzan: what is your best guess? do you belie that thi rally is for re or do you think that this is pottially a bear market trap? >> i think this rally is for

real but it wast been tested yet. it hasn't been tested by continued high unemployme which wee going to have. it hasn't beenested by financial problem that may doesn't have a as successfula soluon. maybsomething that comes out of the european banng system where there are many problems. >> suzanne: i know you're a obal strategist. which ecomies arelikely to come out of recession first and what are the investment implications of that sty. >>. i think it's very clear that number one out is non-asia asia. japan is kindf sluggish here. the restf asia led by china is already coming out. china had 8% or 7.9%.d.p. growth reported ju a few days a. the chinese government says theye going to keep up the ry heavy stimulus spending that they've bee doing. then i think we're actually cond behind non-japan asia because were doing ever so much to promote growth her europe, ithink, d jap, i

think, lag bind. they're doing less. and they're much sloweto coect the probl of rising labor costs. that is painful he when we make the cuts but it positions us to be much more competive globally. suzanne: stu, i think we have to leave it there. thank you for joining us. >> always a pleasu. >> suzanne: my guest s schweitzer of jporgan private ba. >> paul: takg its cue from adncing world markets, wall street opened higheretting more tractn from brokerage upades on caterpillar and harley-davidson. at mid-d, the dow was sporting a 71 point gain with theasdaq up 16 poin. progress in rescui c.i.t. om bankruptcy was a positive was growing optimism about corporate earnings it all added up to sol gains at the fin bell.

>> suzne: a government watchdog rort says the total cost of thgovernment's trbled asset program or tarp could reach $24 trilon. that's about80,000 per taxpay. banks we supposed to use that money increase lending. but neil barofsky, tarp specl inspector general sa they also used the funds for otherhings. his reporturveyed 360 banks. among the findings:

nearly 40% or 144 usedome of their tarponey to build up pital cushions. 52 banksepaid debts and 15 used the funds to buy other banks. about 80% of the ban also said some of the money had suorted new lendin to kp better tabs on those ans, barofsky wants the treasury to require rp recipients to bmit periodic rerts. we'll find out more torrow about barofs's recommendatis, when he testifs before congress. >> paul: with congressetting ready r its summer recess, this is shaping up to be critical week for heal care reform. it's the psident's top domesticgenda item and he is making a major push to bld support. but as darren gersh ports, the challee is not just potical. >> reporter: with e apollo 11 astronauts today, e president must have woered why it took less than a decade to get to the moon, but hataken more than five decades to get thislose to a health re overhaul. unlike the dramatispace race, analyst paul ginsburg says health care form is not about winning, it's about cuing

costs and keeping peop from losing covage. >>o in a sense it's preventing bad thin from happening, and th's more, a lot harder to do th pointing out a positive thing that a lot of peopleould be eager to get to, which is very clearly defin. reporter: this week, congre is focusing on things it hasot been eager to . key committe continue to search for the mon needed to insurell americans. with no obvis solution in sight, policy analyst alec phillips says the white use has toned do its call for imdiate action. >> the white house is starng to realize that this is ing to be a very difficult push, th there ara lot of challenges not only political, t fiscal, and that some of the difficulties that th face can't really be solved tough pushing congre to act quickly. >>eporter: with polls showing public support sofning, the presidt is trying to keep the pressure on. after visiti a hospital, he said it was time tstop talking the problem to death, waing there is a ct to inaction.

>> jobs will be lo. take home pay will blower. businesses will shutter anwe will continue waste hundreds billions of dollars. reporter: one option is to scale back the sizof the reform pacge. phillips says lawmakercould focus on wre they do agree: creati a health care exchange for surance and finding savings in medicare spendi. >>o on both of those issues there is some kernelf agreement, the questiois how far do youo on both fronts. >> reporter: white houseealth care spokeoman linda douglass says the plan is to hieve the president's original heah care goals. >> whathe president wants is legislation that is ing to lower costs, it'going to protect your cice of doctors anplans. it's goi to assureffordable and qualy health care for all americans. >> reporte in the early '60s, esident kennedy said we choo to go to the moonot because it isasy, but because it is hard. fitting rds for health care reform as well. darren gsh, "nightly business report", washington.

>> suzannesome of the biggest names in tecology report earnings this week. yahoo, ale and microsoft are among them. but don'expect those numbers to tell the same story. as sco gurvey reports each company will paint different picte about how it and the economy are doing. reporter: so far so good fo inveors in tech stocks. early seconduarter earnings nuers are good, but there remain many questions r the weeks ahea last week, int had an encouragingly llish forecast looking ahead to the sond half. but the semicondtor sector needs see confirmation from texas instruments, a, sandisk and brdcom.

en it comes to hardware, del is falling way bind its rivals. one of them,bm, raised its ouook for the year, but it said the economic envinment remains tough. analyst thomas smith ostandard and poor says i.b.m. and wlett packard are the stocks to watch here. >> both thoscompanies have dirsified into services and through thisownturn their nishment on the revenue line if you will, haseen less severe than i think it might have been had theyot been diversifng over the last five years anthat's helped steady their ships anthey now look like strong strategic modethat working prty well. >>eporter: two other tech giants report this wee apple tomorrow and microso on thursday. analysts s investors need to focus more on what these companies say abouthe future than what they say abouthe past. apple is as much a phone a consumer electronics compa as it is computer firm these days. microsoft's port will be noted for itprojections about upcoming sal of its new operating systemwindows 7, and for progress by its bi search engine. tom lydon, editor of etftrends.com sa

electrically traded funds like ishares, dow jones, us tech select, and chnology select spdr, let invests spread risk and avoid having to pick one technology player er another. >> the great thing about i besides the diversificion is its efficit. its liquid. it tras interday and the expense ratio is jt a fraction of wt you would pay in a mutual fund. >> reporter: speaking of ping, experts say as soon as businesses start ping for computs and other gadgets again, you would be wi to invest in the companies that make the partshat go into them scott gurvey, "night business report new york. >> paul: and nowlet's take a lookt some stocks in the news tonight.

anthose are the stocks in the news tonight, susae. >> suzanne: the skies haveeen anything butriendly for the nation's airlines during the recession. thair transport association says airline revenuelunged 26% last mth. that's the eighth straightonth of losses. as dianeastabrook reports, carriersre battling the global economic slump, and the ss of their mostucrative passengers. >> rorter: this isn't the best time to be an airline. fuel pces have been bouncing up and down. >> united, you bro my taylor guitar. >> reporter: there's that sky youtube videskewering baggage handlers at united airlines. and worst of allash-strapped busiss travelers have eith cut way back on flyingr like alex paris are only ying coach. >> we'd rather tvel twice much than to tvel less at high luxury. >>eporter: analysts say a precipitous drop in fu fares

is the priry reason profits are plunging at many airline trouble stard last fall when the global economy nose dive taking business avel with it. so, lucrate business travelers who pay more to bo late or sit at the front of the planhave practically disappeared. add to that, leisureravelers are onlyuying heavily diounted fares. fitch ratings airline analys william warlick says those expensive fares e how airlines ma money. >> most ofhe global legacy rries would rely on 40% or more of their passenge being business oented. and viously they pay a higher re, they are higher yielding customers and thatends to drive half othe airlines total passenger revenue. >> reporter: the reven hole could speltrouble for the airlines if businessravel doesn't ta off again. nextear, the major carriers along with souwest and jetblue have me than $8 billion in debtaturing warlick says refinancing at debt could be difficult if credit market remain tight. >> i think it's very lely that at least t or three of the big

caiers will have a significant cash problem on their has by early 2010. the question is homuch cooperation dohey get let's safrom the banks and credit card processors continue operatinwith very compromised liquidity positions. >> reporter: the airlines e working aggresvely to save mone they're cuing capacity, elinating routes, and furloughing workers. but expertsay it may not be enough to avoid bankruptcies u.s. airways, united airline delta, and northwest all reorganized undechter eleven withinhe last few years. morningstar airline analyst basili alus doubts another round of reorganizions would help. he wants to see ther mergers or aiquidation. >> athe end of the day there e just too many carriers chasing too few passgers and the indury has to shrink. >> repter: there's some speculation that uncle sam cld throw the airles a lifeline. but most analysts doubt the s government or taayers would stomacanother bailout, especially to an indusy most experts samust get smaller.

diane stabrook "nightly business report" chicago. >> paul: tomorro a closer look at how those airlines e faring when connental, jet blue and united airlines report quaerly results. >> suzanne: online bror td ameritrade will buy back aost half a billion dollars in auction rate securies owned by custers. it's part of a dl with new york's attorney general to sele charges ameritrade misled those customers. the auction rate securies marketroze last year but some brers still sold them as liquid investments. new york's attorney geral is now reatening similar charges for charles schwab &ompany. schwab denies any wrongdng. >> paul: mnwhile, morgan stley has agreed to pay half a milliodollars to the s.e.c. to settle chaes one of its advirs misled clients. the agency said moan said one thing,ut did another, when recommending money maners who had not en okayed by the firm.

the invement bank did not admit or deny the s.e.c. findings b agreed to pay the fine. >> suzne: here's a look at what's happening tomorrow:

>> suzanne: mo now on health ca reform. tonit's commentator says if we want to fix e system, we need to recognize a few key point he'slenn hubbard, de of columbia's gduatschool of siness and former head of the council of econoc advisers. >> reducg health care costs would be aig plus for our onomy and the budget. heal care occupies a large share of the u.s. economy, a escalating hlth care costs stall wage growtand job creation unfortunatel congress and the obama administrationre on the wrong pathnew mandates and the creation onew unaffordable alth care entitlements. the mandat will reduce both wages and employment. the new entitlements wiladd to anlready soaring national debt. to the extent the propals addrs this concern, they do so through rge increases in marginal tax rates, limiti growth and emploent. and the bills will raise hlth care cos by accentuating

current problems with heth insurance. thhouse and senate bills would enrine the flaws in current empler-based plans that are sponsible for high and risin alth care costs, flaws that stem directly om the misguided tax exclusion r employer- provided insurance a the hundreds of ate mandates for covera of health care oviders and procedures. to move forwd, the country must begin two sarate debates. the fit: how to improve health insurance to rgn in the epidemic of alth spending that fails to provide vue for money. the second: how to improve access to alth care for those who cannot afford it. washington's reform prcription is deadly, lets not fill iand get a secondpinion. i'm glenhubbard. >> suzanne: and nally, today markthe 40th anniversary of apollo 11's landing onhe moon. it was o small step for man one giant leap for technoly. the practical applications o the space prograhave touched

everarea of our lives. they range frothings as complited as efficient structes for semi-conductors to the simpler aerodynamicof golf balls tbetter brakes on rs and trucks. ace experts say for every dollar wspend on r&d for space, we get back sevenollars in eventual econom growth, paul. would say that is a stellar rate of return. paul: wis they'd do a little more research on the golf balls i use. they're all over the place. >>uzanne: i had a feeng you were gng to say something just likthat. that'snightly business report" for monday, july 20. i'm suzanne pratt. goodnight, everyone. and good night to u, paul. goodnigh suzanne. i'm pa kangas wishing l of you the best of good buys. ightly business report" is made possible by

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